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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 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 (Jan15) TTM:Last Year (Jan14) TTM:
Net Income was 140.09 + 137.975 + 171.264 + 171.718 = $621 Mil.
Cash Flow from Operations was -39.257 + 119.331 + 352.513 + 246.502 = $679 Mil.
Revenue was 2244.866 + 2284.947 + 2543.771 + 2395.073 = $9,469 Mil.
Gross Profit was 378.758 + 363.999 + 423.584 + 444.605 = $1,611 Mil.
Average Total Assets from the begining of this year (Jan14)
to the end of this year (Jan15) was
(5067.17 + 5085.824 + 5188.433 + 5455.619 + 5559.623) / 5 = $5271.3338 Mil.
Total Assets at the begining of this year (Jan14) was $5,067 Mil.
Long-Term Debt was $250 Mil.
Total Current Assets was $2,246 Mil.
Total Current Liabilities was $937 Mil.
Net Income was 125.52 + 113.635 + 157.34 + 153.348 = $550 Mil.

Revenue was 2152.686 + 2159.525 + 2323.202 + 2242.672 = $8,878 Mil.
Gross Profit was 352.801 + 330.306 + 385.516 + 398.642 = $1,467 Mil.
Average Total Assets from the begining of last year (Jan13)
to the end of last year (Jan14) was
(4622.83 + 4667.641 + 4761.249 + 4915.88 + 5067.17) / 5 = $4806.954 Mil.
Total Assets at the begining of last year (Jan13) was $4,623 Mil.
Long-Term Debt was $250 Mil.
Total Current Assets was $2,167 Mil.
Total Current Liabilities was $825 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.

Hormel Foods Corp's current net income (TTM) was 621. ==> 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.

Hormel Foods Corp's current cash flow from operations (TTM) was 679. ==> 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 (Jan14)
=621.047/5067.17
=0.12256289

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=549.843/4622.83
=0.11894078

Hormel Foods Corp's return on assets of this year was 0.12256289. Hormel Foods Corp's return on assets of last year was 0.11894078. ==> 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.

Hormel Foods Corp's current net income (TTM) was 621. Hormel Foods Corp's current cash flow from operations (TTM) was 679. ==> 679 > 621 ==> 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: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=250/5271.3338
=0.04742633

Gearing (Last Year: Jan14)=Long-Term Debt/Average Total Assets from Jan13 to Jan14
=250/4806.954
=0.05200799

Hormel Foods Corp's gearing of this year was 0.04742633. Hormel Foods Corp's gearing of last year was 0.05200799. ==> This year is lower or equal to last year. ==> Score 1.

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: Jan15)=Total Current Assets/Total Current Liabilities
=2246.331/937.304
=2.39658745

Current Ratio (Last Year: Jan14)=Total Current Assets/Total Current Liabilities
=2166.833/824.525
=2.62797732

Hormel Foods Corp's current ratio of this year was 2.39658745. Hormel Foods Corp's current ratio of last year was 2.62797732. ==> 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.

Hormel Foods Corp's number of shares in issue this year was 270.1. 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

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
=1610.946/9468.657
=0.17013458

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1467.265/8878.085
=0.16526819

Hormel Foods Corp's gross margin of this year was 0.17013458. Hormel Foods Corp's gross margin of last year was 0.16526819. ==> 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 (Jan14)
=9468.657/5067.17
=1.86862825

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=8878.085/4622.83
=1.92048702

Hormel Foods Corp's asset turnover of this year was 1.86862825. Hormel Foods Corp's asset turnover of last year was 1.92048702. ==> 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+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
Question 1 1111111111
Question 2 1111111111
Question 3 1100111101
Question 4 1110111111
Question 5 1111110111
Question 6 0100101100
Question 7 1101110101
Question 8 1100110001
Question 9 1010010000
F-score 8854885747

Hormel Foods Corp Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
Question 1 1111111111
Question 2 1111111111
Question 3 1110011111
Question 4 1111111111
Question 5 1111111111
Question 6 1100001100
Question 7 1100001111
Question 8 0000011111
Question 9 0110000000
F-score 7864468877
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