Switch to:
GuruFocus has detected 6 Warning Signs with Darden Restaurants Inc $DRI.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Darden Restaurants Inc (NYSE:DRI)
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

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

DRI' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 9
Current: 6

2
9

During the past 13 years, the highest Piotroski F-Score of Darden Restaurants Inc was 9. The lowest was 2. 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 (Nov16) TTM:Last Year (Nov15) TTM:
Net Income was 105.8 + 139.6 + 110.2 + 79.5 = $435 Mil.
Cash Flow from Operations was 406.6 + 223.2 + 173.1 + 121.2 = $924 Mil.
Revenue was 1847.5 + 1790.2 + 1714.4 + 1642.5 = $6,995 Mil.
Gross Profit was 432 + 407.9 + 371.7 + 321 = $1,533 Mil.
Average Total Assets from the begining of this year (Nov15)
to the end of this year (Nov16) was
(5182.3 + 4501.9 + 4582.6 + 4370.3 + 4461.9) / 5 = $4619.8 Mil.
Total Assets at the begining of this year (Nov15) was $5,182 Mil.
Long-Term Debt was $441 Mil.
Total Current Assets was $683 Mil.
Total Current Liabilities was $1,151 Mil.
Net Income was 133.8 + 105.3 + 86.4 + 43.2 = $369 Mil.

Revenue was 1730.9 + 1878.3 + 1687 + 1608.8 = $6,905 Mil.
Gross Profit was 388.6 + 431.4 + 376.3 + 324.9 = $1,521 Mil.
Average Total Assets from the begining of last year (Nov14)
to the end of last year (Nov15) was
(5787.9 + 6002.9 + 5994.7 + 6026.5 + 5182.3) / 5 = $5798.86 Mil.
Total Assets at the begining of last year (Nov14) was $5,788 Mil.
Long-Term Debt was $440 Mil.
Total Current Assets was $1,384 Mil.
Total Current Liabilities was $1,815 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.

Darden Restaurants Inc's current net income (TTM) was 435. ==> 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.

Darden Restaurants Inc's current cash flow from operations (TTM) was 924. ==> 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 (Nov15)
=435.1/5182.3
=0.08395886

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Nov14)
=368.7/5787.9
=0.06370186

Darden Restaurants Inc's return on assets of this year was 0.08395886. Darden Restaurants Inc's return on assets of last year was 0.06370186. ==> 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.

Darden Restaurants Inc's current net income (TTM) was 435. Darden Restaurants Inc's current cash flow from operations (TTM) was 924. ==> 924 > 435 ==> 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: Nov16)=Long-Term Debt/Average Total Assets from Nov15 to Nov16
=440.5/4619.8
=0.09535045

Gearing (Last Year: Nov15)=Long-Term Debt/Average Total Assets from Nov14 to Nov15
=439.5/5798.86
=0.07579076

Darden Restaurants Inc's gearing of this year was 0.09535045. Darden Restaurants Inc's gearing of last year was 0.07579076. ==> 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: Nov16)=Total Current Assets/Total Current Liabilities
=683.4/1151.3
=0.59358985

Current Ratio (Last Year: Nov15)=Total Current Assets/Total Current Liabilities
=1383.5/1815.4
=0.762091

Darden Restaurants Inc's current ratio of this year was 0.59358985. Darden Restaurants Inc's current ratio of last year was 0.762091. ==> Last year's current ratio is higher ==> Score 0.

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.

Darden Restaurants Inc's number of shares in issue this year was 124.9. Darden Restaurants Inc's number of shares in issue last year was 129.9. ==> 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
=1532.6/6994.6
=0.21911189

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1521.2/6905
=0.22030413

Darden Restaurants Inc's gross margin of this year was 0.21911189. Darden Restaurants Inc's gross margin of last year was 0.22030413. ==> 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 (Nov15)
=6994.6/5182.3
=1.34970959

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Nov14)
=6905/5787.9
=1.1930061

Darden Restaurants Inc's asset turnover of this year was 1.34970959. Darden Restaurants Inc's asset turnover of last year was 1.1930061. ==> 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+0+0+1+0+1
=6

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

Darden Restaurants Inc 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.

Darden Restaurants Inc Annual Data

May07May08May09May10May11May12May13May14May15May16
Question 1 1111111111
Question 2 1111111111
Question 3 0101100010
Question 4 1111111111
Question 5 1011110111
Question 6 1011001100
Question 7 1110111011
Question 8 1001100011
Question 9 1100101011
F-score 8667856587

Darden Restaurants Inc Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
Question 1 1111111111
Question 2 1111111111
Question 3 1111000011
Question 4 0001111111
Question 5 1111011110
Question 6 1110110000
Question 7 1111100111
Question 8 0001111110
Question 9 0111111111
F-score 6778776786
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