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GuruFocus has detected 3 Warning Signs with TE Connectivity Ltd $TEL.
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TE Connectivity Ltd (NYSE:TEL)
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

TE Connectivity Ltd has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

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

3
8

During the past 13 years, the highest Piotroski F-Score of TE Connectivity Ltd was 8. The lowest was 3. And the median was 7.


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 839 + 437 + 409 + 405 = $2,090 Mil.
Cash Flow from Operations was 693 + 684 + 404 + 521 = $2,302 Mil.
Revenue was 3121 + 3332 + 3063 + 3227 = $12,743 Mil.
Gross Profit was 1022 + 1104 + 1065 + 1108 = $4,299 Mil.
Average Total Assets from the begining of this year (Mar16)
to the end of this year (Mar17) was
(17841 + 17500 + 17608 + 17615 + 18056) / 5 = $17724 Mil.
Total Assets at the begining of this year (Mar16) was $17,841 Mil.
Long-Term Debt was $3,073 Mil.
Total Current Assets was $5,146 Mil.
Total Current Liabilities was $3,935 Mil.
Net Income was 309 + 1040 + 353 + 380 = $2,082 Mil.

Revenue was 3118 + 2984 + 2833 + 2952 = $11,887 Mil.
Gross Profit was 1048 + 968 + 945 + 962 = $3,923 Mil.
Average Total Assets from the begining of last year (Mar15)
to the end of last year (Mar16) was
(20243 + 20441 + 20589 + 19223 + 17841) / 5 = $19667.4 Mil.
Total Assets at the begining of last year (Mar15) was $20,243 Mil.
Long-Term Debt was $3,732 Mil.
Total Current Assets was $5,414 Mil.
Total Current Liabilities was $3,097 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.

TE Connectivity Ltd's current net income (TTM) was 2,090. ==> 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.

TE Connectivity Ltd's current cash flow from operations (TTM) was 2,302. ==> 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.

TE Connectivity Ltd's return on assets of this year was 0.1171459. TE Connectivity Ltd's return on assets of last year was 0.10285037. ==> 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.

TE Connectivity Ltd's current net income (TTM) was 2,090. TE Connectivity Ltd's current cash flow from operations (TTM) was 2,302. ==> 2,302 > 2,090 ==> 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
=3073/17724
=0.17338073

Gearing (Last Year: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=3732/19667.4
=0.18975564

TE Connectivity Ltd's gearing of this year was 0.17338073. TE Connectivity Ltd's gearing of last year was 0.18975564. ==> This year is lower or equal to last year. ==> Score 1.

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
=5146/3935
=1.30775095

Current Ratio (Last Year: Mar16)=Total Current Assets/Total Current Liabilities
=5414/3097
=1.74814336

TE Connectivity Ltd's current ratio of this year was 1.30775095. TE Connectivity Ltd's current ratio of last year was 1.74814336. ==> 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.

TE Connectivity Ltd's number of shares in issue this year was 359. TE Connectivity Ltd's number of shares in issue last year was 368. ==> 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
=4299/12743
=0.33736169

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3923/11887
=0.3300244

TE Connectivity Ltd's gross margin of this year was 0.33736169. TE Connectivity Ltd's gross margin of last year was 0.3300244. ==> 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)
=12743/17841
=0.71425369

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=11887/20243
=0.58721533

TE Connectivity Ltd's asset turnover of this year was 0.71425369. TE Connectivity Ltd's asset turnover of last year was 0.58721533. ==> 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+1+0+1+1+1
=8

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

TE Connectivity Ltd 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.


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.

TE Connectivity Ltd Annual Data

Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
Question 1 101111111
Question 2 111111111
Question 3 101101110
Question 4 011111100
Question 5 110011010
Question 6 100100100
Question 7 111111111
Question 8 101001110
Question 9 001100100
F-score 747757863

TE Connectivity Ltd Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Question 1 1111111111
Question 2 1111111111
Question 3 1111101001
Question 4 1000000001
Question 5 0001100011
Question 6 0110100000
Question 7 1111111111
Question 8 1111100001
Question 9 1110000011
F-score 7776734358
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