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Royal Dutch Shell PLC (NYSE:RDS.A)
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

Royal Dutch Shell PLC has an F-score of 4 indicating the company's financial situation is typical for a stable company.

RDS.A' s 10-Year Piotroski F-Score Range
Min: 4   Max: 8
Current: 4

4
8

During the past 13 years, the highest Piotroski F-Score of Royal Dutch Shell PLC was 8. The lowest was 4. 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 4677 + 1781 + 4509 + 5307 = $16,274 Mil.
Cash Flow from Operations was 10409 + 6028 + 13984 + 8641 = $39,062 Mil.
Revenue was 118258 + 111479 + 112079 + 115274 = $457,090 Mil.
Gross Profit was 19000 + 18114 + 21065 + 22139 = $80,318 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(345508 + 354613 + 357512 + 366593 + 370716) / 5 = $358,988 Mil.
Total Assets was $370,716 Mil.
Long-Term Debt was $38,901 Mil.
Total Current Assets was $112,005 Mil.
Total Current Liabilities was $94,904 Mil.
Net Income was 7164 + 6728 + 8176 + 1737 = $23,805 Mil.

Revenue was 115429 + 122611 + 115514 + 114348 = $467,902 Mil.
Gross Profit was 21672 + 21942 + 22453 + 18447 = $84,514 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(345832 + 360350 + 350294 + 356994 + 345508) / 5 = $351,796 Mil.
Total Assets was $345,508 Mil.
Long-Term Debt was $28,017 Mil.
Total Current Assets was $103,876 Mil.
Total Current Liabilities was $91,269 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Royal Dutch Shell PLC's current net income (ttm) was 16,274. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Royal Dutch Shell PLC's current cash flow from operations (ttm) was 39,062. ==> 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 (TTM)/Average Total Assets from Jun13 to Jun14
=16274/358988.4
=0.04533294

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jun12 to Jun13
=23805/351795.6
=0.06766713

Royal Dutch Shell PLC's return on assets of this year was 0.04533294. Royal Dutch Shell PLC's return on assets of last year was 0.06766713. ==> 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.

Royal Dutch Shell PLC's current net income (ttm) was 16,274. Royal Dutch Shell PLC's current cash flow from operations (ttm) was 39,062. ==> 39,062 > 16,274 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

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

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

Gearing (This Year: Jun14)=Long-Term Debt/Total Assets
=38901/370716
=0.10493477

Gearing (Last Year: Jun13)=Long-Term Debt/Total Assets
=28017/345508
=0.08108929

Royal Dutch Shell PLC's gearing of this year was 0.10493477. Royal Dutch Shell PLC's gearing of last year was 0.08108929. ==> Last year is lower than this year ==> 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: Jun14)=Total Current Assets/Total Current Liabilities
=112005/94904
=1.18019262

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=103876/91269
=1.13813014

Royal Dutch Shell PLC's current ratio of this year was 1.18019262. Royal Dutch Shell PLC's current ratio of last year was 1.13813014. ==> This year's current ratio is higher. ==> Score 1.

Q7. 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 3161.7. Royal Dutch Shell PLC's number of shares in issue last year was 3158.5. ==> There is larger 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: TTM)=Gross Profit/Revenue
=80318/457090
=0.17571594

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=84514/467902
=0.18062329

Royal Dutch Shell PLC's gross margin of this year was 0.17571594. Royal Dutch Shell PLC's gross margin of last year was 0.18062329. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by average total assets throughout 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)/Average Total Assets from Jun13 to Jun14
=457090/358988.4
=1.27327234

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jun12 to Jun13
=467902/351795.6
=1.33003938

Royal Dutch Shell PLC's asset turnover of this year was 1.27327234. Royal Dutch Shell PLC's asset turnover of last year was 1.33003938. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+0+1+0+0+0
=4

Good or high score = 8 or 9

Bad or low score = 0 or 1

Royal Dutch Shell PLC has an F-score of 4 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, Altman Z-Score, Beneish M-Score


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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 01001100
Q4 11111111
Q5 00000110
Q6 11010110
Q7 11110000
Q8 00110000
Q9 01101100
F-score 57665753

Royal Dutch Shell PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 1000000000
Q4 1111111111
Q5 1111110000
Q6 1101000001
Q7 0000001110
Q8 0000110000
Q9 1100000000
F-score 7645554444
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