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TE Connectivity Ltd (NYSE:TEL)
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

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

TEL' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 6

3
8

During the past 13 years, the highest Piotroski F-Score of TE Connectivity Ltd was 8. The lowest was 3. And the median was 7.


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 (Mar15) TTM:Last Year (Mar14) TTM:
Net Income was 403 + 663 + 472 + 599 = $2,137 Mil.
Cash Flow from Operations was 500 + 749 + 295 + 398 = $1,942 Mil.
Revenue was 3580 + 3575 + 3466 + 3082 = $13,703 Mil.
Gross Profit was 1204 + 1198 + 1171 + 1051 = $4,624 Mil.
Average Total Assets from the begining of this year (Mar14)
to the end of this year (Mar15) was
(18628 + 18871 + 20152 + 20153 + 20243) / 5 = $19609.4 Mil.
Total Assets at the begining of this year (Mar14) was $18,628 Mil.
Long-Term Debt was $3,390 Mil.
Total Current Assets was $7,612 Mil.
Total Current Liabilities was $4,141 Mil.
Net Income was 335 + 387 + 353 + 362 = $1,437 Mil.

Revenue was 3449 + 3432 + 3326 + 3431 = $13,638 Mil.
Gross Profit was 1132 + 1156 + 1117 + 1173 = $4,578 Mil.
Average Total Assets from the begining of last year (Mar13)
to the end of last year (Mar14) was
(18140 + 18090 + 18461 + 18443 + 18628) / 5 = $18352.4 Mil.
Total Assets at the begining of last year (Mar13) was $18,140 Mil.
Long-Term Debt was $2,370 Mil.
Total Current Assets was $6,566 Mil.
Total Current Liabilities was $4,087 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.

TE Connectivity Ltd's current net income (TTM) was 2,137. ==> 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.

TE Connectivity Ltd's current cash flow from operations (TTM) was 1,942. ==> 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.

TE Connectivity Ltd's return on assets of this year was 0.11471978. TE Connectivity Ltd's return on assets of last year was 0.0792172. ==> 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.

TE Connectivity Ltd's current net income (TTM) was 2,137. TE Connectivity Ltd's current cash flow from operations (TTM) was 1,942. ==> 1,942 <= 2,137 ==> 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: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=3390/19609.4
=0.17287627

Gearing (Last Year: Mar14)=Long-Term Debt/Average Total Assets from Mar13 to Mar14
=2370/18352.4
=0.12913842

TE Connectivity Ltd's gearing of this year was 0.17287627. TE Connectivity Ltd's gearing of last year was 0.12913842. ==> 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: Mar15)=Total Current Assets/Total Current Liabilities
=7612/4141
=1.83820333

Current Ratio (Last Year: Mar14)=Total Current Assets/Total Current Liabilities
=6566/4087
=1.60655738

TE Connectivity Ltd's current ratio of this year was 1.83820333. TE Connectivity Ltd's current ratio of last year was 1.60655738. ==> 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.

TE Connectivity Ltd's number of shares in issue this year was 413. TE Connectivity Ltd's number of shares in issue last year was 417. ==> 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
=4624/13703
=0.33744436

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=4578/13638
=0.33567972

TE Connectivity Ltd's gross margin of this year was 0.33744436. TE Connectivity Ltd's gross margin of last year was 0.33567972. ==> 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 (Mar14)
=13703/18628
=0.73561306

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar13)
=13638/18140
=0.75181918

TE Connectivity Ltd's asset turnover of this year was 0.73561306. TE Connectivity Ltd's asset turnover of last year was 0.75181918. ==> 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+1+1+0+0+1+1+1+0
=6

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

TE Connectivity 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.

TE Connectivity Ltd Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
Question 1 101011111
Question 2 111111111
Question 3 101011011
Question 4 110111111
Question 5 011100110
Question 6 101001001
Question 7 111111111
Question 8 001010011
Question 9 110011001
F-score 757477578

TE Connectivity Ltd Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Question 1 1111111111
Question 2 1111111111
Question 3 0011111111
Question 4 1111111110
Question 5 0111100000
Question 6 1000111101
Question 7 1111111111
Question 8 1111111111
Question 9 0000011110
F-score 6677888876
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