Switch to:
Johnson & Johnson (NYSE:JNJ)
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

Johnson & Johnson has an F-score of 6 indicating the company's financial situation is typical for a stable company.

JNJ' s 10-Year Piotroski F-Score Range
Min: 4   Max: 8
Current: 6

4
8

During the past 13 years, the highest Piotroski F-Score of Johnson & Johnson 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 (Mar15) TTM:Last Year (Mar14) TTM:
Net Income was 4326 + 4749 + 2521 + 4320 = $15,916 Mil.
Cash Flow from Operations was 5529 + 4654 + 4365 + 2872 = $17,420 Mil.
Revenue was 19495 + 18467 + 18254 + 17374 = $73,590 Mil.
Gross Profit was 13456 + 13068 + 12401 + 12092 = $51,017 Mil.
Average Total Assets from the begining of this year (Mar14)
to the end of this year (Mar15) was
(133330 + 135200 + 132097 + 131119 + 128590) / 5 = $132067.2 Mil.
Total Assets at the begining of this year (Mar14) was $133,330 Mil.
Long-Term Debt was $14,938 Mil.
Total Current Assets was $58,192 Mil.
Total Current Liabilities was $23,836 Mil.
Net Income was 3833 + 2982 + 3519 + 4727 = $15,061 Mil.

Revenue was 17877 + 17575 + 18355 + 18115 = $71,922 Mil.
Gross Profit was 12388 + 12231 + 12400 + 12660 = $49,679 Mil.
Average Total Assets from the begining of last year (Mar13)
to the end of last year (Mar14) was
(121536 + 124325 + 126933 + 132683 + 133330) / 5 = $127761.4 Mil.
Total Assets at the begining of last year (Mar13) was $121,536 Mil.
Long-Term Debt was $13,343 Mil.
Total Current Assets was $57,369 Mil.
Total Current Liabilities was $23,840 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.

Johnson & Johnson's current net income (TTM) was 15,916. ==> 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.

Johnson & Johnson's current cash flow from operations (TTM) was 17,420. ==> 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 (Mar14)
=15916/133330
=0.11937298

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar13)
=15061/121536
=0.12392213

Johnson & Johnson's return on assets of this year was 0.11937298. Johnson & Johnson's return on assets of last year was 0.12392213. ==> 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.

Johnson & Johnson's current net income (TTM) was 15,916. Johnson & Johnson's current cash flow from operations (TTM) was 17,420. ==> 17,420 > 15,916 ==> 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: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=14938/132067.2
=0.11310908

Gearing (Last Year: Mar14)=Long-Term Debt/Average Total Assets from Mar13 to Mar14
=13343/127761.4
=0.10443686

Johnson & Johnson's gearing of this year was 0.11310908. Johnson & Johnson's gearing of last year was 0.10443686. ==> 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: Mar15)=Total Current Assets/Total Current Liabilities
=58192/23836
=2.44134922

Current Ratio (Last Year: Mar14)=Total Current Assets/Total Current Liabilities
=57369/23840
=2.40641779

Johnson & Johnson's current ratio of this year was 2.44134922. Johnson & Johnson's current ratio of last year was 2.40641779. ==> 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.

Johnson & Johnson's number of shares in issue this year was 2826. Johnson & Johnson's number of shares in issue last year was 2874.7. ==> 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
=51017/73590
=0.69325995

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=49679/71922
=0.69073441

Johnson & Johnson's gross margin of this year was 0.69325995. Johnson & Johnson's gross margin of last year was 0.69073441. ==> 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 (Mar14)
=73590/133330
=0.5519388

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar13)
=71922/121536
=0.59177528

Johnson & Johnson's asset turnover of this year was 0.5519388. Johnson & Johnson's asset turnover of last year was 0.59177528. ==> 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+1+1+1+0
=6

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

Johnson & Johnson 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.

Johnson & Johnson Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 1001000111
Question 4 1111111111
Question 5 1100100100
Question 6 1011111011
Question 7 0111111001
Question 8 1001000011
Question 9 0000000000
F-score 7557655567

Johnson & Johnson Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Question 1 1111111111
Question 2 1111111111
Question 3 1011111110
Question 4 1111111111
Question 5 1111000000
Question 6 0011111111
Question 7 0000001111
Question 8 0001111111
Question 9 0011010000
F-score 5478677776
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK