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Brown-Forman Corp (NYSE:BF.B)
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

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

BF.B' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 7

3
9

During the past 13 years, the highest Piotroski F-Score of Brown-Forman 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 (Jul14) TTM:Last Year (Jul13) TTM:
Net Income was 206 + 177 + 133 + 150 = $666 Mil.
Cash Flow from Operations was 108 + 189 + 259 + 112 = $668 Mil.
Revenue was 833 + 782 + 689 + 705 = $3,009 Mil.
Gross Profit was 576 + 532 + 493 + 495 = $2,096 Mil.
Average Total Assets from the begining of this year (Jul13)
to the end of this year (Jul14) was
(3686 + 3882 + 3993 + 4103 + 4191) / 5 = $3,971 Mil.
Total Assets was $4,191 Mil.
Long-Term Debt was $998 Mil.
Total Current Assets was $2,259 Mil.
Total Current Liabilities was $637 Mil.
Net Income was 173 + 157 + 113 + 143 = $586 Mil.

Revenue was 777 + 747 + 660 + 686 = $2,870 Mil.
Gross Profit was 525 + 507 + 460 + 477 = $1,969 Mil.
Average Total Assets from the begining of last year (Jul12)
to the end of last year (Jul13) was
(3583 + 3803.9 + 3832.3 + 3626 + 3686) / 5 = $3,706 Mil.
Total Assets was $3,686 Mil.
Long-Term Debt was $997 Mil.
Total Current Assets was $1,861 Mil.
Total Current Liabilities was $515 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Brown-Forman Corp's current net income (ttm) was 666. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Brown-Forman Corp's current cash flow from operations (ttm) was 668. ==> 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 (TTM)/Average Total Assets from Jul13 to Jul14
=666/3971
=0.16771594

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jul12 to Jul13
=586/3706.24
=0.15811173

Brown-Forman Corp's return on assets of this year was 0.16771594. Brown-Forman Corp's return on assets of last year was 0.15811173. ==> This year is higher. ==> Score 1.

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.

Brown-Forman Corp's current net income (ttm) was 666. Brown-Forman Corp's current cash flow from operations (ttm) was 668. ==> 668 > 666 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

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

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jul14)=Long-Term Debt/Total Assets
=998/4191
=0.23812932

Gearing (Last Year: Jul13)=Long-Term Debt/Total Assets
=997/3686
=0.27048291

Brown-Forman Corp's gearing of this year was 0.23812932. Brown-Forman Corp's gearing of last year was 0.27048291. ==> This year is lower or equal to last year. ==> Score 1.

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: Jul14)=Total Current Assets/Total Current Liabilities
=2259/637
=3.54631083

Current Ratio (Last Year: Jul13)=Total Current Assets/Total Current Liabilities
=1861/515
=3.61359223

Brown-Forman Corp's current ratio of this year was 3.54631083. Brown-Forman Corp's current ratio of last year was 3.61359223. ==> Last year's current ratio is higher ==> Score 0.

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.

Brown-Forman Corp's number of shares in issue this year was 215. Brown-Forman Corp's number of shares in issue last year was 215.3. ==> 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: TTM)=Gross Profit/Revenue
=2096/3009
=0.69657694

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1969/2870
=0.68606272

Brown-Forman Corp's gross margin of this year was 0.69657694. Brown-Forman Corp's gross margin of last year was 0.68606272. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by average total assets throughout 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)/Average Total Assets from Jul13 to Jul14
=3009/3971
=0.75774364

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jul12 to Jul13
=2870/3706.24
=0.77436971

Brown-Forman Corp's asset turnover of this year was 0.75774364. Brown-Forman Corp's asset turnover of last year was 0.77436971. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

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

Good or high score = 8 or 9

Bad or low score = 0 or 1

Brown-Forman 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, Altman Z-Score, Beneish M-Score


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Brown-Forman Corp Annual Data

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
Q1 1111111111
Q2 1111111111
Q3 1111001011
Q4 1101110100
Q5 1110001001
Q6 0101110101
Q7 0001111110
Q8 1100011011
Q9 1111001100
F-score 7857567656

Brown-Forman Corp Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Q1 1111111111
Q2 1111111111
Q3 0001111111
Q4 1000000001
Q5 0010000111
Q6 1110000110
Q7 1110000111
Q8 0011111111
Q9 1100001100
F-score 6564445877
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