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Avery Dennison Corp (NYSE:AVY)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Avery Dennison Corp has an F-score of 7 indicating the company's financial situation is typical for a stable company.

AVY' s 10-Year Piotroski F-Score Range
Min: 4   Max: 8
Current: 7

4
8

During the past 13 years, the highest Piotroski F-Score of Avery Dennison Corp was 8. The lowest was 4. And the median was 6.


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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 42.7 + 46.5 + 68.8 + 57.8 = $216 Mil.
Cash Flow from Operations was 224.4 + 49 + 112.4 + -65.7 = $320 Mil.
Revenue was 1583.9 + 1504.9 + 1552.3 + 1498.9 = $6,140 Mil.
Gross Profit was 416.3 + 402.2 + 417.5 + 401.7 = $1,638 Mil.
Total Assets at the begining of this year (Dec12) was $5,105 Mil.
Total Assets was $4,611 Mil.
Long-Term Debt was $951 Mil.
Total Current Assets was $2,092 Mil.
Total Current Liabilities was $1,554 Mil.
Net Income was 49 + 58.3 + 64.2 + 43.9 = $215 Mil.

Revenue was 1483.1 + 1447 + 1490.4 + 1443 = $5,864 Mil.
Gross Profit was 382 + 381 + 388.1 + 377.1 = $1,528 Mil.
Total Assets at the begining of last year (Dec11) was $4,973 Mil.
Total Assets was $5,105 Mil.
Long-Term Debt was $702 Mil.
Total Current Assets was $2,412 Mil.
Total Current Liabilities was $2,075 Mil.

Profitability

Q1. 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.

Avery Dennison Corp's current net income was 216. ==> Positive ==> Score 1.

Q2. 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.

Avery Dennison Corp's current cash flow from operations was 320. ==> Positive ==> Score 1.

Q3. 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 at the beginning of this year (Dec12)
=215.8/5105.3
=0.0422698

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=215.4/4972.7
=0.04331651

Avery Dennison Corp's return on assets of this year was 0.0422698. Avery Dennison Corp's return on assets of last year was 0.04331651. ==> Last year is higher ==> Score 0.

Q4. 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.

Avery Dennison Corp's current net income was 216. Avery Dennison Corp's current cash flow from operations was 320. ==> 320 > 216 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=950.6/4610.6
=0.20617707

Gearing (Last Year)=Long-Term Debt/Total Assets
=702.2/5105.3
=0.13754334

Avery Dennison Corp's gearing of this year was 0.20617707. Avery Dennison Corp's gearing of last year was 0.13754334. ==> Last year is lower ==> Score 0.

Q6. 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)=Total Current Assets/Total Current Liabilities
=2091.8/1554.1
=1.34598803

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=2411.7/2074.5
=1.16254519

Avery Dennison Corp's current ratio of this year was 1.34598803. Avery Dennison Corp's current ratio of last year was 1.16254519. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Avery Dennison Corp's number of shares in issue this year was 98.3. Avery Dennison Corp's number of shares in issue last year was 101.4. ==> There is the same number of shares in issue this year, or fewer. ==> Score 1.

Efficiency

Q8. 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)=Gross Profit/Revenue
=1637.7/6140
=0.26672638

Gross Margin (Last Year)=Gross Profit/Revenue
=1528.2/5863.5
=0.26062932

Avery Dennison Corp's gross margin of this year was 0.26672638. Avery Dennison Corp's gross margin of last year was 0.26062932. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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 (Dec12)
=6140/5105.3
=1.20267173

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=5863.5/4972.7
=1.17913809

Avery Dennison Corp's asset turnover of this year was 1.20267173. Avery Dennison Corp's asset turnover of last year was 1.17913809. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+0+1+1+1+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Avery Dennison Corp has an F-score of 7 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.

Avery Dennison Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111101111
Q2 1111111111
Q3 0010001010
Q4 1111111111
Q5 0110011010
Q6 1000101101
Q7 0011100011
Q8 0010010011
Q9 0011001101
F-score 4485547577

Avery Dennison Corp Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 1000011110
Q4 1111111111
Q5 1011111000
Q6 1110001111
Q7 1011111111
Q8 0001111111
Q9 0100101111
F-score 7566779887
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