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Weatherford International PLC (NYSE:WFT)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 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

Weatherford International PLC has an F-score of 3. It is a bad or low score, which usually implies poor business operation.

WFT' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 8
Current: 3

2
8

During the past 13 years, the highest Piotroski F-Score of Weatherford International PLC 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 -475 + -118 + -489 + -170 = $-1,252 Mil.
Cash Flow from Operations was 584 + -42 + 291 + 134 = $967 Mil.
Revenue was 3727 + 2794 + 2390 + 2237 = $11,148 Mil.
Gross Profit was 819 + 592 + 374 + 368 = $2,153 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(20727 + 18889 + 18223 + 17634 + 16799) / 5 = $18454.4 Mil.
Total Assets at the begining of this year (Sep14) was $20,727 Mil.
Long-Term Debt was $6,020 Mil.
Total Current Assets was $6,515 Mil.
Total Current Liabilities was $4,025 Mil.
Net Income was -271 + -41 + -145 + 77 = $-380 Mil.

Revenue was 3738 + 3596 + 3711 + 3877 = $14,922 Mil.
Gross Profit was 604 + 757 + 882 + 992 = $3,235 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(22937 + 21977 + 21830 + 21813 + 20727) / 5 = $21856.8 Mil.
Total Assets at the begining of last year (Sep13) was $22,937 Mil.
Long-Term Debt was $7,004 Mil.
Total Current Assets was $8,927 Mil.
Total Current Liabilities was $4,878 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.

Weatherford International PLC's current net income (TTM) was -1,252. ==> 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.

Weatherford International PLC's current cash flow from operations (TTM) was 967. ==> 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.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Sep14)
=-1252/20727
=-0.0604043

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=-380/22937
=-0.01656712

Weatherford International PLC's return on assets of this year was -0.0604043. Weatherford International PLC's return on assets of last year was -0.01656712. ==> 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.

Weatherford International PLC's current net income (TTM) was -1,252. Weatherford International PLC's current cash flow from operations (TTM) was 967. ==> 967 > -1,252 ==> 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: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=6020/18454.4
=0.32620947

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=7004/21856.8
=0.32044947

Weatherford International PLC's gearing of this year was 0.32620947. Weatherford International PLC's gearing of last year was 0.32044947. ==> 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: Sep15)=Total Current Assets/Total Current Liabilities
=6515/4025
=1.61863354

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=8927/4878
=1.8300533

Weatherford International PLC's current ratio of this year was 1.61863354. Weatherford International PLC's current ratio of last year was 1.8300533. ==> 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.

Weatherford International PLC's number of shares in issue this year was 779. Weatherford International PLC's number of shares in issue last year was 784. ==> 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
=2153/11148
=0.19312881

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3235/14922
=0.216794

Weatherford International PLC's gross margin of this year was 0.19312881. Weatherford International PLC's gross margin of last year was 0.216794. ==> 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)
=11148/20727
=0.53784918

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=14922/22937
=0.65056459

Weatherford International PLC's asset turnover of this year was 0.53784918. Weatherford International PLC's asset turnover of last year was 0.65056459. ==> 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+1+0+1+0+0+1+0+0
=3

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

Weatherford International PLC 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.

Weatherford International PLC Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111101000
Question 2 1111111111
Question 3 1111001010
Question 4 1100111111
Question 5 1000001010
Question 6 0110110011
Question 7 0101000000
Question 8 1100000001
Question 9 1010011101
F-score 7754446355

Weatherford International PLC Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 000000000
Question 2 111111111
Question 3 111000000
Question 4 111111111
Question 5 111000100
Question 6 010111110
Question 7 000000001
Question 8 000011110
Question 9 000001000
F-score 454345543
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