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

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

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 3. It is a bad or low score, which usually implies poor business operation.

GMCR' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 3

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 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 (Jun15) TTM:Last Year (Jun14) TTM:
Net Income was 141.056 + 134.579 + 155.479 + 113.621 = $545 Mil.
Cash Flow from Operations was -104.335 + 142.408 + 225.557 + 242.137 = $506 Mil.
Revenue was 1195.567 + 1386.358 + 1127.184 + 969.525 = $4,679 Mil.
Gross Profit was 449.789 + 464.122 + 458.808 + 349.26 = $1,722 Mil.
Average Total Assets from the begining of this year (Jun14)
to the end of this year (Jun15) was
(4643.664 + 4797.307 + 4775.865 + 4054.685 + 3994.487) / 5 = $4453.2016 Mil.
Total Assets at the begining of this year (Jun14) was $4,644 Mil.
Long-Term Debt was $410 Mil.
Total Current Assets was $1,398 Mil.
Total Current Liabilities was $525 Mil.
Net Income was 126.956 + 138.227 + 162.084 + 155.151 = $582 Mil.

Revenue was 1047.177 + 1386.67 + 1103.072 + 1022.371 = $4,559 Mil.
Gross Profit was 377.459 + 464.047 + 457.432 + 444.592 = $1,744 Mil.
Average Total Assets from the begining of last year (Jun13)
to the end of last year (Jun14) was
(3623.383 + 3761.548 + 3680.108 + 4362.729 + 4643.664) / 5 = $4014.2864 Mil.
Total Assets at the begining of last year (Jun13) was $3,623 Mil.
Long-Term Debt was $254 Mil.
Total Current Assets was $2,340 Mil.
Total Current Liabilities was $683 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 545. ==> 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 506. ==> 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 (Jun14)
=544.735/4643.664
=0.11730715

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=582.418/3623.383
=0.16073874

Keurig Green Mountain Inc's return on assets of this year was 0.11730715. Keurig Green Mountain Inc's return on assets of last year was 0.16073874. ==> 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 545. Keurig Green Mountain Inc's current cash flow from operations (TTM) was 506. ==> 506 <= 545 ==> CFROA <= ROA ==> Score 0.

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: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=410.024/4453.2016
=0.09207398

Gearing (Last Year: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=254.163/4014.2864
=0.06331462

Keurig Green Mountain Inc's gearing of this year was 0.09207398. Keurig Green Mountain Inc's gearing of last year was 0.06331462. ==> 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: Jun15)=Total Current Assets/Total Current Liabilities
=1398.026/524.723
=2.66431241

Current Ratio (Last Year: Jun14)=Total Current Assets/Total Current Liabilities
=2340.25/683.276
=3.42504347

Keurig Green Mountain Inc's current ratio of this year was 2.66431241. Keurig Green Mountain Inc's current ratio of last year was 3.42504347. ==> 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 155.6. Keurig Green Mountain Inc's number of shares in issue last year was 164.7. ==> 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
=1721.979/4678.634
=0.36805166

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1743.53/4559.29
=0.38241261

Keurig Green Mountain Inc's gross margin of this year was 0.36805166. Keurig Green Mountain Inc's gross margin of last year was 0.38241261. ==> 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 (Jun14)
=4678.634/4643.664
=1.00753069

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=4559.29/3623.383
=1.25829646

Keurig Green Mountain Inc's asset turnover of this year was 1.00753069. Keurig Green Mountain Inc's asset turnover of last year was 1.25829646. ==> 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+0+0+0+1+0+0
=3

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

Keurig Green Mountain Inc has an F-score of 3. It is a bad or low score, which usually implies poor business operation.


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

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
Question 1 1111111111
Question 2 1111101111
Question 3 0001101011
Question 4 1110000111
Question 5 1010101111
Question 6 1001101111
Question 7 0000000110
Question 8 0110011011
Question 9 0101101001
F-score 5555627688

Keurig Green Mountain Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Question 1 1111111111
Question 2 1111111111
Question 3 0111111100
Question 4 1111111000
Question 5 1111111100
Question 6 1111111100
Question 7 1111000001
Question 8 1111111110
Question 9 0100101100
F-score 7988878733
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