The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.
TECO Energy has a Altman Z-Score of 1.12, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.
The zones of discrimination were as such:
When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.
The historical rank and industry rank for TECO Energy's Altman Z-Score or its related term are showing as below:
TECO Energy Altman Z-Score Historical Data
The historical data trend for TECO Energy's Altman Z-Score can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of TECO Energy's Altman Z-Score
For the Utilities - Regulated Electric subindustry, TECO Energy's Altman Z-Score, along with its competitors' market caps and Altman Z-Score data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
TECO Energy's Altman Z-Score Distribution in the Utilities - Regulated Industry
For the Utilities - Regulated industry and Utilities sector, TECO Energy's Altman Z-Score distribution charts can be found below:
* The bar in red indicates where TECO Energy's Altman Z-Score falls into.
TECO Energy Altman Z-Score Calculation
Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.
TECO Energy's Altman Z-Score for today is calculated with this formula:
Z
=
1.2
*
X1
+
1.4
*
X2
+
3.3
*
X3
+
0.6
*
X4
+
1.0
*
X5
=
1.2
*
-0.0728
+
1.4
*
0.0516
+
3.3
*
0.0662
+
0.6
*
1.0175
+
1.0
*
0.3017
=
1.12
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.
Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones
TECO Energy has a Altman Z-Score of 1.12 indicating it is in Distress Zones.
Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.
TECO Energy (NYSE:TE) Altman Z-Score Explanation
X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.
X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.
X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.
X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.
X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.
Altman Z-Score does not apply to financial companies.
TECO Energy Altman Z-Score Related Terms
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TECO Energy Inc was incorporated in Florida in 1981 as part of a restructuring in which it became the parent corporation of Tampa Electric Company. The Company is an energy-related holding company with five core businesses, consisting of regulated electric and gas utility operations in Florida and other operating companies engaged in coal mining and synthetic fuel production, waterborne transportation services and unregulated electric generation with long-term contracts and regulated electricity distribution in Guatemala. In 2000 and 2001, the Company announced a series of investments in unregulated domestic power generation facilities outside of Florida, which were made in the 2000 through 2003 period. In the same period, the Company also invested in other smaller unregulated energy service providers within Florida. These investments were made in anticipation of a movement toward competitive energy markets in Florida and other states in which the Company was investing in new power plants. In 2003, the Company announced its revised business strategy, which was to focus on its Florida utilities and other profitable operating companies and to reduce the risk to cash flow and earnings from its involvement in the merchant power sector. Since that announcement, the Company has taken a number of steps that have eliminated its merchant power risk and improved its financial results. The Company's regulated utility companies, Tampa Electric and Peoples Gas operate in the high-growth Florida market. Tampa Electric serves almost 720,000 retail customers in a 2,000-square-mile service area in West Central Florida and has electric generating plants with a winter peak generating capacity of 4,730 MW. PGS, Florida's largest gas distribution utility, serves more than 360,000 residential, commercial, industrial and electric power generating customers in all major metropolitan areas of the state, with a total natural gas throughput of almost 1.8 billion therms in 2015.. Peoples Gas System, a division of Tampa Electric Company, is engaged in the purchase and distribution of natural gas for residential, commercial, industrial and electric power generation customers in Florida. The Company's other energy-related operating companies are: TECO Coal, TECO Transport and TECO Guatemala. TECO Coal, through its subsidiaries, operates 13 surface and 27 underground mines and related coal processing facilities in eastern Kentucky, Tennessee and southwestern Virginia producing metallurgical-grade and high-quality steam coals. TECO Transport, the Company's waterborne transportation company, through its subsidiaries, operates a fleet of inland river barges and towboats on the Ohio, Mississippi and Illinois rivers and their tributaries; a fleet of eight oceangoing tug-barge combination units and three ships that operate in the Gulf of Mexico and world wide; and a dry-bulk storage and transfer terminal located on the Mississippi River southeast of New Orleans. TECO
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