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Family Dollar Stores, Inc. (NYSE:FDO)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

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

Family Dollar Stores, Inc. has an F-score of 6 indicating the company's financial situation is typical for a stable company.

FDO' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 6

3
9

During the past 13 years, the highest Piotroski F-Score of Family Dollar Stores, Inc. was 9. The lowest was 3. And the median was 6.


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 90.869 + 78.027 + 102.213 + 120.938 = $392 Mil.
Cash Flow from Operations was 85.791 + 26.133 + 146.622 + 189.979 = $449 Mil.
Revenue was 2716.621 + 2499.691 + 2502.266 + 2573.506 = $10,292 Mil.
Gross Profit was 902.294 + 856.841 + 868.443 + 892.458 = $3,520 Mil.
Total Assets at the begining of this year (Feb13) was $3,772 Mil.
Total Assets was $4,003 Mil.
Long-Term Debt was $484 Mil.
Total Current Assets was $2,132 Mil.
Total Current Liabilities was $1,382 Mil.
Net Income was 140.145 + 80.279 + 80.931 + 124.54 = $426 Mil.

Revenue was 2893.997 + 2421.688 + 2364.125 + 2359.957 = $10,040 Mil.
Gross Profit was 967.05 + 826.794 + 799.703 + 845.273 = $3,439 Mil.
Total Assets at the begining of last year (Feb12) was $3,100 Mil.
Total Assets was $3,772 Mil.
Long-Term Debt was $500 Mil.
Total Current Assets was $1,951 Mil.
Total Current Liabilities was $1,282 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.

Family Dollar Stores, Inc.'s current net income was 392. ==> 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.

Family Dollar Stores, Inc.'s current cash flow from operations was 449. ==> 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)
=392.047/3771.982
=0.1039366

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Feb12)
=425.895/3100.432
=0.13736634

Family Dollar Stores, Inc.'s return on assets of this year was 0.1039366. Family Dollar Stores, Inc.'s return on assets of last year was 0.13736634. ==> 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.

Family Dollar Stores, Inc.'s current net income was 392. Family Dollar Stores, Inc.'s current cash flow from operations was 449. ==> 449 > 392 ==> 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
=484.15/4002.804
=0.12095271

Gearing (Last Year)=Long-Term Debt/Total Assets
=500.199/3771.982
=0.13260906

Family Dollar Stores, Inc.'s gearing of this year was 0.12095271. Family Dollar Stores, Inc.'s gearing of last year was 0.13260906. ==> 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
=2131.766/1381.943
=1.54258605

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1950.679/1281.927
=1.52167713

Family Dollar Stores, Inc.'s current ratio of this year was 1.54258605. Family Dollar Stores, Inc.'s current ratio of last year was 1.52167713. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Family Dollar Stores, Inc.'s number of shares in issue this year was 114.1. Family Dollar Stores, Inc.'s number of shares in issue last year was 115.9. ==> There is the same number of shares in issue this year, or fewer. ==> 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
=3520.036/10292.084
=0.34201392

Gross Margin (Last Year)=Gross Profit/Revenue
=3438.82/10039.767
=0.3425199

Family Dollar Stores, Inc.'s gross margin of this year was 0.34201392. Family Dollar Stores, Inc.'s gross margin of last year was 0.3425199. ==> 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)
=10292.084/3771.982
=2.72856127

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Feb12)
=10039.767/3100.432
=3.23818326

Family Dollar Stores, Inc.'s asset turnover of this year was 2.72856127. Family Dollar Stores, Inc.'s asset turnover of last year was 3.23818326. ==> 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+0+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Family Dollar Stores, 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 own currency.

Family Dollar Stores, Inc. Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
Q1 1111111111
Q2 1111111111
Q3 0001011110
Q4 1111111101
Q5 0001111011
Q6 0000010011
Q7 1111101111
Q8 1011011000
Q9 0011010110
F-score 5468587676

Family Dollar Stores, Inc. Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
Q1 1111111111
Q2 1111111111
Q3 1111010000
Q4 1110001111
Q5 0111111111
Q6 1011010111
Q7 1111111111
Q8 0000000000
Q9 1111011000
F-score 7787476660
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