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Keurig Green Mountain Inc (NAS:GMCR)
Piotroski F-Score
4 (As of Today)

The zones of discrimination were as such:

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

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

GMCR' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 9
Current: 4

2
9

During the past 13 years, the highest Piotroski F-Score of Keurig Green Mountain Inc was 9. The lowest was 2. And the median was 5.


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 (Dec15) TTM:Last Year (Dec14) TTM:
Net Income was 155.479 + 113.621 + 94.596 + 104.497 = $468 Mil.
Cash Flow from Operations was 225.557 + 242.137 + 144.76 + 334.33 = $947 Mil.
Revenue was 1127.184 + 969.525 + 1036.964 + 1258.421 = $4,392 Mil.
Gross Profit was 458.808 + 349.26 + 335.334 + 359.997 = $1,503 Mil.
Average Total Assets from the begining of this year (Dec14)
to the end of this year (Dec15) was
(4775.865 + 4054.685 + 3994.487 + 4001.577 + 3931.453) / 5 = $4151.6134 Mil.
Total Assets at the begining of this year (Dec14) was $4,776 Mil.
Long-Term Debt was $597 Mil.
Total Current Assets was $1,512 Mil.
Total Current Liabilities was $579 Mil.
Net Income was 162.084 + 155.151 + 141.056 + 134.579 = $593 Mil.

Revenue was 1103.072 + 1022.371 + 1195.567 + 1386.358 = $4,707 Mil.
Gross Profit was 457.432 + 444.592 + 449.789 + 464.122 = $1,816 Mil.
Average Total Assets from the begining of last year (Dec13)
to the end of last year (Dec14) was
(3680.108 + 4362.729 + 4643.664 + 4797.307 + 4775.865) / 5 = $4451.9346 Mil.
Total Assets at the begining of last year (Dec13) was $3,680 Mil.
Long-Term Debt was $251 Mil.
Total Current Assets was $2,231 Mil.
Total Current Liabilities was $805 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.

Keurig Green Mountain Inc's current net income (TTM) was 468. ==> 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.

Keurig Green Mountain Inc's current cash flow from operations (TTM) was 947. ==> 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 (Dec14)
=468.193/4775.865
=0.09803313

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=592.87/3680.108
=0.16110125

Keurig Green Mountain Inc's return on assets of this year was 0.09803313. Keurig Green Mountain Inc's return on assets of last year was 0.16110125. ==> Last year is higher ==> Score 0.

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.

Keurig Green Mountain Inc's current net income (TTM) was 468. Keurig Green Mountain Inc's current cash flow from operations (TTM) was 947. ==> 947 > 468 ==> 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: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=597.245/4151.6134
=0.14385853

Gearing (Last Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=251.077/4451.9346
=0.05639728

Keurig Green Mountain Inc's gearing of this year was 0.14385853. Keurig Green Mountain Inc's gearing of last year was 0.05639728. ==> 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: Dec15)=Total Current Assets/Total Current Liabilities
=1511.924/579.47
=2.60914974

Current Ratio (Last Year: Dec14)=Total Current Assets/Total Current Liabilities
=2230.817/805.438
=2.76969425

Keurig Green Mountain Inc's current ratio of this year was 2.60914974. Keurig Green Mountain Inc's current ratio of last year was 2.76969425. ==> Last year's current ratio is higher ==> Score 0.

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.

Keurig Green Mountain Inc's number of shares in issue this year was 151. Keurig Green Mountain Inc's number of shares in issue last year was 164.1. ==> 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
=1503.399/4392.094
=0.34229664

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1815.935/4707.368
=0.3857644

Keurig Green Mountain Inc's gross margin of this year was 0.34229664. Keurig Green Mountain Inc's gross margin of last year was 0.3857644. ==> Last year's gross margin is higher ==> Score 0.

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 (Dec14)
=4392.094/4775.865
=0.91964367

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=4707.368/3680.108
=1.27913855

Keurig Green Mountain Inc's asset turnover of this year was 0.91964367. Keurig Green Mountain Inc's asset turnover of last year was 1.27913855. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+0+0+1+0+0
=4

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

Keurig Green Mountain 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.

Keurig Green Mountain Inc Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
Question 1 1111111111
Question 2 1111011111
Question 3 0011010110
Question 4 1100001111
Question 5 0101011110
Question 6 0011011110
Question 7 0000000101
Question 8 1100110110
Question 9 1011010010
F-score 5556275884

Keurig Green Mountain Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1111110000
Question 4 1111100011
Question 5 1111110000
Question 6 1111110000
Question 7 1100000111
Question 8 1111111000
Question 9 0010110000
F-score 8887873344
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