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Avery Dennison Corp (NYSE:AVY)
Piotroski F-Score
6 (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

Avery Dennison Corp has an F-score of 6 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: 6

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 (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was 71.2 + 42.5 + 64.3 + 70.9 = $249 Mil.
Cash Flow from Operations was -108 + 117.8 + 190.4 + 174 = $374 Mil.
Revenue was 1550.1 + 1615.8 + 1559.6 + 1604.8 = $6,330 Mil.
Gross Profit was 407.2 + 428.2 + 400.7 + 415.1 = $1,651 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(4610.6 + 4591.3 + 4616.6 + 4493.5 + 4360.2) / 5 = $4534.44 Mil.
Total Assets at the begining of this year (Dec13) was $4,611 Mil.
Long-Term Debt was $945 Mil.
Total Current Assets was $1,921 Mil.
Total Current Liabilities was $1,598 Mil.
Net Income was 57.8 + 68.8 + 46.5 + 42.7 = $216 Mil.

Revenue was 1498.9 + 1552.3 + 1504.9 + 1583.9 = $6,140 Mil.
Gross Profit was 401.7 + 417.5 + 402.2 + 416.3 = $1,638 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(5105.3 + 5137.6 + 5191 + 4732.8 + 4610.6) / 5 = $4955.46 Mil.
Total Assets at the begining of last year (Dec12) was $5,105 Mil.
Long-Term Debt was $951 Mil.
Total Current Assets was $2,092 Mil.
Total Current Liabilities was $1,554 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.

Avery Dennison Corp's current net income (TTM) was 249. ==> 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.

Avery Dennison Corp's current cash flow from operations (TTM) was 374. ==> 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 (Dec13)
=248.9/4610.6
=0.0539843

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=215.8/5105.3
=0.0422698

Avery Dennison Corp's return on assets of this year was 0.0539843. Avery Dennison Corp's return on assets of last year was 0.0422698. ==> 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.

Avery Dennison Corp's current net income (TTM) was 249. Avery Dennison Corp's current cash flow from operations (TTM) was 374. ==> 374 > 249 ==> 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: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=945.3/4534.44
=0.20847117

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=950.6/4955.46
=0.19182881

Avery Dennison Corp's gearing of this year was 0.20847117. Avery Dennison Corp's gearing of last year was 0.19182881. ==> 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: Dec14)=Total Current Assets/Total Current Liabilities
=1921.3/1597.8
=1.20246589

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=2091.8/1554.1
=1.34598803

Avery Dennison Corp's current ratio of this year was 1.20246589. Avery Dennison Corp's current ratio of last year was 1.34598803. ==> 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.

Avery Dennison Corp's number of shares in issue this year was 93. Avery Dennison Corp's number of shares in issue last year was 98.3. ==> 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
=1651.2/6330.3
=0.26084072

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1637.7/6140
=0.26672638

Avery Dennison Corp's gross margin of this year was 0.26084072. Avery Dennison Corp's gross margin of last year was 0.26672638. ==> Last year's gross margin is higher ==> Score 0.

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 (Dec13)
=6330.3/4610.6
=1.37298833

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=6140/5105.3
=1.20267173

Avery Dennison Corp's asset turnover of this year was 1.37298833. Avery Dennison Corp's asset turnover of last year was 1.20267173. ==> 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+0+1+0+1
=6

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

Avery Dennison Corp has an F-score of 6 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111011111
Question 2 1111111111
Question 3 0100010101
Question 4 1111111111
Question 5 1100110100
Question 6 0001011010
Question 7 1111001111
Question 8 0100110110
Question 9 0110010101
F-score 5855485866

Avery Dennison Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 0111100011
Question 4 1111111111
Question 5 1100000000
Question 6 0011111100
Question 7 1111111111
Question 8 0111111000
Question 9 0111101111
F-score 5888867666
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