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Conn's Inc (NAS:CONN)
Piotroski F-Score
4 (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

Conn's Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

CONN' s 10-Year Piotroski F-Score Range
Min: 3   Max: 6
Current: 4

3
6

During the past 13 years, the highest Piotroski F-Score of Conn's Inc was 6. The lowest was 3. And the median was 5.


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 (Jan15) TTM:Last Year (Jan14) TTM:
Net Income was 28.469 + 17.65 + -3.064 + 15.458 = $59 Mil.
Cash Flow from Operations was 30.678 + -83.354 + -74.118 + -63.107 = $-190 Mil.
Revenue was 335.448 + 352.964 + 370.058 + 426.748 = $1,485 Mil.
Gross Profit was 173.247 + 182.376 + 189.557 + 162.992 = $708 Mil.
Average Total Assets from the begining of this year (Jan14)
to the end of this year (Jan15) was
(1297.986 + 1360.383 + 1449.195 + 1556.006 + 1647.322) / 5 = $1462.1784 Mil.
Total Assets at the begining of this year (Jan14) was $1,298 Mil.
Long-Term Debt was $774 Mil.
Total Current Assets was $926 Mil.
Total Current Liabilities was $145 Mil.
Net Income was 22.176 + 19.162 + 24.376 + 27.735 = $93 Mil.

Revenue was 251.063 + 270.689 + 310.876 + 361.141 = $1,194 Mil.
Gross Profit was 126.2 + 133.331 + 157.603 + 146.41 = $564 Mil.
Average Total Assets from the begining of last year (Jan13)
to the end of last year (Jan14) was
(909.857 + 957.274 + 1023.46 + 1174.364 + 1297.986) / 5 = $1072.5882 Mil.
Total Assets at the begining of last year (Jan13) was $910 Mil.
Long-Term Debt was $536 Mil.
Total Current Assets was $736 Mil.
Total Current Liabilities was $129 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.

Conn's Inc's current net income (TTM) was 59. ==> 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.

Conn's Inc's current cash flow from operations (TTM) was -190. ==> Negative ==> Score 0.

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 (Jan14)
=58.513/1297.986
=0.04507984

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=93.449/909.857
=0.10270735

Conn's Inc's return on assets of this year was 0.04507984. Conn's Inc's return on assets of last year was 0.10270735. ==> 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.

Conn's Inc's current net income (TTM) was 59. Conn's Inc's current cash flow from operations (TTM) was -190. ==> -190 <= 59 ==> CFROA <= ROA ==> Score 0.

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: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=774.015/1462.1784
=0.52935743

Gearing (Last Year: Jan14)=Long-Term Debt/Average Total Assets from Jan13 to Jan14
=535.631/1072.5882
=0.49938178

Conn's Inc's gearing of this year was 0.52935743. Conn's Inc's gearing of last year was 0.49938178. ==> Last year is lower than this year ==> Score 0.

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: Jan15)=Total Current Assets/Total Current Liabilities
=925.715/145.009
=6.38384514

Current Ratio (Last Year: Jan14)=Total Current Assets/Total Current Liabilities
=735.595/128.927
=5.70551552

Conn's Inc's current ratio of this year was 6.38384514. Conn's Inc's current ratio of last year was 5.70551552. ==> 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.

Conn's Inc's number of shares in issue this year was 36.8. Conn's Inc's number of shares in issue last year was 37.1. ==> 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
=708.172/1485.218
=0.4768135

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=563.544/1193.769
=0.47207123

Conn's Inc's gross margin of this year was 0.4768135. Conn's Inc's gross margin of last year was 0.47207123. ==> This year's gross margin is higher. ==> Score 1.

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 (Jan14)
=1485.218/1297.986
=1.14424809

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=1193.769/909.857
=1.31204024

Conn's Inc's asset turnover of this year was 1.14424809. Conn's Inc's asset turnover of last year was 1.31204024. ==> 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+0+0+0+0+1+1+1+0
=4

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

Conn's Inc has an F-score of 4 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.

Conn's Inc Annual Data

Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15
Question 1 111100111
Question 2 100111000
Question 3 000000110
Question 4 000111000
Question 5 010011100
Question 6 110010011
Question 7 011100000
Question 8 100111111
Question 9 001001110
F-score 443555553

Conn's Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
Question 1 1111111111
Question 2 1000000000
Question 3 1111111100
Question 4 0000000000
Question 5 1100000000
Question 6 0011110111
Question 7 0000000011
Question 8 1111110001
Question 9 1111111100
F-score 6555553434
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