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Cato Corp (NYSE:CATO)
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 = 8 or 9
Bad or low score = 0 or 1

Cato Corp has an F-score of 7 indicating the company's financial situation is typical for a stable company.

CATO' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 7

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 own currency.

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Net Income was 4.885 + 3.823 + 30.006 + 15.651 = $54.4 Mil.
Cash Flow from Operations was 1.246 + 15.962 + 54.127 + 29.411 = $100.7 Mil.
Revenue was 201.043 + 217.574 + 284.732 + 246.46 = $949.8 Mil.
Gross Profit was 72.256 + 76.966 + 120.369 + 97.421 = $367.0 Mil.
Average Total Assets from the begining of this year (Jul13)
to the end of this year (Jul14) was
(567.413 + 572.127 + 596.918 + 583.237 + 580.111) / 5 = $580.0 Mil.
Total Assets as of Jul13 was $567.4 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $423.4 Mil.
Total Current Liabilities was $168.9 Mil.
Net Income was 4.669 + 7.944 + 30.839 + 14.775 = $58.2 Mil.

Revenue was 200.005 + 234.636 + 269.698 + 231.718 = $936.1 Mil.
Gross Profit was 69.606 + 83.365 + 112.797 + 86.768 = $352.5 Mil.
Average Total Assets from the begining of last year (Jul12)
to the end of last year (Jul13) was
(573.382 + 580.195 + 532.646 + 560.207 + 567.413) / 5 = $562.8 Mil.
Total Assets as of Jul12 was $573.4 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $417.6 Mil.
Total Current Liabilities was $154.0 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

Cato Corp's current net income (ttm) was 54.4. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

Cato Corp's current cash flow from operations (ttm) was 100.7. ==> 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 (TTM)/Beginning of This Year Total Assets (Jul13)
=54.365/567.413
=0.09581205

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Jul12)
=58.227/573.382
=0.1015501

Cato Corp's return on assets of this year was 0.09581205. Cato Corp's return on assets of last year was 0.1015501. ==> 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.

Cato Corp's current net income (ttm) was 54.4. Cato Corp's current cash flow from operations (ttm) was 100.7. ==> 100.7 > 54.4 ==> 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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jul14)=Long-Term Debt/Average Total Assets from Jul13 to Jul14
=0/579.9612
=0

Gearing (Last Year: Jul13)=Long-Term Debt/Average Total Assets from Jul12 to Jul13
=0/562.7686
=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.

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: Jul14)=Total Current Assets/Total Current Liabilities
=423.448/168.934
=2.50658837

Current Ratio (Last Year: Jul13)=Total Current Assets/Total Current Liabilities
=417.64/154.002
=2.71191283

Cato Corp's current ratio of this year was 2.50658837. Cato Corp's current ratio of last year was 2.71191283. ==> Last year's current ratio is higher ==> Score 0.

Q7. 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 27.4. Cato Corp's number of shares in issue last year was 28.7. ==> There is smaller number of shares in issue this year, or the same. ==> 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: TTM)=Gross Profit/Revenue
=367.012/949.809
=0.38640611

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=352.536/936.057
=0.37661809

Cato Corp's gross margin of this year was 0.38640611. Cato Corp's gross margin of last year was 0.37661809. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by begining of the year total assets) 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)/Beginning of This Year Total Assets (Jul13)
=949.809/567.413
=1.67392887

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Jul12)
=936.057/573.382
=1.63251898

Cato Corp's asset turnover of this year was 1.67392887. Cato Corp's asset turnover of last year was 1.63251898. ==> 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+0+1+1+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Cato Corp has an F-score of 7 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, Altman Z-Score, Beneish M-Score


Historical Data

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

Cato Corp Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Q1 1111111111
Q2 1111111111
Q3 1110111100
Q4 1111111111
Q5 1111111111
Q6 1110111101
Q7 1001111111
Q8 1110111000
Q9 1010100001
F-score 9785988757

Cato Corp Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Q1 1111111111
Q2 1111111111
Q3 0000000000
Q4 1111111111
Q5 1111111111
Q6 1110000100
Q7 1110011111
Q8 1110000011
Q9 0000000111
F-score 7774455777
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