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Brown-Forman Corp (NYSE:BF.B)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

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 3. It is a bad or low score, which usually implies poor business operation.

BF.B' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 3

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 (Jan16) TTM:Last Year (Jan15) TTM:
Net Income was 141 + 156 + 200 + 190 = $687 Mil.
Cash Flow from Operations was 233 + 147 + 14 + 287 = $681 Mil.
Revenue was 739 + 699 + 854 + 809 = $3,101 Mil.
Gross Profit was 526 + 491 + 586 + 555 = $2,158 Mil.
Average Total Assets from the begining of this year (Jan15)
to the end of this year (Jan16) was
(4161 + 4193 + 4334 + 4319 + 4333) / 5 = $4268 Mil.
Total Assets at the begining of this year (Jan15) was $4,161 Mil.
Long-Term Debt was $1,229 Mil.
Total Current Assets was $2,405 Mil.
Total Current Liabilities was $1,100 Mil.
Net Income was 133 + 150 + 208 + 186 = $677 Mil.

Revenue was 689 + 705 + 877 + 813 = $3,084 Mil.
Gross Profit was 493 + 495 + 609 + 553 = $2,150 Mil.
Average Total Assets from the begining of last year (Jan14)
to the end of last year (Jan15) was
(3993 + 4103 + 4191 + 4243 + 4161) / 5 = $4138.2 Mil.
Total Assets at the begining of last year (Jan14) was $3,993 Mil.
Long-Term Debt was $748 Mil.
Total Current Assets was $2,209 Mil.
Total Current Liabilities was $860 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.

Brown-Forman Corp's current net income (TTM) was 687. ==> 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.

Brown-Forman Corp's current cash flow from operations (TTM) was 681. ==> 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.

Brown-Forman Corp's return on assets of this year was 0.16510454. Brown-Forman Corp's return on assets of last year was 0.16954671. ==> Last year is higher ==> Score 0.

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.

Brown-Forman Corp's current net income (TTM) was 687. Brown-Forman Corp's current cash flow from operations (TTM) was 681. ==> 681 <= 687 ==> CFROA <= ROA ==> Score 0.

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: Jan16)=Long-Term Debt/Average Total Assets from Jan15 to Jan16
=1229/4268
=0.28795689

Gearing (Last Year: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=748/4138.2
=0.18075492

Brown-Forman Corp's gearing of this year was 0.28795689. Brown-Forman Corp's gearing of last year was 0.18075492. ==> 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: Jan16)=Total Current Assets/Total Current Liabilities
=2405/1100
=2.18636364

Current Ratio (Last Year: Jan15)=Total Current Assets/Total Current Liabilities
=2209/860
=2.56860465

Brown-Forman Corp's current ratio of this year was 2.18636364. Brown-Forman Corp's current ratio of last year was 2.56860465. ==> 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.

Brown-Forman Corp's number of shares in issue this year was 202.4. Brown-Forman Corp's number of shares in issue last year was 212.6. ==> 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
=2158/3101
=0.69590455

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2150/3084
=0.69714656

Brown-Forman Corp's gross margin of this year was 0.69590455. Brown-Forman Corp's gross margin of last year was 0.69714656. ==> 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 (Jan15)
=3101/4161
=0.74525354

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan14)
=3084/3993
=0.77235162

Brown-Forman Corp's asset turnover of this year was 0.74525354. Brown-Forman Corp's asset turnover of last year was 0.77235162. ==> 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+0+0+0+0+1+0+0
=3

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

Brown-Forman Corp has an F-score of 3. It is a bad or low score, which usually implies poor business operation.


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

Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15
Question 1 1111111111
Question 2 1111111111
Question 3 1110110110
Question 4 1001101000
Question 5 1010011011
Question 6 1011101010
Question 7 0011111101
Question 8 1001010111
Question 9 0100101010
F-score 7466767575

Brown-Forman Corp Quarterly Data

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16
Question 1 1111111111
Question 2 1111111111
Question 3 1111110000
Question 4 0001000010
Question 5 0111111000
Question 6 0110000000
Question 7 0101111111
Question 8 1111111100
Question 9 1111100000
F-score 5878765443
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