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Royal Dutch Shell PLC (NYSE:RDS.A)
Piotroski F-Score
2 (As of Today)

Warning Sign:

Piotroski F-Score of 2 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

Royal Dutch Shell PLC has an F-score of 2. It is a bad or low score, which usually implies poor business operation.

RDS.A' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 8
Current: 2

2
8

During the past 13 years, the highest Piotroski F-Score of Royal Dutch Shell PLC was 8. The lowest was 2. And the median was 5.


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 (Jun16) TTM:Last Year (Jun15) TTM:
Net Income was -7416 + 939 + 484 + 1175 = $-4,818 Mil.
Cash Flow from Operations was 11231 + 5423 + 661 + 2292 = $19,607 Mil.
Revenue was 69184 + 60176 + 49732 + 60271 = $239,363 Mil.
Gross Profit was 10153 + 9495 + 9681 + 11833 = $41,162 Mil.
Average Total Assets from the begining of this year (Jun15)
to the end of this year (Jun16) was
(356328 + 343701 + 340157 + 416304 + 417441) / 5 = $374786.2 Mil.
Total Assets at the begining of this year (Jun15) was $356,328 Mil.
Long-Term Debt was $79,466 Mil.
Total Current Assets was $85,395 Mil.
Total Current Liabilities was $77,465 Mil.
Net Income was 4463 + 595 + 4430 + 3986 = $13,474 Mil.

Revenue was 109825 + 94166 + 68846 + 73950 = $346,787 Mil.
Gross Profit was 17763 + 13061 + 14766 + 15003 = $60,593 Mil.
Average Total Assets from the begining of last year (Jun14)
to the end of last year (Jun15) was
(370716 + 359411 + 353116 + 341832 + 356328) / 5 = $356280.6 Mil.
Total Assets at the begining of last year (Jun14) was $370,716 Mil.
Long-Term Debt was $45,575 Mil.
Total Current Assets was $100,395 Mil.
Total Current Liabilities was $78,495 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.

Royal Dutch Shell PLC's current net income (TTM) was -4,818. ==> Negative ==> Score 0.

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.

Royal Dutch Shell PLC's current cash flow from operations (TTM) was 19,607. ==> 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.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Jun15)
=-4818/356328
=-0.01352125

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jun14)
=13474/370716
=0.03634588

Royal Dutch Shell PLC's return on assets of this year was -0.01352125. Royal Dutch Shell PLC's return on assets of last year was 0.03634588. ==> 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.

Royal Dutch Shell PLC's current net income (TTM) was -4,818. Royal Dutch Shell PLC's current cash flow from operations (TTM) was 19,607. ==> 19,607 > -4,818 ==> 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: Jun16)=Long-Term Debt/Average Total Assets from Jun15 to Jun16
=79466/374786.2
=0.21203022

Gearing (Last Year: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=45575/356280.6
=0.12791884

Royal Dutch Shell PLC's gearing of this year was 0.21203022. Royal Dutch Shell PLC's gearing of last year was 0.12791884. ==> Last year is lower than this year ==> Score 0.

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: Jun16)=Total Current Assets/Total Current Liabilities
=85395/77465
=1.10236881

Current Ratio (Last Year: Jun15)=Total Current Assets/Total Current Liabilities
=100395/78495
=1.27899866

Royal Dutch Shell PLC's current ratio of this year was 1.10236881. Royal Dutch Shell PLC's current ratio of last year was 1.27899866. ==> 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.

Royal Dutch Shell PLC's number of shares in issue this year was 4026.7. Royal Dutch Shell PLC's number of shares in issue last year was 3192. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=41162/239363
=0.17196476

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=60593/346787
=0.17472685

Royal Dutch Shell PLC's gross margin of this year was 0.17196476. Royal Dutch Shell PLC's gross margin of last year was 0.17472685. ==> Last year's gross margin is higher ==> Score 0.

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 (Jun15)
=239363/356328
=0.67174906

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun14)
=346787/370716
=0.93545194

Royal Dutch Shell PLC's asset turnover of this year was 0.67174906. Royal Dutch Shell PLC's asset turnover of last year was 0.93545194. ==> 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
=0+1+0+1+0+0+0+0+0
=2

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

Royal Dutch Shell PLC has an F-score of 2. It is a bad or low score, which usually implies poor business operation.


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.

Royal Dutch Shell PLC Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 111111111
Question 2 111111111
Question 3 100110000
Question 4 111111111
Question 5 010011000
Question 6 101011011
Question 7 111000000
Question 8 001000011
Question 9 110110000
F-score 766575355

Royal Dutch Shell PLC Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
Question 1 1111111100
Question 2 1111111111
Question 3 0000100000
Question 4 1111111111
Question 5 0000100000
Question 6 0111111100
Question 7 1000000000
Question 8 0011100110
Question 9 0000000000
F-score 4455744532
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