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

Brown-Forman Corp has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

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 (Oct14) TTM:Last Year (Oct13) TTM:
Net Income was 177 + 133 + 150 + 208 = $668 Mil.
Cash Flow from Operations was 189 + 259 + 112 + -42 = $518 Mil.
Revenue was 782 + 689 + 705 + 877 = $3,053 Mil.
Gross Profit was 532 + 493 + 495 + 609 = $2,129 Mil.
Average Total Assets from the begining of this year (Oct13)
to the end of this year (Oct14) was
(3882 + 3993 + 4103 + 4191 + 4243) / 5 = $4082.4 Mil.
Total Assets at the begining of this year (Oct13) was $3,882 Mil.
Long-Term Debt was $998 Mil.
Total Current Assets was $2,299 Mil.
Total Current Liabilities was $678 Mil.
Net Income was 157 + 113 + 143 + 206 = $619 Mil.

Revenue was 747 + 660 + 686 + 833 = $2,926 Mil.
Gross Profit was 507 + 460 + 477 + 576 = $2,020 Mil.
Average Total Assets from the begining of last year (Oct12)
to the end of last year (Oct13) was
(3803.9 + 3832.3 + 3626 + 3686 + 3882) / 5 = $3766.04 Mil.
Total Assets at the begining of last year (Oct12) was $3,804 Mil.
Long-Term Debt was $997 Mil.
Total Current Assets was $2,033 Mil.
Total Current Liabilities was $542 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.

Brown-Forman Corp's current net income (TTM) was 668. ==> 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.

Brown-Forman Corp's current cash flow from operations (TTM) was 518. ==> 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.

Brown-Forman Corp's return on assets of this year was 0.17207625. Brown-Forman Corp's return on assets of last year was 0.16272773. ==> 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 668. Brown-Forman Corp's current cash flow from operations (TTM) was 518. ==> 518 <= 668 ==> CFROA <= ROA ==> Score 0.

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: Oct14)=Long-Term Debt/Average Total Assets from Oct13 to Oct14
=998/4082.4
=0.24446404

Gearing (Last Year: Oct13)=Long-Term Debt/Average Total Assets from Oct12 to Oct13
=997/3766.04
=0.26473431

Brown-Forman Corp's gearing of this year was 0.24446404. Brown-Forman Corp's gearing of last year was 0.26473431. ==> 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: Oct14)=Total Current Assets/Total Current Liabilities
=2299/678
=3.39085546

Current Ratio (Last Year: Oct13)=Total Current Assets/Total Current Liabilities
=2033/542
=3.75092251

Brown-Forman Corp's current ratio of this year was 3.39085546. Brown-Forman Corp's current ratio of last year was 3.75092251. ==> 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 213.6. Brown-Forman Corp's number of shares in issue last year was 215.2. ==> 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
=2129/3053
=0.69734687

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2020/2926
=0.69036227

Brown-Forman Corp's gross margin of this year was 0.69734687. Brown-Forman Corp's gross margin of last year was 0.69036227. ==> 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 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 (Oct13)
=3053/3882
=0.78645028

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=2926/3803.9
=0.76921055

Brown-Forman Corp's asset turnover of this year was 0.78645028. Brown-Forman Corp's asset turnover of last year was 0.76921055. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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

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

Brown-Forman Corp has an F-score of 7. 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 own currency.

Brown-Forman Corp Annual Data

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
Q1 1111111111
Q2 1111111111
Q3 1010111011
Q4 1101110100
Q5 1101001101
Q6 0101110101
Q7 0001111110
Q8 1100011011
Q9 1010101101
F-score 7646777757

Brown-Forman Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Q1 1111111111
Q2 1111111111
Q3 0001111111
Q4 0000000010
Q5 1100001111
Q6 1100001100
Q7 1100001111
Q8 0001111111
Q9 1110000001
F-score 6634447777
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