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GuruFocus has detected 2 Warning Signs with AutoZone Inc $AZO.
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AutoZone Inc (NYSE:AZO)
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

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

AZO' 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 AutoZone Inc was 8. 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 local exchange's currency.

This Year (Nov16) TTM:Last Year (Nov15) TTM:
Net Income was 228.613 + 327.515 + 426.768 + 278.125 = $1,261 Mil.
Cash Flow from Operations was 183.55 + 516.347 + 530.429 + 406.5 = $1,637 Mil.
Revenue was 2257.192 + 2593.672 + 3398.769 + 2467.845 = $10,717 Mil.
Gross Profit was 1190.596 + 1370.458 + 1794.748 + 1301.542 = $5,657 Mil.
Average Total Assets from the begining of this year (Nov15)
to the end of this year (Nov16) was
(8217.528 + 8366.414 + 8464.105 + 8599.787 + 8742.544) / 5 = $8478.0756 Mil.
Total Assets at the begining of this year (Nov15) was $8,218 Mil.
Long-Term Debt was $4,997 Mil.
Total Current Assets was $4,369 Mil.
Total Current Liabilities was $4,850 Mil.
Net Income was 211.723 + 309.071 + 401.137 + 258.112 = $1,180 Mil.

Revenue was 2143.651 + 2493.021 + 3290.404 + 2386.043 = $10,313 Mil.
Gross Profit was 1120.033 + 1302.789 + 1727.548 + 1252.934 = $5,403 Mil.
Average Total Assets from the begining of last year (Nov14)
to the end of last year (Nov15) was
(7717.101 + 7949.965 + 8032.44 + 8102.349 + 8217.528) / 5 = $8003.8766 Mil.
Total Assets at the begining of last year (Nov14) was $7,717 Mil.
Long-Term Debt was $4,754 Mil.
Total Current Assets was $4,054 Mil.
Total Current Liabilities was $4,775 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.

AutoZone Inc's current net income (TTM) was 1,261. ==> 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.

AutoZone Inc's current cash flow from operations (TTM) was 1,637. ==> 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 (Nov15)
=1261.021/8217.528
=0.15345503

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Nov14)
=1180.043/7717.101
=0.15291273

AutoZone Inc's return on assets of this year was 0.15345503. AutoZone Inc's return on assets of last year was 0.15291273. ==> 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.

AutoZone Inc's current net income (TTM) was 1,261. AutoZone Inc's current cash flow from operations (TTM) was 1,637. ==> 1,637 > 1,261 ==> 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: Nov16)=Long-Term Debt/Average Total Assets from Nov15 to Nov16
=4997.446/8478.0756
=0.58945523

Gearing (Last Year: Nov15)=Long-Term Debt/Average Total Assets from Nov14 to Nov15
=4754.101/8003.8766
=0.5939748

AutoZone Inc's gearing of this year was 0.58945523. AutoZone Inc's gearing of last year was 0.5939748. ==> 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: Nov16)=Total Current Assets/Total Current Liabilities
=4368.686/4850.219
=0.90071933

Current Ratio (Last Year: Nov15)=Total Current Assets/Total Current Liabilities
=4053.871/4775.241
=0.84893537

AutoZone Inc's current ratio of this year was 0.90071933. AutoZone Inc's current ratio of last year was 0.84893537. ==> This year's current ratio is higher. ==> Score 1.

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.

AutoZone Inc's number of shares in issue this year was 29.7. AutoZone Inc's number of shares in issue last year was 31.1. ==> 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
=5657.344/10717.478
=0.5278615

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=5403.304/10313.119
=0.5239253

AutoZone Inc's gross margin of this year was 0.5278615. AutoZone Inc's gross margin of last year was 0.5239253. ==> 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 (Nov15)
=10717.478/8217.528
=1.30422166

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Nov14)
=10313.119/7717.101
=1.33639809

AutoZone Inc's asset turnover of this year was 1.30422166. AutoZone Inc's asset turnover of last year was 1.33639809. ==> 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
=1+1+1+1+1+1+1+1+0
=8

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

AutoZone Inc 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.

AutoZone Inc Annual Data

Aug07Aug08Aug09Aug10Aug11Aug12Aug13Aug14Aug15Aug16
Question 1 1111111111
Question 2 1111111111
Question 3 0101111000
Question 4 1111111111
Question 5 1000001100
Question 6 0100010111
Question 7 1111111111
Question 8 1111111111
Question 9 0001110000
F-score 6757787766

AutoZone Inc Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
Question 1 1111111111
Question 2 1111111111
Question 3 0000000001
Question 4 1111111111
Question 5 1111001001
Question 6 1011110111
Question 7 1111111111
Question 8 1111111111
Question 9 0000000000
F-score 7677666668
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