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Hormel Foods Corp (NYSE:HRL)
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

Hormel Foods Corp has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

HRL' s 10-Year Piotroski F-Score Range
Min: 4   Max: 8
Current: 7

4
8

During the past 13 years, the highest Piotroski F-Score of Hormel Foods Corp was 8. The lowest was 4. And the median was 7.


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 (Oct14) TTM:Last Year (Oct13) TTM:
Net Income was 153.348 + 140.09 + 137.975 + 171.264 = $603 Mil.
Cash Flow from Operations was 314.292 + -39.257 + 119.331 + 352.513 = $747 Mil.
Revenue was 2242.672 + 2244.866 + 2284.947 + 2543.771 = $9,316 Mil.
Gross Profit was 398.642 + 378.758 + 363.999 + 423.584 = $1,565 Mil.
Average Total Assets from the begining of this year (Oct13)
to the end of this year (Oct14) was
(4915.88 + 5067.17 + 5085.824 + 5188.433 + 5455.619) / 5 = $5142.5852 Mil.
Total Assets at the begining of this year (Oct13) was $4,916 Mil.
Long-Term Debt was $250 Mil.
Total Current Assets was $2,133 Mil.
Total Current Liabilities was $955 Mil.
Net Income was 129.716 + 125.52 + 113.635 + 157.34 = $526 Mil.

Revenue was 2116.241 + 2152.686 + 2159.525 + 2323.202 = $8,752 Mil.
Gross Profit was 344.193 + 352.801 + 330.306 + 385.516 = $1,413 Mil.
Average Total Assets from the begining of last year (Oct12)
to the end of last year (Oct13) was
(4563.966 + 4622.83 + 4667.641 + 4761.249 + 4915.88) / 5 = $4706.3132 Mil.
Total Assets at the begining of last year (Oct12) was $4,564 Mil.
Long-Term Debt was $250 Mil.
Total Current Assets was $2,047 Mil.
Total Current Liabilities was $784 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.

Hormel Foods Corp's current net income (TTM) was 603. ==> 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.

Hormel Foods Corp's current cash flow from operations (TTM) was 747. ==> 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 (TTM)/Total Assets at the Beginning of This Year (Oct13)
=602.677/4915.88
=0.12259799

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=526.211/4563.966
=0.11529687

Hormel Foods Corp's return on assets of this year was 0.12259799. Hormel Foods Corp's return on assets of last year was 0.11529687. ==> This year is higher. ==> Score 1.

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.

Hormel Foods Corp's current net income (TTM) was 603. Hormel Foods Corp's current cash flow from operations (TTM) was 747. ==> 747 > 603 ==> 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: Oct14)=Long-Term Debt/Average Total Assets from Oct13 to Oct14
=250/5142.5852
=0.04861368

Gearing (Last Year: Oct13)=Long-Term Debt/Average Total Assets from Oct12 to Oct13
=250/4706.3132
=0.05312014

Hormel Foods Corp's gearing of this year was 0.04861368. Hormel Foods Corp's gearing of last year was 0.05312014. ==> 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: Oct14)=Total Current Assets/Total Current Liabilities
=2132.771/954.692
=2.23398855

Current Ratio (Last Year: Oct13)=Total Current Assets/Total Current Liabilities
=2047.413/784.009
=2.61146619

Hormel Foods Corp's current ratio of this year was 2.23398855. Hormel Foods Corp's current ratio of last year was 2.61146619. ==> Last year's current ratio is higher ==> Score 0.

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.

Hormel Foods Corp's number of shares in issue this year was 269.8. Hormel Foods Corp's number of shares in issue last year was 270.2. ==> 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: TTM)=Gross Profit/Revenue
=1564.983/9316.256
=0.16798411

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1412.816/8751.654
=0.16143417

Hormel Foods Corp's gross margin of this year was 0.16798411. Hormel Foods Corp's gross margin of last year was 0.16143417. ==> This year's gross margin is higher. ==> Score 1.

Q9. 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 (Oct13)
=9316.256/4915.88
=1.89513495

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=8751.654/4563.966
=1.9175546

Hormel Foods Corp's asset turnover of this year was 1.89513495. Hormel Foods Corp's asset turnover of last year was 1.9175546. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+1+0+1+1+0
=7

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

Hormel Foods Corp has an F-score of 7. 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.

Hormel Foods Corp Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
Q1 1111111111
Q2 1111111111
Q3 1100111101
Q4 1110111111
Q5 1111110111
Q6 0100101100
Q7 1101110101
Q8 1100110001
Q9 1010010000
F-score 8854885747

Hormel Foods Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Q1 1111111111
Q2 1111111111
Q3 0111001111
Q4 0111111111
Q5 1111111111
Q6 1110000110
Q7 1110000111
Q8 0000001111
Q9 0011000000
F-score 5786446887
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