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Johnson & Johnson (NYSE:JNJ)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

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: 7
Current: 6

4
7

During the past 13 years, the highest Piotroski F-Score of Johnson & Johnson was 7. 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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 3519 + 2982 + 3833 + 3497 = $13,831 Mil.
Cash Flow from Operations was 4139 + 5947 + 5051 + 2277 = $17,414 Mil.
Revenue was 18355 + 17575 + 17877 + 17505 = $71,312 Mil.
Gross Profit was 12400 + 12231 + 12388 + 11951 = $48,970 Mil.
Total Assets at the begining of this year (Dec12) was $121,347 Mil.
Total Assets was $132,683 Mil.
Long-Term Debt was $13,328 Mil.
Total Current Assets was $56,407 Mil.
Total Current Liabilities was $25,675 Mil.
Net Income was 2567 + 2968 + 1408 + 3910 = $10,853 Mil.

Revenue was 17558 + 17052 + 16475 + 16139 = $67,224 Mil.
Gross Profit was 11555 + 11455 + 11332 + 11224 = $45,566 Mil.
Total Assets at the begining of last year (Dec11) was $113,644 Mil.
Total Assets was $121,347 Mil.
Long-Term Debt was $11,489 Mil.
Total Current Assets was $46,116 Mil.
Total Current Liabilities was $24,262 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.

Johnson & Johnson's current net income was 13,831. ==> 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.

Johnson & Johnson's current cash flow from operations was 17,414. ==> 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/Total Assets at the beginning of this year (Dec12)
=13831/121347
=0.11397892

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=10853/113644
=0.09549998

Johnson & Johnson's return on assets of this year was 0.11397892. Johnson & Johnson's return on assets of last year was 0.09549998. ==> 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.

Johnson & Johnson's current net income was 13,831. Johnson & Johnson's current cash flow from operations was 17,414. ==> 17,414 > 13,831 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=13328/132683
=0.10044994

Gearing (Last Year)=Long-Term Debt/Total Assets
=11489/121347
=0.0946789

Johnson & Johnson's gearing of this year was 0.10044994. Johnson & Johnson's gearing of last year was 0.0946789. ==> Last year is lower ==> Score 0.

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)=Total Current Assets/Total Current Liabilities
=56407/25675
=2.19696203

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=46116/24262
=1.90075014

Johnson & Johnson's current ratio of this year was 2.19696203. Johnson & Johnson's current ratio of last year was 1.90075014. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Johnson & Johnson's number of shares in issue this year was 2871. Johnson & Johnson's number of shares in issue last year was 2835.4. ==> There is more number of shares in issue this year. ==> Score 0.

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)=Gross Profit/Revenue
=48970/71312
=0.6867007

Gross Margin (Last Year)=Gross Profit/Revenue
=45566/67224
=0.6778234

Johnson & Johnson's gross margin of this year was 0.6867007. Johnson & Johnson's gross margin of last year was 0.6778234. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Dec12)
=71312/121347
=0.58767007

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=67224/113644
=0.59153145

Johnson & Johnson's asset turnover of this year was 0.58767007. Johnson & Johnson's asset turnover of last year was 0.59153145. ==> 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+0+1+0+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 0100100011
Q4 1111111111
Q5 1110010010
Q6 1101111101
Q7 1011111100
Q8 1100100001
Q9 0000000000
F-score 7755765556

Johnson & Johnson Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 0000010111
Q4 1111111111
Q5 0001111110
Q6 1110000111
Q7 1100000000
Q8 0000000011
Q9 0000000110
F-score 5544454786
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