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Cheesecake Factory Inc (NAS:CAKE)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

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

Cheesecake Factory Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

CAKE' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 6

3
9

During the past 13 years, the highest Piotroski F-Score of Cheesecake Factory Inc 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 (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was 22.518 + 30.049 + 24.223 + 24.486 = $101 Mil.
Cash Flow from Operations was 77.116 + 44.992 + 38.87 + 78.671 = $240 Mil.
Revenue was 481.431 + 496.406 + 499.114 + 499.673 = $1,977 Mil.
Gross Profit was 86.986 + 95.385 + 88.712 + 90.629 = $362 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(1124.114 + 1073.756 + 1080.521 + 1105.514 + 1176.452) / 5 = $1112.0714 Mil.
Total Assets at the begining of this year (Dec13) was $1,124 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $239 Mil.
Total Current Liabilities was $322 Mil.
Net Income was 25.292 + 28.583 + 27.481 + 33 = $114 Mil.

Revenue was 463.018 + 470.118 + 469.699 + 475.075 = $1,878 Mil.
Gross Profit was 86.764 + 92.204 + 92.404 + 95.213 = $367 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(1092.167 + 1071.108 + 1124.887 + 1101.138 + 1124.114) / 5 = $1102.6828 Mil.
Total Assets at the begining of last year (Dec12) was $1,092 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $226 Mil.
Total Current Liabilities was $264 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.

Cheesecake Factory Inc's current net income (TTM) was 101. ==> 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.

Cheesecake Factory Inc's current cash flow from operations (TTM) was 240. ==> 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 (Dec13)
=101.276/1124.114
=0.09009407

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=114.356/1092.167
=0.1047056

Cheesecake Factory Inc's return on assets of this year was 0.09009407. Cheesecake Factory Inc's return on assets of last year was 0.1047056. ==> 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.

Cheesecake Factory Inc's current net income (TTM) was 101. Cheesecake Factory Inc's current cash flow from operations (TTM) was 240. ==> 240 > 101 ==> 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: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=0/1112.0714
=0

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=0/1102.6828
=0

Cheesecake Factory Inc's gearing of this year was 0. Cheesecake Factory Inc's gearing of last year was 0. ==> This year is lower or equal to last year. ==> Score 1.

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: Dec14)=Total Current Assets/Total Current Liabilities
=239.462/322.011
=0.7436454

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=225.903/264.247
=0.85489334

Cheesecake Factory Inc's current ratio of this year was 0.7436454. Cheesecake Factory Inc's current ratio of last year was 0.85489334. ==> 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.

Cheesecake Factory Inc's number of shares in issue this year was 51.2. Cheesecake Factory Inc's number of shares in issue last year was 53.5. ==> 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
=361.712/1976.624
=0.18299484

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=366.585/1877.91
=0.19520904

Cheesecake Factory Inc's gross margin of this year was 0.18299484. Cheesecake Factory Inc's gross margin of last year was 0.19520904. ==> 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 (Dec13)
=1976.624/1124.114
=1.75838394

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=1877.91/1092.167
=1.71943485

Cheesecake Factory Inc's asset turnover of this year was 1.75838394. Cheesecake Factory Inc's asset turnover of last year was 1.71943485. ==> 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+0+1+1+0+1+0+1
=6

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

Cheesecake Factory Inc has an F-score of 6 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


Historical Data

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

Cheesecake Factory Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 1000011110
Question 4 1111111111
Question 5 1100111111
Question 6 1001010100
Question 7 0111101111
Question 8 1000010110
Question 9 0010011101
F-score 7555587976

Cheesecake Factory Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Question 1 1111111111
Question 2 1111111111
Question 3 1110110100
Question 4 1111111111
Question 5 1111100011
Question 6 1110000001
Question 7 1111111111
Question 8 0000111101
Question 9 1110000011
F-score 8885765660
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