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Canon, Inc. (NYSE:CAJ)
Piotroski F-Score
9 (As of Today)

Good Sign:

Piotroski F-Score of 9 is 9, 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

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

CAJ' s 10-Year Piotroski F-Score Range
Min: 4   Max: 9
Current: 9

4
9

During the past 13 years, the highest Piotroski F-Score of Canon, Inc. was 9. The lowest was 4. And the median was 7.


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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 619.230732163 + 601.636493812 + 667.141552878 + 418.51306287 = $2,307 Mil.
Cash Flow from Operations was 1583.60077486 + 1282.98046436 + 1630.08036279 + 566.848748951 = $5,064 Mil.
Revenue was 9971.93550563 + 9339.76679963 + 9700.5207027 + 8353.82270505 = $37,366 Mil.
Gross Profit was 4703.28928981 + 4573.30469469 + 4789.24081747 + 3947.6359991 = $18,013 Mil.
Total Assets at the begining of this year (Dec12) was $44,415 Mil.
Total Assets was $40,889 Mil.
Long-Term Debt was $14 Mil.
Total Current Assets was $22,031 Mil.
Total Current Liabilities was $8,176 Mil.
Net Income was 686.889442835 + 634.566463746 + 655.14663964 + 757.372126225 = $2,734 Mil.

Revenue was 10682.858362 + 10124.2706896 + 11391.714702 + 10205.77955 = $42,405 Mil.
Gross Profit was 4855.1730333 + 4894.82743346 + 5573.20580224 + 4810.9338847 = $20,134 Mil.
Total Assets at the begining of last year (Dec11) was $51,072 Mil.
Total Assets was $44,415 Mil.
Long-Term Debt was $24 Mil.
Total Current Assets was $23,381 Mil.
Total Current Liabilities was $9,482 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.

Canon, Inc.'s current net income was 2,307. ==> 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.

Canon, Inc.'s current cash flow from operations was 5,064. ==> 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/Total Assets at the beginning of this year (Dec12)
=2306.52184172/44414.9093849
=0.05193125

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=2733.97467245/51072.2805467
=0.05353148

Canon, Inc.'s return on assets of this year was 0.05193125. Canon, Inc.'s return on assets of last year was 0.05353148. ==> Last year is higher ==> Score 0.

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.

Canon, Inc.'s current net income was 2,307. Canon, Inc.'s current cash flow from operations was 5,064. ==> 5,064 > 2,307 ==> CFROA > ROA ==> Score 1.

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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=13.9551469242/40889.2551151
=0.00034129

Gearing (Last Year)=Long-Term Debt/Total Assets
=23.7710256238/44414.9093849
=0.0005352

Canon, Inc.'s gearing of this year was 0.00034129. Canon, Inc.'s gearing of last year was 0.0005352. ==> This year is lower. ==> 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)=Total Current Assets/Total Current Liabilities
=22030.8401037/8175.58620291
=2.69471076

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=23380.8978419/9481.85452177
=2.46585705

Canon, Inc.'s current ratio of this year was 2.69471076. Canon, Inc.'s current ratio of last year was 2.46585705. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Canon, Inc.'s number of shares in issue this year was 1138.1. Canon, Inc.'s number of shares in issue last year was 1154.9. ==> There is the same number of shares in issue this year, or fewer. ==> 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)=Gross Profit/Revenue
=18013.4708011/37366.045713
=0.48208127

Gross Margin (Last Year)=Gross Profit/Revenue
=20134.1401537/42404.6233036
=0.47481002

Canon, Inc.'s gross margin of this year was 0.48208127. Canon, Inc.'s gross margin of last year was 0.47481002. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Dec12)
=37366.045713/44414.9093849
=0.8412951

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=42404.6233036/51072.2805467
=0.83028647

Canon, Inc.'s asset turnover of this year was 0.8412951. Canon, Inc.'s asset turnover of last year was 0.83028647. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+1+1+1+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Canon, 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 own currency.

Canon, Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1011001001
Q4 1111111111
Q5 1111011111
Q6 0110110111
Q7 1001110111
Q8 0011001101
Q9 0011001001
F-score 6588567769

Canon, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 0011000000
Q4 1111111111
Q5 1111111111
Q6 0100111111
Q7 1111111111
Q8 1111000001
Q9 0000000001
F-score 6777666789
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