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Phillips 66 (NYSE:PSX)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Phillips 66 has an F-score of 6 indicating the company's financial situation is typical for a stable company.

PSX' s Piotroski F-Score Range Over the Past 10 Years
Min: 5   Max: 7
Current: 6

5
7

During the past 7 years, the highest Piotroski F-Score of Phillips 66 was 7. The lowest was 5. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Net Income was 650 + 385 + 496 + 511 = $2,042 Mil.
Cash Flow from Operations was 1497 + 258 + 1155 + 883 = $3,793 Mil.
Revenue was 22029 + 17760 + 22307 + 22042 = $84,138 Mil.
Gross Profit was 5084 + 4807 + 5115 + 5020 = $20,026 Mil.
Average Total Assets from the begining of this year (Sep15)
to the end of this year (Sep16) was
(49415 + 48580 + 48246 + 50361 + 50254) / 5 = $49371.2 Mil.
Total Assets at the begining of this year (Sep15) was $49,415 Mil.
Long-Term Debt was $7,275 Mil.
Total Current Assets was $11,964 Mil.
Total Current Liabilities was $10,100 Mil.
Net Income was 1147 + 987 + 1012 + 1578 = $4,724 Mil.

Revenue was 35607 + 23426 + 29077 + 26417 = $114,527 Mil.
Gross Profit was 5994 + 5637 + 5781 + 6754 = $24,166 Mil.
Average Total Assets from the begining of last year (Sep14)
to the end of last year (Sep15) was
(49650 + 48692 + 49077 + 49874 + 49415) / 5 = $49341.6 Mil.
Total Assets at the begining of last year (Sep14) was $49,650 Mil.
Long-Term Debt was $8,908 Mil.
Total Current Assets was $15,049 Mil.
Total Current Liabilities was $8,875 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Phillips 66's current net income (TTM) was 2,042. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Phillips 66's current cash flow from operations (TTM) was 3,793. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

Phillips 66's return on assets of this year was 0.04132348. Phillips 66's return on assets of last year was 0.09514602. ==> Last year is higher ==> Score 0.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Phillips 66's current net income (TTM) was 2,042. Phillips 66's current cash flow from operations (TTM) was 3,793. ==> 3,793 > 2,042 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Sep16)=Long-Term Debt/Average Total Assets from Sep15 to Sep16
=7275/49371.2
=0.14735311

Gearing (Last Year: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=8908/49341.6
=0.18053732

Phillips 66's gearing of this year was 0.14735311. Phillips 66's gearing of last year was 0.18053732. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: Sep16)=Total Current Assets/Total Current Liabilities
=11964/10100
=1.18455446

Current Ratio (Last Year: Sep15)=Total Current Assets/Total Current Liabilities
=15049/8875
=1.69566197

Phillips 66's current ratio of this year was 1.18455446. Phillips 66's current ratio of last year was 1.69566197. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Phillips 66's number of shares in issue this year was 528.8. Phillips 66's number of shares in issue last year was 544.7. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=20026/84138
=0.23801374

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=24166/114527
=0.21100701

Phillips 66's gross margin of this year was 0.23801374. Phillips 66's gross margin of last year was 0.21100701. ==> This year's gross margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (Sep15)
=84138/49415
=1.70268137

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=114527/49650
=2.30668681

Phillips 66's asset turnover of this year was 1.70268137. Phillips 66's asset turnover of last year was 2.30668681. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+1+0+1+1+0
=6

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Phillips 66 has an F-score of 6 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Phillips 66 Annual Data

Dec12Dec13Dec14Dec15
Question 1 1111
Question 2 1111
Question 3 0010
Question 4 1101
Question 5 0100
Question 6 1111
Question 7 0111
Question 8 1011
Question 9 0000
F-score 5666

Phillips 66 Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Question 1 1111111111
Question 2 1111111111
Question 3 0111110000
Question 4 1000011111
Question 5 1000000011
Question 6 0011111000
Question 7 1111111111
Question 8 0111111111
Question 9 0100000000
F-score 5666676566
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