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Transocean Ltd (NYSE:RIG)
Piotroski F-Score
5 (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

Transocean Ltd has an F-score of 5 indicating the company's financial situation is typical for a stable company.

RIG' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 5

2
9

During the past 13 years, the highest Piotroski F-Score of Transocean Ltd was 9. The lowest was 2. 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 (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was 456 + 587 + -2217 + -739 = $-1,913 Mil.
Cash Flow from Operations was 136 + 636 + 882 + 566 = $2,220 Mil.
Revenue was 2339 + 2328 + 2270 + 2237 = $9,174 Mil.
Gross Profit was 1070 + 1115 + 952 + 927 = $4,064 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(32546 + 31897 + 32067 + 29964 + 28413) / 5 = $30977.4 Mil.
Total Assets at the begining of this year (Dec13) was $32,546 Mil.
Long-Term Debt was $9,059 Mil.
Total Current Assets was $6,001 Mil.
Total Current Liabilities was $3,770 Mil.
Net Income was 321 + 307 + 546 + 233 = $1,407 Mil.

Revenue was 2197 + 2397 + 2558 + 2332 = $9,484 Mil.
Gross Profit was 822 + 1004 + 1067 + 800 = $3,693 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(34255 + 32675 + 32215 + 32601 + 32546) / 5 = $32858.4 Mil.
Total Assets at the begining of last year (Dec12) was $34,255 Mil.
Long-Term Debt was $10,379 Mil.
Total Current Assets was $6,772 Mil.
Total Current Liabilities was $3,554 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.

Transocean Ltd's current net income (TTM) was -1,913. ==> 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.

Transocean Ltd's current cash flow from operations (TTM) was 2,220. ==> 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 (Dec13)
=-1913/32546
=-0.05877834

Transocean Ltd's return on assets of this year was -0.05877834. Transocean Ltd's return on assets of last year was 0.0410743. ==> 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.

Transocean Ltd's current net income (TTM) was -1,913. Transocean Ltd's current cash flow from operations (TTM) was 2,220. ==> 2,220 > -1,913 ==> 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: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=9059/30977.4
=0.292439

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=10379/32858.4
=0.31587052

Transocean Ltd's gearing of this year was 0.292439. Transocean Ltd's gearing of last year was 0.31587052. ==> 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: Dec14)=Total Current Assets/Total Current Liabilities
=6001/3770
=1.59177719

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=6772/3554
=1.90545864

Transocean Ltd's current ratio of this year was 1.59177719. Transocean Ltd's current ratio of last year was 1.90545864. ==> 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.

Transocean Ltd's number of shares in issue this year was 362. Transocean Ltd's number of shares in issue last year was 360. ==> 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
=4064/9174
=0.44299106

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3693/9484
=0.38939266

Transocean Ltd's gross margin of this year was 0.44299106. Transocean Ltd's gross margin of last year was 0.38939266. ==> 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 (Dec13)
=9174/32546
=0.28187796

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=9484/34255
=0.27686469

Transocean Ltd's asset turnover of this year was 0.28187796. Transocean Ltd's asset turnover of last year was 0.27686469. ==> This year's asset turnover is higher. ==> Score 1.

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+1+0+0+1+1
=5

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

Transocean Ltd has an F-score of 5 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.

Transocean Ltd Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111110010
Question 2 1111111111
Question 3 1110000110
Question 4 1001111111
Question 5 1001110011
Question 6 0101010110
Question 7 0110110000
Question 8 1111000111
Question 9 1110000111
F-score 7766562685

Transocean Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 0011111100
Question 2 1111111111
Question 3 0111111100
Question 4 1111111111
Question 5 0000111011
Question 6 0111110000
Question 7 0000010000
Question 8 0111111111
Question 9 1111111111
F-score 3677897655
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