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Sears Holdings Corp (NAS:SHLD)
Piotroski F-Score
1 (As of Today)

Warning Sign:

Piotroski F-Score of 1 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

Sears Holdings Corp has an F-score of 1. It is a bad or low score, which usually implies poor business operation.

SHLD' s 10-Year Piotroski F-Score Range
Min: 1   Max: 8
Current: 1

1
8

During the past 12 years, the highest Piotroski F-Score of Sears Holdings Corp was 8. The lowest was 1. 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 (Jan15) TTM:Last Year (Jan14) TTM:
Net Income was -402 + -573 + -548 + -159 = $-1,682 Mil.
Cash Flow from Operations was -560 + -187 + -1195 + 555 = $-1,387 Mil.
Revenue was 7879 + 8013 + 7207 + 8099 = $31,198 Mil.
Gross Profit was 1828 + 1742 + 1601 + 1978 = $7,149 Mil.
Average Total Assets from the begining of this year (Jan14)
to the end of this year (Jan15) was
(18261 + 16930 + 16438 + 15169 + 13209) / 5 = $16001.4 Mil.
Total Assets at the begining of this year (Jan14) was $18,261 Mil.
Long-Term Debt was $3,110 Mil.
Total Current Assets was $5,863 Mil.
Total Current Liabilities was $6,076 Mil.
Net Income was -279 + -194 + -534 + -358 = $-1,365 Mil.

Revenue was 8452 + 8871 + 8272 + 10593 = $36,188 Mil.
Gross Profit was 2156 + 2186 + 1931 + 2482 = $8,755 Mil.
Average Total Assets from the begining of last year (Jan13)
to the end of last year (Jan14) was
(19340 + 19396 + 19278 + 20209 + 18261) / 5 = $19296.8 Mil.
Total Assets at the begining of last year (Jan13) was $19,340 Mil.
Long-Term Debt was $2,834 Mil.
Total Current Assets was $8,959 Mil.
Total Current Liabilities was $8,185 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.

Sears Holdings Corp's current net income (TTM) was -1,682. ==> 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.

Sears Holdings Corp's current cash flow from operations (TTM) was -1,387. ==> Negative ==> Score 0.

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 (Jan14)
=-1682/18261
=-0.09210887

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=-1365/19340
=-0.07057911

Sears Holdings Corp's return on assets of this year was -0.09210887. Sears Holdings Corp's return on assets of last year was -0.07057911. ==> 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.

Sears Holdings Corp's current net income (TTM) was -1,682. Sears Holdings Corp's current cash flow from operations (TTM) was -1,387. ==> -1,387 > -1,682 ==> 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: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=3110/16001.4
=0.19435799

Gearing (Last Year: Jan14)=Long-Term Debt/Average Total Assets from Jan13 to Jan14
=2834/19296.8
=0.14686373

Sears Holdings Corp's gearing of this year was 0.19435799. Sears Holdings Corp's gearing of last year was 0.14686373. ==> 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: Jan15)=Total Current Assets/Total Current Liabilities
=5863/6076
=0.96494404

Current Ratio (Last Year: Jan14)=Total Current Assets/Total Current Liabilities
=8959/8185
=1.09456323

Sears Holdings Corp's current ratio of this year was 0.96494404. Sears Holdings Corp's current ratio of last year was 1.09456323. ==> 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.

Sears Holdings Corp's number of shares in issue this year was 86.4. Sears Holdings Corp's number of shares in issue last year was 86.2. ==> 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
=7149/31198
=0.2291493

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=8755/36188
=0.24193103

Sears Holdings Corp's gross margin of this year was 0.2291493. Sears Holdings Corp's gross margin of last year was 0.24193103. ==> 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 (Jan14)
=31198/18261
=1.7084497

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=36188/19340
=1.87114788

Sears Holdings Corp's asset turnover of this year was 1.7084497. Sears Holdings Corp's asset turnover of last year was 1.87114788. ==> 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+0+0+1+0+0+0+0+0
=1

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

Sears Holdings Corp has an F-score of 1. 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.

Sears Holdings Corp Annual Data

Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15
Question 1 11110000
Question 2 11110000
Question 3 00100100
Question 4 11101111
Question 5 11101000
Question 6 01010000
Question 7 11111110
Question 8 00100100
Question 9 01100110
F-score 57843531

Sears Holdings Corp Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
Question 1 0000000000
Question 2 0000000000
Question 3 0111100000
Question 4 1111111111
Question 5 1000000000
Question 6 0000100000
Question 7 1110010000
Question 8 0110000000
Question 9 0111111000
F-score 3553432111
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