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3M Co (FRA:MMM)
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 = 7, 8, 9
Bad or low score = 0, 1, 2, 3

3M Co has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

FRA:MMM' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 9
Current: 7

4
9

During the past 13 years, the highest Piotroski F-Score of 3M Co was 9. The lowest was 4. 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 (Sep15) TTM:Last Year (Sep14) TTM:
Net Income was 956.204379562 + 1107.82592627 + 1158.3355609 + 1154.77145148 = €4,377 Mil.
Cash Flow from Operations was 1770.4785077 + 997.874896055 + 1192.19460037 + 1482.66951795 = €5,443 Mil.
Revenue was 6260.3406326 + 7001.75552065 + 6848.43624699 + 6871.60295821 = €26,982 Mil.
Gross Profit was 2994.32278994 + 3471.31109674 + 3410.85271318 + 3417.08990466 = €13,294 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(25433.3824785 + 25360.0973236 + 28312.8522591 + 27967.5666043 + 29633.7877573) / 5 = €27341.5372845 Mil.
Total Assets at the begining of this year (Sep14) was €25,433 Mil.
Long-Term Debt was €7,996 Mil.
Total Current Assets was €10,343 Mil.
Total Current Liabilities was €6,266 Mil.
Net Income was 804.111686229 + 872.677319066 + 932.509015971 + 1011.09645379 = €3,620 Mil.

Revenue was 5517.97040169 + 5661.91887788 + 5986.60484286 + 6314.11499961 = €23,481 Mil.
Gross Profit was 2619.37741489 + 2747.45137734 + 2907.19069699 + 3051.13680453 = €11,325 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(25169.6502135 + 24458.7008821 + 24254.9345673 + 25001.8399941 + 25433.3824785) / 5 = €24863.7016271 Mil.
Total Assets at the begining of last year (Sep13) was €25,170 Mil.
Long-Term Debt was €4,054 Mil.
Total Current Assets was €9,840 Mil.
Total Current Liabilities was €5,979 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.

3M Co's current net income (TTM) was 4,377. ==> 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.

3M Co's current cash flow from operations (TTM) was 5,443. ==> 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 (Sep14)
=4377.13731822/25433.3824785
=0.17210205

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=3620.39447506/25169.6502135
=0.14383968

3M Co's return on assets of this year was 0.17210205. 3M Co's return on assets of last year was 0.14383968. ==> 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.

3M Co's current net income (TTM) was 4,377. 3M Co's current cash flow from operations (TTM) was 5,443. ==> 5,443 > 4,377 ==> 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: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=7996.07947964/27341.5372845
=0.29245172

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=4054.47350043/24863.7016271
=0.16306798

3M Co's gearing of this year was 0.29245172. 3M Co's gearing of last year was 0.16306798. ==> 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: Sep15)=Total Current Assets/Total Current Liabilities
=10343.0455315/6265.70435712
=1.65073948

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=9840.14898735/5978.89345852
=1.64581441

3M Co's current ratio of this year was 1.65073948. 3M Co's current ratio of last year was 1.64581441. ==> This year's current ratio is higher. ==> Score 1.

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.

3M Co's number of shares in issue this year was 631.2. 3M Co's number of shares in issue last year was 657.9. ==> 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
=13293.5765045/26982.1353585
=0.49268067

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=11325.1562937/23480.6091221
=0.48231953

3M Co's gross margin of this year was 0.49268067. 3M Co's gross margin of last year was 0.48231953. ==> This year's gross margin is higher. ==> Score 1.

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 (Sep14)
=26982.1353585/25433.3824785
=1.06089449

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=23480.6091221/25169.6502135
=0.93289374

3M Co's asset turnover of this year was 1.06089449. 3M Co's asset turnover of last year was 0.93289374. ==> 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+1+1+1+1
=8

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

3M Co has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.


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.

3M Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1100101011
Question 4 0111111111
Question 5 1001101100
Question 6 0101010010
Question 7 1111011111
Question 8 0001101111
Question 9 0100101011
F-score 5747758687

3M Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 0001111111
Question 4 1111111111
Question 5 1110000000
Question 6 0000011110
Question 7 1111111111
Question 8 0111111111
Question 9 0001111111
F-score 5667788887
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