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Darden Restaurants Inc (NYSE:DRI)
Piotroski F-Score
4 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

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

DRI' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 4

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 own currency.

This Year (Feb14) TTM:Last Year (Feb13) TTM:
Net Income was 109.7 + 19.8 + 70.2 + 133.1 = $333 Mil.
Cash Flow from Operations was 363.7 + 86 + 217 + 259.6 = $926 Mil.
Revenue was 2233.1 + 2049.9 + 2158.5 + 2298.9 = $8,740 Mil.
Gross Profit was 472.2 + 379.8 + 457.2 + 508.7 = $1,818 Mil.
Total Assets at the begining of this year (Feb13) was $6,958 Mil.
Total Assets was $7,225 Mil.
Long-Term Debt was $2,534 Mil.
Total Current Assets was $909 Mil.
Total Current Liabilities was $1,642 Mil.
Net Income was 134.4 + 33.6 + 110.8 + 151.2 = $430 Mil.

Revenue was 2258.2 + 1960 + 2034.8 + 2065.5 = $8,319 Mil.
Gross Profit was 505.9 + 391.3 + 485 + 496.6 = $1,879 Mil.
Total Assets at the begining of last year (Feb12) was $5,927 Mil.
Total Assets was $6,958 Mil.
Long-Term Debt was $2,555 Mil.
Total Current Assets was $853 Mil.
Total Current Liabilities was $1,535 Mil.

Profitability

Q1. 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 was 333. ==> Positive ==> Score 1.

Q2. 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 was 926. ==> 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/Total Assets at the beginning of this year (Feb13)
=332.8/6957.8
=0.04783121

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Feb12)
=430/5927.4
=0.07254445

Darden Restaurants Inc's return on assets of this year was 0.04783121. Darden Restaurants Inc's return on assets of last year was 0.07254445. ==> 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.

Darden Restaurants Inc's current net income was 333. Darden Restaurants Inc's current cash flow from operations was 926. ==> 926 > 333 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=2533.6/7224.8
=0.35068099

Gearing (Last Year)=Long-Term Debt/Total Assets
=2555.4/6957.8
=0.36727126

Darden Restaurants Inc's gearing of this year was 0.35068099. Darden Restaurants Inc's gearing of last year was 0.36727126. ==> This year is lower. ==> 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)=Total Current Assets/Total Current Liabilities
=909.2/1641.5
=0.55388364

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=853.4/1535.4
=0.55581607

Darden Restaurants Inc's current ratio of this year was 0.55388364. Darden Restaurants Inc's current ratio of last year was 0.55581607. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Darden Restaurants Inc's number of shares in issue this year was 133.4. Darden Restaurants Inc's number of shares in issue last year was 131.5. ==> There is more number of shares in issue this year. ==> Score 0.

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)=Gross Profit/Revenue
=1817.9/8740.4
=0.20798819

Gross Margin (Last Year)=Gross Profit/Revenue
=1878.8/8318.5
=0.22585803

Darden Restaurants Inc's gross margin of this year was 0.20798819. Darden Restaurants Inc's gross margin of last year was 0.22585803. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Feb13)
=8740.4/6957.8
=1.25620167

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Feb12)
=8318.5/5927.4
=1.40339778

Darden Restaurants Inc's asset turnover of this year was 1.25620167. Darden Restaurants Inc's asset turnover of last year was 1.40339778. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+0+0+0+0
=4

Good or high score = 8 or 9

Bad or low score = 0 or 1

Darden Restaurants 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.

Darden Restaurants Inc Annual Data

May04May05May06May07May08May09May10May11May12May13
Q1 1111111111
Q2 1111111111
Q3 0110101100
Q4 1111111111
Q5 1100011110
Q6 0001011001
Q7 1111110111
Q8 1111001100
Q9 1101100110
F-score 7867667865

Darden Restaurants Inc Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
Q1 1111111111
Q2 1111111111
Q3 0000000000
Q4 1111111111
Q5 1111000011
Q6 0000111100
Q7 1111100000
Q8 0000100000
Q9 1110000000
F-score 6665644440
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