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Western Digital Corp (NAS:WDC)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

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

WDC' s 10-Year Piotroski F-Score Range
Min: 1   Max: 8
Current: 6

1
8

During the past 13 years, the highest Piotroski F-Score of Western Digital Corp was 8. The lowest was 1. 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 317 + 375 + 430 + 495 = $1,617 Mil.
Cash Flow from Operations was 712 + 698 + 726 + 680 = $2,816 Mil.
Revenue was 3651 + 3703 + 3972 + 3804 = $15,130 Mil.
Gross Profit was 1071 + 1060 + 1141 + 1088 = $4,360 Mil.
Total Assets at the begining of this year (Jun13) was $14,036 Mil.
Total Assets was $15,499 Mil.
Long-Term Debt was $2,313 Mil.
Total Current Assets was $8,720 Mil.
Total Current Liabilities was $3,845 Mil.
Net Income was -265 + 391 + 335 + 519 = $980 Mil.

Revenue was 3728 + 3764 + 3824 + 4035 = $15,351 Mil.
Gross Profit was 1050 + 1061 + 1059 + 1193 = $4,363 Mil.
Total Assets at the begining of last year (Jun12) was $14,206 Mil.
Total Assets was $14,036 Mil.
Long-Term Debt was $1,725 Mil.
Total Current Assets was $7,598 Mil.
Total Current Liabilities was $3,973 Mil.

Profitability

Q1. 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.

Western Digital Corp's current net income was 1,617. ==> Positive ==> Score 1.

Q2. 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.

Western Digital Corp's current cash flow from operations was 2,816. ==> Positive ==> Score 1.

Q3. 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/Total Assets at the beginning of this year (Jun13)
=1617/14036
=0.11520376

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jun12)
=980/14206
=0.06898494

Western Digital Corp's return on assets of this year was 0.11520376. Western Digital Corp's return on assets of last year was 0.06898494. ==> This year is higher. ==> Score 1.

Q4. 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.

Western Digital Corp's current net income was 1,617. Western Digital Corp's current cash flow from operations was 2,816. ==> 2,816 > 1,617 ==> CFROA > ROA ==> Score 1.

Funding

Q5. 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)=Long-Term Debt/Total Assets
=2313/15499
=0.14923543

Gearing (Last Year)=Long-Term Debt/Total Assets
=1725/14036
=0.12289826

Western Digital Corp's gearing of this year was 0.14923543. Western Digital Corp's gearing of last year was 0.12289826. ==> Last year is lower than this year ==> Score 0.

Q6. 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)=Total Current Assets/Total Current Liabilities
=8720/3845
=2.26788036

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=7598/3973
=1.91240876

Western Digital Corp's current ratio of this year was 2.26788036. Western Digital Corp's current ratio of last year was 1.91240876. ==> This year's current ratio is higher. ==> Score 1.

Q7. 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.

Western Digital Corp's number of shares in issue this year was 242. Western Digital Corp's number of shares in issue last year was 240. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Q8. 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)=Gross Profit/Revenue
=4360/15130
=0.2881692

Gross Margin (Last Year)=Gross Profit/Revenue
=4363/15351
=0.28421601

Western Digital Corp's gross margin of this year was 0.2881692. Western Digital Corp's gross margin of last year was 0.28421601. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Jun13)
=15130/14036
=1.07794243

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jun12)
=15351/14206
=1.08059975

Western Digital Corp's asset turnover of this year was 1.07794243. Western Digital Corp's asset turnover of last year was 1.08059975. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+0+1+0+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Western Digital Corp 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.

Western Digital Corp Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
Q1 1111111111
Q2 1111111111
Q3 0111010101
Q4 1111111111
Q5 1110111010
Q6 0110111011
Q7 0001100001
Q8 1101010101
Q9 0001010100
F-score 5767685657

Western Digital Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 1111100001
Q4 1111111111
Q5 0000111100
Q6 0000110001
Q7 0000111110
Q8 1111100001
Q9 0111000000
F-score 5666865546
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