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Telefonica SA (NYSE:TEF)
Piotroski F-Score
6 (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

Telefonica SA has an F-score of 6 indicating the company's financial situation is typical for a stable company.

TEF' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 8
Current: 6

2
8

During the past 13 years, the highest Piotroski F-Score of Telefonica SA 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 local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Net Income was 864.142538976 + 522.471910112 + 1103.25476992 + 151.898734177 = $2,642 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
Revenue was 12208.2405345 + 16850.5617978 + 14913.5802469 + 13802.742616 = $57,775 Mil.
Gross Profit was 8984.40979955 + 11762.9213483 + 10777.7777778 + 11301.6877637 = $42,827 Mil.
Average Total Assets from the begining of this year (Dec15)
to the end of this year (Dec16) was
(131077.342048 + 136045.657016 + 138208.988764 + 135428.731762 + 130422.995781) / 5 = $134236.743074 Mil.
Total Assets at the begining of this year (Dec15) was $131,077 Mil.
Long-Term Debt was $641 Mil.
Total Current Assets was $21,070 Mil.
Total Current Liabilities was $37,396 Mil.
Net Income was 1950.21645022 + 1711.56004489 + 796.857463524 + -2435.72984749 = $2,023 Mil.

Revenue was 12676.4069264 + 15735.1290685 + 15865.3198653 + 14372.5490196 = $58,649 Mil.
Gross Profit was 9366.88311688 + 11106.6217733 + 11205.3872054 + 11842.0479303 = $43,521 Mil.
Average Total Assets from the begining of last year (Dec14)
to the end of last year (Dec15) was
(150860.665845 + 135067.099567 + 146619.52862 + 138166.105499 + 131077.342048) / 5 = $140358.148316 Mil.
Total Assets at the begining of last year (Dec14) was $150,861 Mil.
Long-Term Debt was $1,020 Mil.
Total Current Assets was $20,387 Mil.
Total Current Liabilities was $37,455 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.

Telefonica SA's current net income (TTM) was 2,642. ==> Positive ==> Score 1.

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.

Telefonica SA's current cash flow from operations (TTM) was 0. ==> 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 (Dec15)
=2641.76795319/131077.342048
=0.02015427

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=2022.90411114/150860.665845
=0.01340909

Telefonica SA's return on assets of this year was 0.02015427. Telefonica SA's return on assets of last year was 0.01340909. ==> 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.

Telefonica SA's current net income (TTM) was 2,642. Telefonica SA's current cash flow from operations (TTM) was 0. ==> 0 <= 2,642 ==> CFROA <= ROA ==> Score 0.

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: Dec16)=Long-Term Debt/Average Total Assets from Dec15 to Dec16
=641.35021097/134236.743074
=0.00477775

Gearing (Last Year: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=1019.60784314/140358.148316
=0.00726433

Telefonica SA's gearing of this year was 0.00477775. Telefonica SA's gearing of last year was 0.00726433. ==> 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: Dec16)=Total Current Assets/Total Current Liabilities
=21069.6202532/37395.5696203
=0.56342557

Current Ratio (Last Year: Dec15)=Total Current Assets/Total Current Liabilities
=20386.7102397/37455.3376906
=0.54429386

Telefonica SA's current ratio of this year was 0.56342557. Telefonica SA's current ratio of last year was 0.54429386. ==> 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.

Telefonica SA's number of shares in issue this year was 5063.2. Telefonica SA's number of shares in issue last year was 5075.7. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=42826.7966894/57775.1251952
=0.74126705

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=43520.9400258/58649.4048798
=0.74205254

Telefonica SA's gross margin of this year was 0.74126705. Telefonica SA's gross margin of last year was 0.74205254. ==> 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 (Dec15)
=57775.1251952/131077.342048
=0.44077126

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=58649.4048798/150860.665845
=0.38876539

Telefonica SA's asset turnover of this year was 0.44077126. Telefonica SA's asset turnover of last year was 0.38876539. ==> 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
=1+0+1+0+1+1+1+0+1
=6

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

Telefonica SA 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 local exchange's currency.

Telefonica SA Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Question 1 1111111111
Question 2 0111100000
Question 3 0011001001
Question 4 0011000000
Question 5 1101101111
Question 6 1010111001
Question 7 1110100001
Question 8 1011111010
Question 9 0010100101
F-score 5486735336

Telefonica SA Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Question 1 1111111011
Question 2 0000000000
Question 3 1000000001
Question 4 0000000100
Question 5 1111110001
Question 6 1010000001
Question 7 0000000011
Question 8 1000011110
Question 9 0111101001
F-score 5343333236
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