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Transocean Ltd (NYSE:RIG)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

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 6 indicating the company's financial situation is typical for a stable company.

RIG' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 7

3
9

During the past 13 years, the highest Piotroski F-Score of Transocean Ltd was 9. 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 (Sep15) TTM:Last Year (Sep14) TTM:
Net Income was -739 + -483 + 342 + 321 = $-559 Mil.
Cash Flow from Operations was 566 + 526 + 1311 + 648 = $3,051 Mil.
Revenue was 2237 + 2043 + 1884 + 1608 = $7,772 Mil.
Gross Profit was 927 + 959 + 1687 + 728 = $4,301 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(29964 + 28413 + 27105 + 26973 + 25835) / 5 = $27658 Mil.
Total Assets at the begining of this year (Sep14) was $29,964 Mil.
Long-Term Debt was $8,630 Mil.
Total Current Assets was $4,906 Mil.
Total Current Liabilities was $1,830 Mil.
Net Income was 233 + 456 + 587 + -2217 = $-941 Mil.

Revenue was 2252 + 2339 + 2328 + 2270 = $9,189 Mil.
Gross Profit was 791 + 1070 + 1115 + 952 = $3,928 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(32601 + 32546 + 31897 + 32067 + 29964) / 5 = $31815 Mil.
Total Assets at the begining of last year (Sep13) was $32,601 Mil.
Long-Term Debt was $9,991 Mil.
Total Current Assets was $6,367 Mil.
Total Current Liabilities was $3,546 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 -559. ==> 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 3,051. ==> 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 (Sep14)
=-559/29964
=-0.01865572

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=-941/32601
=-0.02886415

Transocean Ltd's return on assets of this year was -0.01865572. Transocean Ltd's return on assets of last year was -0.02886415. ==> This year is higher. ==> Score 1.

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 -559. Transocean Ltd's current cash flow from operations (TTM) was 3,051. ==> 3,051 > -559 ==> 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: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=8630/27658
=0.31202545

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=9991/31815
=0.31403426

Transocean Ltd's gearing of this year was 0.31202545. Transocean Ltd's gearing of last year was 0.31403426. ==> 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: Sep15)=Total Current Assets/Total Current Liabilities
=4906/1830
=2.68087432

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=6367/3546
=1.79554428

Transocean Ltd's current ratio of this year was 2.68087432. Transocean Ltd's current ratio of last year was 1.79554428. ==> This year's current ratio is higher. ==> Score 1.

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 363. Transocean Ltd's number of shares in issue last year was 362. ==> 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
=4301/7772
=0.55339681

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3928/9189
=0.42746762

Transocean Ltd's gross margin of this year was 0.55339681. Transocean Ltd's gross margin of last year was 0.42746762. ==> 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 (Sep14)
=7772/29964
=0.25937792

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=9189/32601
=0.28186252

Transocean Ltd's asset turnover of this year was 0.25937792. Transocean Ltd's asset turnover of last year was 0.28186252. ==> 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+1+1+1+1+0+1+0
=6

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

Transocean Ltd 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 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 1110001111
F-score 7766563685

Transocean Ltd Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
Question 1 1111100000
Question 2 1111111111
Question 3 1111100001
Question 4 1111111111
Question 5 0111011111
Question 6 1110000011
Question 7 0000000000
Question 8 1111111111
Question 9 1111111000
F-score 7887655456
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