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Penn West Petroleum Ltd (NYSE:PWE)
Piotroski F-Score
4 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Penn West Petroleum Ltd has an F-score of 3 indicating the company's financial situation is typical for a stable company.

PWE' s 10-Year Piotroski F-Score Range
Min: 3   Max: 7
Current: 4

3
7

During the past 13 years, the highest Piotroski F-Score of Penn West Petroleum Ltd was 7. The lowest was 3. 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 own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was -665.447897623 + 26.0617760618 + -38.4615384615 + -95.1913640824 = $-773 Mil.
Cash Flow from Operations was 300.731261426 + 246.138996139 + 191.346153846 + 251.226692836 = $989 Mil.
Revenue was 985.374771481 + 569.498069498 + 1339.42307692 + 683.022571148 = $3,577 Mil.
Gross Profit was 329.067641682 + 352.316602317 + 1000 + 566.24141315 = $2,248 Mil.
Total Assets at the begining of this year (Dec12) was $14,553 Mil.
Total Assets was $11,558 Mil.
Long-Term Debt was $2,188 Mil.
Total Current Assets was $421 Mil.
Total Current Liabilities was $740 Mil.
Net Income was -78.6290322581 + -67.8824721378 + 231.755424063 + 59.4159113797 = $145 Mil.

Revenue was 1064.51612903 + 550.151975684 + 1735.70019724 + 650.55387714 = $4,001 Mil.
Gross Profit was 212.701612903 + 291.79331307 + 1332.34714004 + 367.573011078 = $2,204 Mil.
Total Assets at the begining of last year (Dec11) was $15,384 Mil.
Total Assets was $14,553 Mil.
Long-Term Debt was $2,707 Mil.
Total Current Assets was $712 Mil.
Total Current Liabilities was $914 Mil.

Profitability

Q1. 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.

Penn West Petroleum Ltd's current net income was -773. ==> Negative ==> Score 0.

Q2. 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.

Penn West Petroleum Ltd's current cash flow from operations was 989. ==> Positive ==> Score 1.

Q3. 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.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Dec12)
=-773.039024106/14553.4274194
=-0.05311732

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=144.659831047/15384.0078973
=0.00940326

Penn West Petroleum Ltd's return on assets of this year was -0.05311732. Penn West Petroleum Ltd's return on assets of last year was 0.00940326. ==> Last year is higher ==> Score 0.

Q4. 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.

Penn West Petroleum Ltd's current net income was -773. Penn West Petroleum Ltd's current cash flow from operations was 989. ==> 989 > -773 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

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

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

Gearing (This Year)=Long-Term Debt/Total Assets
=2188.29981718/11557.5868373
=0.18933882

Gearing (Last Year)=Long-Term Debt/Total Assets
=2706.65322581/14553.4274194
=0.18598047

Penn West Petroleum Ltd's gearing of this year was 0.18933882. Penn West Petroleum Ltd's gearing of last year was 0.18598047. ==> Last year is lower ==> Score 0.

Q6. 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)=Total Current Assets/Total Current Liabilities
=421.389396709/740.402193784
=0.5691358

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=711.693548387/914.314516129
=0.7783903

Penn West Petroleum Ltd's current ratio of this year was 0.5691358. Penn West Petroleum Ltd's current ratio of last year was 0.7783903. ==> Last year's current ratio is higher ==> Score 0.

Q7. Change in Shares in Issue

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

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

Penn West Petroleum Ltd's number of shares in issue this year was 489.4. Penn West Petroleum Ltd's number of shares in issue last year was 479.4. ==> There is more number of shares in issue this year. ==> Score 0.

Efficiency

Q8. 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)=Gross Profit/Revenue
=2247.62565715/3577.31848905
=0.62829901

Gross Margin (Last Year)=Gross Profit/Revenue
=2204.41507709/4000.92217909
=0.55097674

Penn West Petroleum Ltd's gross margin of this year was 0.62829901. Penn West Petroleum Ltd's gross margin of last year was 0.55097674. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Dec12)
=3577.31848905/14553.4274194
=0.24580591

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=4000.92217909/15384.0078973
=0.26007021

Penn West Petroleum Ltd's asset turnover of this year was 0.24580591. Penn West Petroleum Ltd's asset turnover of last year was 0.26007021. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=0+1+0+1+0+0+0+1+0
=3

Good or high score = 8 or 9

Bad or low score = 0 or 1

Penn West Petroleum Ltd has an F-score of 3 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 own currency.

Penn West Petroleum Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 111101110
Q2 111111111
Q3 110101000
Q4 111111111
Q5 000011010
Q6 110100110
Q7 000000000
Q8 100101101
Q9 100101100
F-score 753737653

Penn West Petroleum Ltd Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111110000
Q2 1111111111
Q3 0000000000
Q4 1111111111
Q5 1000011110
Q6 0111111000
Q7 0000000000
Q8 1111101001
Q9 1111011000
F-score 6666576334
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