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Cato Corp (NYSE:CATO)
Piotroski F-Score
8 (As of Today)

Good Sign:

Piotroski F-Score of 8 is 8, 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

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

CATO' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 8

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 (Jan16) TTM:Last Year (Jan15) TTM:
Net Income was 31.083 + 15.594 + 8.319 + 11.845 = $67 Mil.
Cash Flow from Operations was 29.765 + 26.002 + 1.978 + 36.108 = $94 Mil.
Revenue was 283.899 + 251.269 + 225.467 + 250.456 = $1,011 Mil.
Gross Profit was 121.379 + 96.786 + 85.204 + 92.38 = $396 Mil.
Average Total Assets from the begining of this year (Jan15)
to the end of this year (Jan16) was
(608.278 + 622.234 + 623.404 + 618.377 + 642.344) / 5 = $622.9274 Mil.
Total Assets at the begining of this year (Jan15) was $608 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $472 Mil.
Total Current Liabilities was $193 Mil.
Net Income was 30.006 + 15.651 + 5.692 + 9.152 = $61 Mil.

Revenue was 284.732 + 246.058 + 216.01 + 240.113 = $987 Mil.
Gross Profit was 120.369 + 97.421 + 79.515 + 89.04 = $386 Mil.
Average Total Assets from the begining of last year (Jan14)
to the end of last year (Jan15) was
(596.918 + 583.237 + 580.111 + 582.489 + 608.278) / 5 = $590.2066 Mil.
Total Assets at the begining of last year (Jan14) was $597 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $454 Mil.
Total Current Liabilities was $194 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 67. ==> 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 94. ==> 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 (Jan15)
=66.841/608.278
=0.10988561

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jan14)
=60.501/596.918
=0.10135563

Cato Corp's return on assets of this year was 0.10988561. Cato Corp's return on assets of last year was 0.10135563. ==> 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 67. Cato Corp's current cash flow from operations (TTM) was 94. ==> 94 > 67 ==> 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: Jan16)=Long-Term Debt/Average Total Assets from Jan15 to Jan16
=0/622.9274
=0

Gearing (Last Year: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=0/590.2066
=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: Jan16)=Total Current Assets/Total Current Liabilities
=472.052/193.064
=2.44505449

Current Ratio (Last Year: Jan15)=Total Current Assets/Total Current Liabilities
=454.451/193.901
=2.34372695

Cato Corp's current ratio of this year was 2.44505449. Cato Corp's current ratio of last year was 2.34372695. ==> 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 27.4. Cato Corp's number of shares in issue last year was 27.6. ==> 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
=395.749/1011.091
=0.3914079

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=386.345/986.913
=0.39146814

Cato Corp's gross margin of this year was 0.3914079. Cato Corp's gross margin of last year was 0.39146814. ==> 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 (Jan15)
=1011.091/608.278
=1.66221859

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan14)
=986.913/596.918
=1.6533477

Cato Corp's asset turnover of this year was 1.66221859. Cato Corp's asset turnover of last year was 1.6533477. ==> 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+1+1+1+0+1
=8

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

Cato Corp 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.

Cato Corp Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
Question 1 1111111111
Question 2 1111111111
Question 3 1011110001
Question 4 1111111111
Question 5 1111111111
Question 6 1011110101
Question 7 0111111111
Question 8 1011100010
Question 9 1010000101
F-score 8598875768

Cato Corp Quarterly Data

Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16
Question 1 1111111111
Question 2 1111111111
Question 3 0000011111
Question 4 1111111110
Question 5 1111111111
Question 6 1000011111
Question 7 1111110010
Question 8 0111111100
Question 9 1111011110
F-score 7777698885
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