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Applied Materials Inc  (NAS:AMAT) Piotroski F-Score: 8 (As of Today)

Good Sign:

Piotroski F-Score of 8 is 8, indicating very healthy situation.

The zones of discrimination were as such:

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

Applied Materials Inc has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

NAS:AMAT' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Max: 9
Current: 8

1
9

During the past 13 years, the highest Piotroski F-Score of Applied Materials Inc was 9. The lowest was 1. And the median was 6.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Applied Materials Inc Annual Data

Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.00 7.00 8.00 4.00 7.00

Applied Materials Inc Quarterly Data

Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.00 7.00 8.00 8.00 8.00

Competitive Comparison
* 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.

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jul17) TTM:Last Year (Jul16) TTM:
Net Income was 610 + 703 + 824 + 925 = $3,062 Mil.
Cash Flow from Operations was 797 + 646 + 898 + 1366 = $3,707 Mil.
Revenue was 3297 + 3278 + 3546 + 3744 = $13,865 Mil.
Gross Profit was 1399 + 1445 + 1600 + 1700 = $6,144 Mil.
Average Total Assets from the begining of this year (Jul16)
to the end of this year (Jul17) was
(13699 + 14588 + 15244 + 18240 + 19078) / 5 = $16169.8 Mil.
Total Assets at the begining of this year ({FiscalYear0}) was $13,699 Mil.
Long-Term Debt & Capital Lease Obligation was $5,303 Mil.
Total Current Assets was $12,731 Mil.
Total Current Liabilities was $4,371 Mil.
Total Assets was 336 + 286 + 320 + 505 = $1,447 Mil.

Revenue was 2368 + 2257 + 2450 + 2821 = $9,896 Mil.
Gross Profit was 959 + 916 + 1004 + 1192 = $4,071 Mil.
Average Total Assets from the begining of last year (Jul15)
to the end of last year (Jul16) was
(13153 + 15308 + 13326 + 13075 + 13699) / 5 = $13712.2 Mil.
Total Assets at the begining of last year (Jul15) was $13,153 Mil.
Long-Term Debt & Capital Lease Obligation was $3,343 Mil.
Total Current Assets was $7,399 Mil.
Total Current Liabilities was $2,964 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.

Applied Materials Inc's current Net Income (TTM) was {NetIncome0_f}. ==> 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.

Applied Materials Inc's current Cash Flow from Operations (TTM) was 3,707. ==> 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/Total Assets(Jul16)
=3062/13699
=0.22351996

ROA (Last Year)=Net Income/Total Assets(Jul15)
=1447/13153
=0.11001292

Applied Materials Inc's return on assets of this year was 0.22351996. Applied Materials Inc's return on assets of last year was 0.11001292. ==> 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.

Applied Materials Inc's current Net Income (TTM) was 3,062. Applied Materials Inc's current Cash Flow from Operations (TTM) was 3,707. ==> 3,707 > 3,062 ==> 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: Jul17)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Jul16 to Jul17
=5303/16169.8
=0.32795706

Gearing (Last Year: Jul16)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Jul15 to Jul16
=3343/13712.2
=0.24379749

Applied Materials Inc's gearing of this year was 0.32795706. Applied Materials Inc's gearing of last year was 0.24379749. ==> 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: Jul17)=Total Current Assets/Total Current Liabilities
=12731/4371
=2.91260581

Current Ratio (Last Year: Jul16)=Total Current Assets/Total Current Liabilities
=7399/2964
=2.4962888

Applied Materials Inc's current ratio of this year was 2.91260581. Applied Materials Inc's current ratio of last year was 2.4962888. ==> 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.

Applied Materials Inc's number of shares in issue this year was 1083. Applied Materials Inc's number of shares in issue last year was 1093. ==> 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
=6144/13865
=0.44313018

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=4071/9896
=0.41137833

Applied Materials Inc's gross margin of this year was 0.44313018. Applied Materials Inc's gross margin of last year was 0.41137833. ==> 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/Total Assets at the Beginning of This Year (Jul16)
=13865/13699
=1.01211767

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jul15)
=9896/13153
=0.75237588

Applied Materials Inc's asset turnover of this year was 1.01211767. Applied Materials Inc's asset turnover of last year was 0.75237588. ==> This year's asset turnover is higher. ==> Score 1.

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+1+0+1+1+1+1
=8

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

Applied Materials Inc has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

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.


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