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The Hershey Co (NYSE:HSY)
Piotroski F-Score
5 (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

The Hershey Co has an F-score of 5 indicating the company's financial situation is typical for a stable company.

HSY' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 9
Current: 5

4
9

During the past 13 years, the highest Piotroski F-Score of The Hershey 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 (Mar16) TTM:Last Year (Mar15) TTM:
Net Income was -99.941 + 154.771 + 213.384 + 229.832 = $498 Mil.
Cash Flow from Operations was 221.715 + 106.916 + 626.592 + 257.115 = $1,212 Mil.
Revenue was 1578.825 + 1960.779 + 1909.222 + 1828.812 = $7,278 Mil.
Gross Profit was 735.408 + 892.064 + 854.36 + 817.376 = $3,299 Mil.
Average Total Assets from the begining of this year (Mar15)
to the end of this year (Mar16) was
(5757.462 + 5449.33 + 5630.62 + 5344.371 + 5305.84) / 5 = $5497.5246 Mil.
Total Assets at the begining of this year (Mar15) was $5,757 Mil.
Long-Term Debt was $1,571 Mil.
Total Current Assets was $1,773 Mil.
Total Current Liabilities was $2,337 Mil.
Net Income was 168.168 + 223.741 + 202.508 + 244.737 = $839 Mil.

Revenue was 1578.35 + 1961.578 + 2010.027 + 1937.8 = $7,488 Mil.
Gross Profit was 717.474 + 860.137 + 887.065 + 900.843 = $3,366 Mil.
Average Total Assets from the begining of last year (Mar14)
to the end of last year (Mar15) was
(5428.846 + 5184.969 + 5916.553 + 5622.87 + 5757.462) / 5 = $5582.14 Mil.
Total Assets at the begining of last year (Mar14) was $5,429 Mil.
Long-Term Debt was $1,560 Mil.
Total Current Assets was $2,108 Mil.
Total Current Liabilities was $2,175 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.

The Hershey Co's current net income (TTM) was 498. ==> 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.

The Hershey Co's current cash flow from operations (TTM) was 1,212. ==> 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 (Mar15)
=498.046/5757.462
=0.08650444

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar14)
=839.154/5428.846
=0.15457318

The Hershey Co's return on assets of this year was 0.08650444. The Hershey Co's return on assets of last year was 0.15457318. ==> 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.

The Hershey Co's current net income (TTM) was 498. The Hershey Co's current cash flow from operations (TTM) was 1,212. ==> 1,212 > 498 ==> 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: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=1571.388/5497.5246
=0.28583556

Gearing (Last Year: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=1560.265/5582.14
=0.27951019

The Hershey Co's gearing of this year was 0.28583556. The Hershey Co's gearing of last year was 0.27951019. ==> 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: Mar16)=Total Current Assets/Total Current Liabilities
=1772.918/2336.972
=0.75863896

Current Ratio (Last Year: Mar15)=Total Current Assets/Total Current Liabilities
=2108.099/2175.13
=0.96918299

The Hershey Co's current ratio of this year was 0.75863896. The Hershey Co's current ratio of last year was 0.96918299. ==> 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.

The Hershey Co's number of shares in issue this year was 217.5. The Hershey Co's number of shares in issue last year was 222.7. ==> 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
=3299.208/7277.638
=0.453335

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3365.519/7487.755
=0.4494697

The Hershey Co's gross margin of this year was 0.453335. The Hershey Co's gross margin of last year was 0.4494697. ==> 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 (Mar15)
=7277.638/5757.462
=1.26403579

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar14)
=7487.755/5428.846
=1.37925353

The Hershey Co's asset turnover of this year was 1.26403579. The Hershey Co's asset turnover of last year was 1.37925353. ==> 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+1+0
=5

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

The Hershey Co has an F-score of 5 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.

The Hershey Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1011111100
Question 4 1111101101
Question 5 0000101011
Question 6 1011110100
Question 7 1110011111
Question 8 0011101101
Question 9 0111101000
F-score 6587858746

The Hershey Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
Question 1 1111111111
Question 2 1111111111
Question 3 1110000000
Question 4 1111011111
Question 5 0011111010
Question 6 1100000000
Question 7 1111111111
Question 8 1110000111
Question 9 0110000000
F-score 7885455565
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