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Estee Lauder Cos Inc (NYSE:EL)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

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

Estee Lauder Cos Inc has an F-score of 7 indicating the company's financial situation is typical for a stable company.

EL' s 10-Year Piotroski F-Score Range
Min: 4   Max: 9
Current: 7

4
9

During the past 13 years, the highest Piotroski F-Score of Estee Lauder Cos Inc was 9. The lowest was 4. 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 (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 213.2 + 432.5 + 300.7 + 94 = $1,040 Mil.
Cash Flow from Operations was 387 + 752.5 + 29.9 + 292.1 = $1,462 Mil.
Revenue was 2549.8 + 3018.7 + 2675 + 2407.4 = $10,651 Mil.
Gross Profit was 2051.1 + 2437.1 + 2130.9 + 1931.8 = $8,551 Mil.
Total Assets at the begining of this year (Mar13) was $7,095 Mil.
Total Assets was $7,646 Mil.
Long-Term Debt was $1,328 Mil.
Total Current Assets was $4,692 Mil.
Total Current Liabilities was $2,039 Mil.
Net Income was 178.8 + 447.5 + 299.5 + 51.2 = $977 Mil.

Revenue was 2291.8 + 2933 + 2549.5 + 2251.2 = $10,026 Mil.
Gross Profit was 1848.7 + 2365 + 2010.3 + 1810 = $8,034 Mil.
Total Assets at the begining of last year (Mar12) was $6,602 Mil.
Total Assets was $7,095 Mil.
Long-Term Debt was $1,329 Mil.
Total Current Assets was $4,286 Mil.
Total Current Liabilities was $1,916 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.

Estee Lauder Cos Inc's current net income was 1,040. ==> 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.

Estee Lauder Cos Inc's current cash flow from operations was 1,462. ==> 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 (Mar13)
=1040.4/7095.1
=0.14663641

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=977/6601.5
=0.14799667

Estee Lauder Cos Inc's return on assets of this year was 0.14663641. Estee Lauder Cos Inc's return on assets of last year was 0.14799667. ==> 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.

Estee Lauder Cos Inc's current net income was 1,040. Estee Lauder Cos Inc's current cash flow from operations was 1,462. ==> 1,462 > 1,040 ==> 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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year)=Long-Term Debt/Total Assets
=1327.7/7646
=0.17364635

Gearing (Last Year)=Long-Term Debt/Total Assets
=1329.2/7095.1
=0.18734056

Estee Lauder Cos Inc's gearing of this year was 0.17364635. Estee Lauder Cos Inc's gearing of last year was 0.18734056. ==> This year is lower or equal to last year. ==> 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
=4691.8/2039.3
=2.30069141

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=4286.2/1915.9
=2.23717313

Estee Lauder Cos Inc's current ratio of this year was 2.30069141. Estee Lauder Cos Inc's current ratio of last year was 2.23717313. ==> This year's current ratio is higher. ==> Score 1.

Q7. 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.

Estee Lauder Cos Inc's number of shares in issue this year was 392.1. Estee Lauder Cos Inc's number of shares in issue last year was 394. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=8550.9/10650.9
=0.80283356

Gross Margin (Last Year)=Gross Profit/Revenue
=8034/10025.5
=0.80135654

Estee Lauder Cos Inc's gross margin of this year was 0.80283356. Estee Lauder Cos Inc's gross margin of last year was 0.80135654. ==> This year's gross margin is higher. ==> Score 1.

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 (Mar13)
=10650.9/7095.1
=1.50116277

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=10025.5/6601.5
=1.51867

Estee Lauder Cos Inc's asset turnover of this year was 1.50116277. Estee Lauder Cos Inc's asset turnover of last year was 1.51867. ==> 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+1+1+1+0
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Estee Lauder Cos Inc has an F-score of 7 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.

Estee Lauder Cos Inc Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Q1 1111111111
Q2 1111111111
Q3 1101001111
Q4 1111111111
Q5 0110101110
Q6 0000110001
Q7 1111100011
Q8 1001001111
Q9 1001101100
F-score 7657747777

Estee Lauder Cos Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111111
Q2 1111111111
Q3 1111111100
Q4 1111111111
Q5 1110000111
Q6 0101111111
Q7 1111111101
Q8 1111111111
Q9 1100000000
F-score 8977777867
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