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GuruFocus has detected 7 Warning Signs with Big Lots Inc $BIG.
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Big Lots Inc (NYSE:BIG)
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

Big Lots Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

BIG' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 9
Current: 7

2
9

During the past 13 years, the highest Piotroski F-Score of Big Lots Inc was 9. The lowest was 2. 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 (Oct16) TTM:Last Year (Oct15) TTM:
Net Income was 94.532 + 38.659 + 22.715 + 1.376 = $157 Mil.
Cash Flow from Operations was 290.034 + 78.611 + 32.889 + -67.964 = $334 Mil.
Revenue was 1583.967 + 1312.575 + 1203.155 + 1105.498 = $5,205 Mil.
Gross Profit was 647.229 + 517.681 + 486.423 + 441.992 = $2,093 Mil.
Average Total Assets from the begining of this year (Oct15)
to the end of this year (Oct16) was
(1889.297 + 1640.37 + 1606.621 + 1624.66 + 1847.243) / 5 = $1721.6382 Mil.
Total Assets at the begining of this year (Oct15) was $1,889 Mil.
Long-Term Debt was $363 Mil.
Total Current Assets was $1,208 Mil.
Total Current Liabilities was $767 Mil.
Net Income was 94.431 + 32.213 + 17.636 + -1.508 = $143 Mil.

Revenue was 1593.349 + 1280.455 + 1209.686 + 1116.474 = $5,200 Mil.
Gross Profit was 649.929 + 504.116 + 475.834 + 440.007 = $2,070 Mil.
Average Total Assets from the begining of last year (Oct14)
to the end of last year (Oct15) was
(1933.911 + 1635.891 + 1648.812 + 1664.363 + 1889.297) / 5 = $1754.4548 Mil.
Total Assets at the begining of last year (Oct14) was $1,934 Mil.
Long-Term Debt was $335 Mil.
Total Current Assets was $1,267 Mil.
Total Current Liabilities was $729 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.

Big Lots Inc's current net income (TTM) was 157. ==> 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.

Big Lots Inc's current cash flow from operations (TTM) was 334. ==> 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 (Oct15)
=157.282/1889.297
=0.08324895

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Oct14)
=142.772/1933.911
=0.07382553

Big Lots Inc's return on assets of this year was 0.08324895. Big Lots Inc's return on assets of last year was 0.07382553. ==> 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.

Big Lots Inc's current net income (TTM) was 157. Big Lots Inc's current cash flow from operations (TTM) was 334. ==> 334 > 157 ==> 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: Oct16)=Long-Term Debt/Average Total Assets from Oct15 to Oct16
=362.9/1721.6382
=0.21078761

Gearing (Last Year: Oct15)=Long-Term Debt/Average Total Assets from Oct14 to Oct15
=334.9/1754.4548
=0.19088551

Big Lots Inc's gearing of this year was 0.21078761. Big Lots Inc's gearing of last year was 0.19088551. ==> 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: Oct16)=Total Current Assets/Total Current Liabilities
=1208.331/766.584
=1.57625387

Current Ratio (Last Year: Oct15)=Total Current Assets/Total Current Liabilities
=1267.278/728.799
=1.73885804

Big Lots Inc's current ratio of this year was 1.57625387. Big Lots Inc's current ratio of last year was 1.73885804. ==> 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.

Big Lots Inc's number of shares in issue this year was 44.9. Big Lots Inc's number of shares in issue last year was 49.1. ==> 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
=2093.325/5205.195
=0.40216073

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2069.886/5199.964
=0.39805776

Big Lots Inc's gross margin of this year was 0.40216073. Big Lots Inc's gross margin of last year was 0.39805776. ==> 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 (Oct15)
=5205.195/1889.297
=2.75509621

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct14)
=5199.964/1933.911
=2.68883315

Big Lots Inc's asset turnover of this year was 2.75509621. Big Lots Inc's asset turnover of last year was 2.68883315. ==> This year's asset turnover is higher. ==> Score 1.

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+0+0+1+1+1
=7

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

Big Lots Inc 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 local exchange's currency.

Big Lots Inc Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
Question 1 1111111111
Question 2 1111111111
Question 3 1111000001
Question 4 1111111111
Question 5 1011100110
Question 6 1001001100
Question 7 1110111111
Question 8 1011100011
Question 9 1011010011
F-score 9588655677

Big Lots Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
Question 1 1111111111
Question 2 1111111111
Question 3 0001111111
Question 4 1111111111
Question 5 1111000000
Question 6 0000010000
Question 7 1111111111
Question 8 0011111111
Question 9 0011111101
F-score 5578787767
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