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Family Dollar Stores Inc (NYSE:FDO)
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

Family Dollar Stores Inc has an F-score of 7 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: 7

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 (May14) TTM:Last Year (May13) TTM:
Net Income was 81.147 + 90.869 + 78.027 + 102.213 = $352 Mil.
Cash Flow from Operations was 141.077 + 85.791 + 26.133 + 146.622 = $400 Mil.
Revenue was 2658.964 + 2716.621 + 2499.691 + 2502.266 = $10,378 Mil.
Gross Profit was 910.853 + 902.294 + 856.841 + 868.443 = $3,538 Mil.
Total Assets at the begining of this year (May13) was $3,850 Mil.
Total Assets was $3,963 Mil.
Long-Term Debt was $484 Mil.
Total Current Assets was $2,091 Mil.
Total Current Liabilities was $1,301 Mil.
Net Income was 120.938 + 140.145 + 80.279 + 80.931 = $422 Mil.

Revenue was 2573.506 + 2893.997 + 2421.688 + 2364.125 = $10,253 Mil.
Gross Profit was 892.458 + 967.05 + 826.794 + 799.703 = $3,486 Mil.
Total Assets at the begining of last year (May12) was $3,273 Mil.
Total Assets was $3,850 Mil.
Long-Term Debt was $500 Mil.
Total Current Assets was $1,902 Mil.
Total Current Liabilities was $1,275 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 352. ==> 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 400. ==> 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 (May13)
=352.256/3850.404
=0.09148546

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (May12)
=422.293/3273.044
=0.12902149

Family Dollar Stores Inc's return on assets of this year was 0.09148546. Family Dollar Stores Inc's return on assets of last year was 0.12902149. ==> 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 352. Family Dollar Stores Inc's current cash flow from operations was 400. ==> 400 > 352 ==> 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
=484.188/3963.104
=0.12217393

Gearing (Last Year)=Long-Term Debt/Total Assets
=500.237/3850.404
=0.12991806

Family Dollar Stores Inc's gearing of this year was 0.12217393. Family Dollar Stores Inc's gearing of last year was 0.12991806. ==> 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
=2090.659/1301.275
=1.6066235

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1901.914/1275.169
=1.49149956

Family Dollar Stores Inc's current ratio of this year was 1.6066235. Family Dollar Stores Inc's current ratio of last year was 1.49149956. ==> 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.

Family Dollar Stores Inc's number of shares in issue this year was 114.2. Family Dollar Stores Inc's number of shares in issue last year was 115.5. ==> 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
=3538.431/10377.542
=0.34097005

Gross Margin (Last Year)=Gross Profit/Revenue
=3486.005/10253.316
=0.33998806

Family Dollar Stores Inc's gross margin of this year was 0.34097005. Family Dollar Stores Inc's gross margin of last year was 0.33998806. ==> 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 (May13)
=10377.542/3850.404
=2.69518264

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (May12)
=10253.316/3273.044
=3.1326545

Family Dollar Stores Inc's asset turnover of this year was 2.69518264. Family Dollar Stores Inc's asset turnover of last year was 3.1326545. ==> 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

Family Dollar Stores 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.

Family Dollar Stores Inc Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
Q1 1111111111
Q2 1111111111
Q3 0001011110
Q4 1111111101
Q5 1101111011
Q6 0000010011
Q7 1111101111
Q8 1011011000
Q9 0011010110
F-score 6568587676

Family Dollar Stores Inc Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
Q1 1111111111
Q2 1111111111
Q3 1110100000
Q4 1100011111
Q5 1111111111
Q6 0110101111
Q7 1111111111
Q8 0000000001
Q9 1110110000
F-score 7874766667
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