Switch to:
GuruFocus has detected 3 Warning Signs with Cato Corp $CATO.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Cato Corp (NYSE:CATO)
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

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

CATO' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 6

3
9

During the past 13 years, the highest Piotroski F-Score of Cato Corp was 9. The lowest was 3. 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 local exchange's currency.

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Net Income was 11.846 + 35.874 + 15.887 + 8.26 = $71.9 Mil.
Cash Flow from Operations was 36.108 + 36.16 + 18.847 + -8.753 = $82.4 Mil.
Revenue was 250.456 + 287.973 + 238.887 + 209.262 = $986.6 Mil.
Gross Profit was 91.242 + 124 + 89.828 + 75.635 = $380.7 Mil.
Average Total Assets from the begining of this year (Oct15)
to the end of this year (Oct16) was
(618.377 + 642.344 + 648.804 + 651.915 + 617.581) / 5 = $635.8042 Mil.
Total Assets at the begining of this year (Oct15) was $618.4 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $442.9 Mil.
Total Current Liabilities was $154.0 Mil.
Net Income was 9.152 + 31.083 + 15.594 + 8.319 = $64.1 Mil.

Revenue was 240.113 + 283.899 + 251.269 + 225.467 = $1,000.7 Mil.
Gross Profit was 89.04 + 121.379 + 96.786 + 85.204 = $392.4 Mil.
Average Total Assets from the begining of last year (Oct14)
to the end of last year (Oct15) was
(582.489 + 608.278 + 622.234 + 623.404 + 618.377) / 5 = $610.9564 Mil.
Total Assets at the begining of last year (Oct14) was $582.5 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $452.4 Mil.
Total Current Liabilities was $174.0 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.

Cato Corp's current net income (TTM) was 71.9. ==> 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.

Cato Corp's current cash flow from operations (TTM) was 82.4. ==> 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)
=71.867/618.377
=0.11621875

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Oct14)
=64.148/582.489
=0.1101274

Cato Corp's return on assets of this year was 0.11621875. Cato Corp's return on assets of last year was 0.1101274. ==> 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.

Cato Corp's current net income (TTM) was 71.9. Cato Corp's current cash flow from operations (TTM) was 82.4. ==> 82.4 > 71.9 ==> 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
=0/635.8042
=0

Gearing (Last Year: Oct15)=Long-Term Debt/Average Total Assets from Oct14 to Oct15
=0/610.9564
=0

Cato Corp's gearing of this year was 0. Cato Corp'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: Oct16)=Total Current Assets/Total Current Liabilities
=442.851/153.959
=2.87642164

Current Ratio (Last Year: Oct15)=Total Current Assets/Total Current Liabilities
=452.361/173.993
=2.59988045

Cato Corp's current ratio of this year was 2.87642164. Cato Corp's current ratio of last year was 2.59988045. ==> This year's current ratio is higher. ==> Score 1.

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.

Cato Corp's number of shares in issue this year was 27.5. Cato Corp's number of shares in issue last year was 27.4. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=380.705/986.578
=0.38588434

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=392.409/1000.748
=0.3921157

Cato Corp's gross margin of this year was 0.38588434. Cato Corp's gross margin of last year was 0.3921157. ==> 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 (Oct15)
=986.578/618.377
=1.59543127

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct14)
=1000.748/582.489
=1.71805476

Cato Corp's asset turnover of this year was 1.59543127. Cato Corp's asset turnover of last year was 1.71805476. ==> 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+1+1+1+1+0+0+0
=6

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

Cato Corp 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 local exchange's currency.

Cato Corp Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
Question 1 1111111111
Question 2 1111111111
Question 3 1011100001
Question 4 1111111111
Question 5 1111111111
Question 6 1011110101
Question 7 0111111111
Question 8 1011100010
Question 9 1010000101
F-score 8598865768

Cato Corp Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
Question 1 1111111111
Question 2 1111111111
Question 3 0001111111
Question 4 1111111111
Question 5 1111111111
Question 6 0001111111
Question 7 1111001110
Question 8 1111110000
Question 9 1101111000
F-score 7769888776
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK