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Avon Products Inc (NYSE:AVP)
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

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

AVP' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 3

3
8

During the past 13 years, the highest Piotroski F-Score of Avon Products Inc was 8. The lowest was 3. 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 (Jun15) TTM:Last Year (Jun14) TTM:
Net Income was 91.4 + -330.7 + -147.3 + 28.8 = $-358 Mil.
Cash Flow from Operations was 132.9 + 234 + -198.1 + 88.2 = $257 Mil.
Revenue was 2138.2 + 2341 + 1794.2 + 1823.4 = $8,097 Mil.
Gross Profit was 1324.3 + 1421.7 + 1086.9 + 1110 = $4,943 Mil.
Average Total Assets from the begining of this year (Jun14)
to the end of this year (Jun15) was
(6115.2 + 6090.4 + 5496.8 + 4872.3 + 4988.6) / 5 = $5512.66 Mil.
Total Assets at the begining of this year (Jun14) was $6,115 Mil.
Long-Term Debt was $2,204 Mil.
Total Current Assets was $2,863 Mil.
Total Current Liabilities was $2,088 Mil.
Net Income was -5.5 + -69.1 + -168.3 + 19 = $-224 Mil.

Revenue was 2322.9 + 2667.2 + 2183.6 + 2188.6 = $9,362 Mil.
Gross Profit was 1451.2 + 1627.2 + 1228.2 + 1377.9 = $5,685 Mil.
Average Total Assets from the begining of last year (Jun13)
to the end of last year (Jun14) was
(6685.3 + 6528.3 + 6492.3 + 6084.9 + 6115.2) / 5 = $6381.2 Mil.
Total Assets at the begining of last year (Jun13) was $6,685 Mil.
Long-Term Debt was $2,480 Mil.
Total Current Assets was $3,041 Mil.
Total Current Liabilities was $2,108 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.

Avon Products Inc's current net income (TTM) was -358. ==> 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.

Avon Products Inc's current cash flow from operations (TTM) was 257. ==> 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 (Jun14)
=-357.8/6115.2
=-0.05850994

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=-223.9/6685.3
=-0.03349139

Avon Products Inc's return on assets of this year was -0.05850994. Avon Products Inc's return on assets of last year was -0.03349139. ==> 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.

Avon Products Inc's current net income (TTM) was -358. Avon Products Inc's current cash flow from operations (TTM) was 257. ==> 257 > -358 ==> 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: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=2203.6/5512.66
=0.39973443

Gearing (Last Year: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=2480/6381.2
=0.38864163

Avon Products Inc's gearing of this year was 0.39973443. Avon Products Inc's gearing of last year was 0.38864163. ==> 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: Jun15)=Total Current Assets/Total Current Liabilities
=2862.7/2087.5
=1.37135329

Current Ratio (Last Year: Jun14)=Total Current Assets/Total Current Liabilities
=3040.5/2107.5
=1.44270463

Avon Products Inc's current ratio of this year was 1.37135329. Avon Products Inc's current ratio of last year was 1.44270463. ==> 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.

Avon Products Inc's number of shares in issue this year was 0. Avon Products Inc's number of shares in issue last year was 434.6. ==> 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
=4942.9/8096.8
=0.61047574

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=5684.5/9362.3
=0.60716918

Avon Products Inc's gross margin of this year was 0.61047574. Avon Products Inc's gross margin of last year was 0.60716918. ==> 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 (Jun14)
=8096.8/6115.2
=1.324045

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=9362.3/6685.3
=1.4004308

Avon Products Inc's asset turnover of this year was 1.324045. Avon Products Inc's asset turnover of last year was 1.4004308. ==> 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

Avon Products 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 own currency.

Avon Products Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111000
Question 2 1111111111
Question 3 0011000000
Question 4 1110111111
Question 5 1000011000
Question 6 0101101110
Question 7 1111010000
Question 8 0001011010
Question 9 0010000001
F-score 5566466343

Avon Products Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Question 1 0000000000
Question 2 1111111111
Question 3 0000001000
Question 4 1111111111
Question 5 0000000000
Question 6 1111100000
Question 7 0000010000
Question 8 0011000011
Question 9 0100011110
F-score 3444344343
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