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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: 1   Max: 7
Current: 4

1
7

During the past 12 years, the highest Piotroski F-Score of Conn's Inc was 7. The lowest was 1. 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 (Oct14) TTM:Last Year (Oct13) TTM:
Net Income was 27.735 + 28.469 + 17.65 + -3.064 = $71 Mil.
Cash Flow from Operations was -100.563 + 30.678 + -83.354 + -74.118 = $-227 Mil.
Revenue was 361.141 + 335.448 + 352.964 + 370.058 = $1,420 Mil.
Gross Profit was 182.587 + 173.247 + 182.376 + 189.557 = $728 Mil.
Average Total Assets from the begining of this year (Oct13)
to the end of this year (Oct14) was
(1174.364 + 1297.986 + 1360.383 + 1449.195 + 1556.006) / 5 = $1367.5868 Mil.
Total Assets at the begining of this year (Oct13) was $1,174 Mil.
Long-Term Debt was $696 Mil.
Total Current Assets was $911 Mil.
Total Current Liabilities was $163 Mil.
Net Income was 17.665 + 22.176 + 19.162 + 24.376 = $83 Mil.

Revenue was 250.344 + 251.063 + 270.689 + 310.876 = $1,083 Mil.
Gross Profit was 119.251 + 126.2 + 133.331 + 157.603 = $536 Mil.
Average Total Assets from the begining of last year (Oct12)
to the end of last year (Oct13) was
(852.864 + 909.857 + 957.274 + 1023.46 + 1174.364) / 5 = $983.5638 Mil.
Total Assets at the begining of last year (Oct12) was $853 Mil.
Long-Term Debt was $422 Mil.
Total Current Assets was $679 Mil.
Total Current Liabilities was $167 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 71. ==> 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 -227. ==> 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 (Oct13)
=70.79/1174.364
=0.06027944

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=83.379/852.864
=0.09776354

Conn's Inc's return on assets of this year was 0.06027944. Conn's Inc's return on assets of last year was 0.09776354. ==> 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 71. Conn's Inc's current cash flow from operations (TTM) was -227. ==> -227 <= 71 ==> 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: Oct14)=Long-Term Debt/Average Total Assets from Oct13 to Oct14
=696.31/1367.5868
=0.50915233

Gearing (Last Year: Oct13)=Long-Term Debt/Average Total Assets from Oct12 to Oct13
=422.161/983.5638
=0.42921567

Conn's Inc's gearing of this year was 0.50915233. Conn's Inc's gearing of last year was 0.42921567. ==> 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: Oct14)=Total Current Assets/Total Current Liabilities
=910.646/163.337
=5.57525851

Current Ratio (Last Year: Oct13)=Total Current Assets/Total Current Liabilities
=679.042/167.385
=4.05676733

Conn's Inc's current ratio of this year was 5.57525851. Conn's Inc's current ratio of last year was 4.05676733. ==> 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 36.3. Conn's Inc's number of shares in issue last year was 37. ==> 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
=727.767/1419.611
=0.51265241

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=536.385/1082.972
=0.49528981

Conn's Inc's gross margin of this year was 0.51265241. Conn's Inc's gross margin of last year was 0.49528981. ==> 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 (Oct13)
=1419.611/1174.364
=1.20883389

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=1082.972/852.864
=1.26980621

Conn's Inc's asset turnover of this year was 1.20883389. Conn's Inc's asset turnover of last year was 1.26980621. ==> 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

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Question 1 11110011
Question 2 10011100
Question 3 00000011
Question 4 00011100
Question 5 01001110
Question 6 11001001
Question 7 01110000
Question 8 10011111
Question 9 00100111
F-score 44355555

Conn's Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Question 1 1111111111
Question 2 1100000000
Question 3 1111111110
Question 4 0000000000
Question 5 1110000000
Question 6 0001111011
Question 7 0000000001
Question 8 1111111111
Question 9 1111111110
F-score 6655555454
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