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JC Penney Co Inc (NYSE:JCP)
Piotroski F-Score
6 (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

JC Penney Co Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

JCP' s 10-Year Piotroski F-Score Range
Min: 1   Max: 9
Current: 6

1
9

During the past 13 years, the highest Piotroski F-Score of JC Penney Co Inc was 9. The lowest was 1. 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 (Jan15) TTM:Last Year (Apr14) TTM:
Net Income was -172 + -188 + 0 + -59 = $-419 Mil.
Cash Flow from Operations was 137 + -320 + 693 + 693 = $1,203 Mil.
Revenue was 2799 + 2764 + 0 + 3893 = $9,456 Mil.
Gross Profit was 1008 + 1013 + 0 + 1314 = $3,335 Mil.
Average Total Assets from the begining of this year (Apr14)
to the end of this year (Jan15) was
(11292 + 11112 + 11165 + 0 + 10404) / 5 = $8794.6 Mil.
Total Assets at the begining of this year (Apr14) was $11,292 Mil.
Long-Term Debt was $5,360 Mil.
Total Current Assets was $4,331 Mil.
Total Current Liabilities was $2,241 Mil.
Net Income was -489 + 0 + 35 + -352 = $-806 Mil.

Revenue was 2779 + 0 + 3782 + 2801 = $9,362 Mil.
Gross Profit was 819 + 0 + 1074 + 926 = $2,819 Mil.
Average Total Assets from the begining of last year (Jul13)
to the end of last year (Apr14) was
(11654 + 11875 + 0 + 11801 + 11292) / 5 = $9324.4 Mil.
Total Assets at the begining of last year (Jul13) was $11,654 Mil.
Long-Term Debt was $4,891 Mil.
Total Current Assets was $4,395 Mil.
Total Current Liabilities was $2,711 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.

JC Penney Co Inc's current net income (TTM) was -419. ==> Negative ==> Score 0.

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.

JC Penney Co Inc's current cash flow from operations (TTM) was 1,203. ==> 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 (Apr14)
=-419/11292
=-0.03710592

JC Penney Co Inc's return on assets of this year was -0.03710592. JC Penney Co Inc's return on assets of last year was -0.0691608. ==> 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.

JC Penney Co Inc's current net income (TTM) was -419. JC Penney Co Inc's current cash flow from operations (TTM) was 1,203. ==> 1,203 > -419 ==> 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 Apr14 to Jan15
=5360/8794.6
=0.6094649

Gearing (Last Year: Apr14)=Long-Term Debt/Average Total Assets from Jul13 to Apr14
=4891/9324.4
=0.52453777

JC Penney Co Inc's gearing of this year was 0.6094649. JC Penney Co Inc's gearing of last year was 0.52453777. ==> 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: Jan15)=Total Current Assets/Total Current Liabilities
=4331/2241
=1.93261937

Current Ratio (Last Year: Apr14)=Total Current Assets/Total Current Liabilities
=4395/2711
=1.621173

JC Penney Co Inc's current ratio of this year was 1.93261937. JC Penney Co Inc's current ratio of last year was 1.621173. ==> This year's current ratio is higher. ==> Score 1.

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.

JC Penney Co Inc's number of shares in issue this year was 305.5. JC Penney Co Inc's number of shares in issue last year was 305. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=3335/9456
=0.35268613

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2819/9362
=0.30111087

JC Penney Co Inc's gross margin of this year was 0.35268613. JC Penney Co Inc's gross margin of last year was 0.30111087. ==> 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 (Apr14)
=9456/11292
=0.83740701

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jul13)
=9362/11654
=0.80332933

JC Penney Co Inc's asset turnover of this year was 0.83740701. JC Penney Co Inc's asset turnover of last year was 0.80332933. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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

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

JC Penney Co Inc has an F-score of 6 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.

JC Penney Co Inc Annual Data

Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15
Question 1 1111110000
Question 2 1111111001
Question 3 1100010001
Question 4 1111111101
Question 5 0100111000
Question 6 0011010011
Question 7 1111001000
Question 8 1100100001
Question 9 1100100010
F-score 7855664125

JC Penney Co Inc Quarterly Data

Jul13Oct13Dec13Jan14Apr14Jul14Oct14Dec14Jan15Apr15
Question 1 00000
Question 2 00011
Question 3 00111
Question 4 11111
Question 5 00100
Question 6 01111
Question 7 00000
Question 8 01111
Question 9 01011
F-score 1104544060
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