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GuruFocus has detected 3 Warning Signs with Overstock.com Inc $OSTK.
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Overstock.com Inc (NAS:OSTK)
Piotroski F-Score
4 (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

Overstock.com Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

OSTK' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Max: 8
Current: 4

1
8

During the past 13 years, the highest Piotroski F-Score of Overstock.com Inc was 8. The lowest was 1. 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 local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Net Income was -0.904 + -3.098 + 3.095 + -5.903 = $-7 Mil.
Cash Flow from Operations was 7.521 + 11.543 + 55.003 + -23.097 = $51 Mil.
Revenue was 418.54 + 441.564 + 526.182 + 432.435 = $1,819 Mil.
Gross Profit was 76.322 + 79.716 + 98.004 + 86.907 = $341 Mil.
Average Total Assets from the begining of this year (Mar16)
to the end of this year (Mar17) was
(392.058 + 414.822 + 424.276 + 485.076 + 441.301) / 5 = $431.5066 Mil.
Total Assets at the begining of this year (Mar16) was $392 Mil.
Long-Term Debt was $55 Mil.
Total Current Assets was $191 Mil.
Total Current Liabilities was $213 Mil.
Net Income was 1.668 + -2.071 + 0.11 + 13.429 = $13 Mil.

Revenue was 388.013 + 391.211 + 480.27 + 413.677 = $1,673 Mil.
Gross Profit was 73.657 + 72.451 + 83.109 + 77.307 = $307 Mil.
Average Total Assets from the begining of last year (Mar15)
to the end of last year (Mar16) was
(320.398 + 320.77 + 331.806 + 428.389 + 392.058) / 5 = $358.6842 Mil.
Total Assets at the begining of last year (Mar15) was $320 Mil.
Long-Term Debt was $27 Mil.
Total Current Assets was $197 Mil.
Total Current Liabilities was $194 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.

Overstock.com Inc's current net income (TTM) was -7. ==> 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.

Overstock.com Inc's current cash flow from operations (TTM) was 51. ==> 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 (Mar16)
=-6.81/392.058
=-0.01736988

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=13.136/320.398
=0.04099901

Overstock.com Inc's return on assets of this year was -0.01736988. Overstock.com Inc's return on assets of last year was 0.04099901. ==> 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.

Overstock.com Inc's current net income (TTM) was -7. Overstock.com Inc's current cash flow from operations (TTM) was 51. ==> 51 > -7 ==> 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: Mar17)=Long-Term Debt/Average Total Assets from Mar16 to Mar17
=54.924/431.5066
=0.12728426

Gearing (Last Year: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=26.633/358.6842
=0.07425195

Overstock.com Inc's gearing of this year was 0.12728426. Overstock.com Inc's gearing of last year was 0.07425195. ==> 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: Mar17)=Total Current Assets/Total Current Liabilities
=190.638/212.564
=0.89684989

Current Ratio (Last Year: Mar16)=Total Current Assets/Total Current Liabilities
=196.876/194.406
=1.01270537

Overstock.com Inc's current ratio of this year was 0.89684989. Overstock.com Inc's current ratio of last year was 1.01270537. ==> 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.

Overstock.com Inc's number of shares in issue this year was 25.3. Overstock.com Inc's number of shares in issue last year was 25.3. ==> 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
=340.949/1818.721
=0.18746636

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=306.524/1673.171
=0.18319945

Overstock.com Inc's gross margin of this year was 0.18746636. Overstock.com Inc's gross margin of last year was 0.18319945. ==> 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 (Mar16)
=1818.721/392.058
=4.63890802

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=1673.171/320.398
=5.22216431

Overstock.com Inc's asset turnover of this year was 4.63890802. Overstock.com Inc's asset turnover of last year was 5.22216431. ==> 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+1+0
=4

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

Overstock.com Inc has an F-score of 4 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 local exchange's currency.

Overstock.com Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Question 1 0011011111
Question 2 1111111111
Question 3 1111011001
Question 4 1111110111
Question 5 0011111100
Question 6 0000011001
Question 7 0100100100
Question 8 1110011001
Question 9 1111011000
F-score 5676487536

Overstock.com Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Question 1 1111111110
Question 2 1111111111
Question 3 0000011110
Question 4 1111111111
Question 5 1111000000
Question 6 0000000110
Question 7 1000000001
Question 8 0000000011
Question 9 0000000000
F-score 5444344564
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