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

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: 3   Max: 9
Current: 6

3
9

During the past 13 years, the highest Piotroski F-Score of Avery Dennison Corp was 9. The lowest was 3. 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 42.5 + 71.2 + 42.7 + 46.5 = $203 Mil.
Cash Flow from Operations was 117.8 + -108 + 224.4 + 49 = $283 Mil.
Revenue was 1615.8 + 1550.1 + 1583.9 + 1504.9 = $6,255 Mil.
Gross Profit was 428.2 + 407.2 + 416.3 + 402.2 = $1,654 Mil.
Total Assets at the begining of this year (Jun13) was $5,191 Mil.
Total Assets was $4,617 Mil.
Long-Term Debt was $945 Mil.
Total Current Assets was $2,130 Mil.
Total Current Liabilities was $1,623 Mil.
Net Income was 68.8 + 57.8 + 49 + 58.3 = $234 Mil.

Revenue was 1552.3 + 1498.9 + 1532.2 + 1487.8 = $6,071 Mil.
Gross Profit was 417.5 + 401.7 + 397.7 + 392 = $1,609 Mil.
Total Assets at the begining of last year (Jun12) was $5,058 Mil.
Total Assets was $5,191 Mil.
Long-Term Debt was $951 Mil.
Total Current Assets was $2,589 Mil.
Total Current Liabilities was $1,985 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 203. ==> 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 283. ==> 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 (Jun13)
=202.9/5191
=0.03908688

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jun12)
=233.9/5057.9
=0.04624449

Avery Dennison Corp's return on assets of this year was 0.03908688. Avery Dennison Corp's return on assets of last year was 0.04624449. ==> 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 203. Avery Dennison Corp's current cash flow from operations was 283. ==> 283 > 203 ==> 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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year)=Long-Term Debt/Total Assets
=945.2/4616.6
=0.20473942

Gearing (Last Year)=Long-Term Debt/Total Assets
=951.4/5191
=0.18327875

Avery Dennison Corp's gearing of this year was 0.20473942. Avery Dennison Corp's gearing of last year was 0.18327875. ==> Last year is lower than this year ==> 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
=2129.9/1622.7
=1.31256548

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=2589/1984.9
=1.30434783

Avery Dennison Corp's current ratio of this year was 1.31256548. Avery Dennison Corp's current ratio of last year was 1.30434783. ==> 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 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 96.7. Avery Dennison Corp's number of shares in issue last year was 100.8. ==> There is smaller number of shares in issue this year, or the same. ==> 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
=1653.9/6254.7
=0.26442515

Gross Margin (Last Year)=Gross Profit/Revenue
=1608.9/6071.2
=0.26500527

Avery Dennison Corp's gross margin of this year was 0.26442515. Avery Dennison Corp's gross margin of last year was 0.26500527. ==> Last year's gross margin is higher ==> Score 0.

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 (Jun13)
=6254.7/5191
=1.20491235

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jun12)
=6071.2/5057.9
=1.20034006

Avery Dennison Corp's asset turnover of this year was 1.20491235. Avery Dennison Corp's asset turnover of last year was 1.20034006. ==> 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+0+1
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111101111
Q2 1111111111
Q3 0010001010
Q4 1111111111
Q5 0110011010
Q6 1000101101
Q7 0111100111
Q8 0100011011
Q9 0011001010
F-score 4675548586

Avery Dennison Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 0001111000
Q4 1111111111
Q5 1111100000
Q6 1000111111
Q7 1111111111
Q8 0001111110
Q9 0001111011
F-score 6558988676
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