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Telefonica SA (NYSE:TEF)
Piotroski F-Score
4 (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 3. It is a bad or low score, which usually implies poor business operation.

TEF' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 8
Current: 4

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 own currency.

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Net Income was 0 + 1950.21645022 + 2122.33445567 + 992.14365881 = $5,065 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
Revenue was 0 + 12676.4069264 + 13540.9652076 + 13590.3479237 = $39,808 Mil.
Gross Profit was 0 + 9366.88311688 + 9912.45791246 + 9945.00561167 = $29,224 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(155238.402062 + 150800.246609 + 135067.099567 + 146619.52862 + 138166.105499) / 5 = $145178.276471 Mil.
Total Assets at the begining of this year (Sep14) was $155,238 Mil.
Long-Term Debt was $52,416 Mil.
Total Current Assets was $37,440 Mil.
Total Current Liabilities was $40,684 Mil.
Net Income was 0 + 951.590594744 + 1508.15217391 + 1159.79381443 = $3,620 Mil.

Revenue was 0 + 14374.8271093 + 14559.7826087 + 14072.1649485 = $43,007 Mil.
Gross Profit was 0 + 10594.7441217 + 10691.576087 + 10380.1546392 = $31,666 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(161806.408545 + 163048.010974 + 155134.163209 + 159563.858696 + 155238.402062) / 5 = $158958.168697 Mil.
Total Assets at the begining of last year (Sep13) was $161,806 Mil.
Long-Term Debt was $65,258 Mil.
Total Current Assets was $35,500 Mil.
Total Current Liabilities was $36,081 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 5,065. ==> 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 (Sep14)
=5064.69456469/155238.402062
=0.03262527

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=3619.53658309/161806.408545
=0.02236955

Telefonica SA's return on assets of this year was 0.03262527. Telefonica SA's return on assets of last year was 0.02236955. ==> 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 5,065. Telefonica SA's current cash flow from operations (TTM) was 0. ==> 0 <= 5,065 ==> 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: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=52416.3860831/145178.276471
=0.36104841

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=65257.7319588/158958.168697
=0.41053399

Telefonica SA's gearing of this year was 0.36104841. Telefonica SA's gearing of last year was 0.41053399. ==> 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
=37439.9551066/40683.5016835
=0.92027366

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=35500/36081.185567
=0.98389228

Telefonica SA's current ratio of this year was 0.92027366. Telefonica SA's current ratio of last year was 0.98389228. ==> 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.

Telefonica SA's number of shares in issue this year was 4889. Telefonica SA's number of shares in issue last year was 4569. ==> 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
=29224.346641/39807.7200577
=0.73413766

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=31666.4748478/43006.7746664
=0.73631364

Telefonica SA's gross margin of this year was 0.73413766. Telefonica SA's gross margin of last year was 0.73631364. ==> 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 (Sep14)
=39807.7200577/155238.402062
=0.25642959

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=43006.7746664/161806.408545
=0.26579154

Telefonica SA's asset turnover of this year was 0.25642959. Telefonica SA's asset turnover of last year was 0.26579154. ==> 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
=1+0+1+0+1+0+0+0+0
=3

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

Telefonica SA has an F-score of 3. 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.

Telefonica SA Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111111
Question 2 0001111110
Question 3 1110010001
Question 4 0001111110
Question 5 0011011011
Question 6 1110101110
Question 7 0111110101
Question 8 0001111001
Question 9 1101001001
F-score 4557677556

Telefonica SA Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
Question 1 1111111111
Question 2 1111000000
Question 3 1000111111
Question 4 1111000000
Question 5 0111111111
Question 6 1111110100
Question 7 0000001000
Question 8 1001111110
Question 9 1000111100
F-score 7556666643
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