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CarMax Inc (NYSE:KMX)
Piotroski F-Score
4 (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

CarMax Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

KMX' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 9
Current: 4

2
9

During the past 13 years, the highest Piotroski F-Score of CarMax Inc was 9. The lowest was 2. 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 (Nov15) TTM:Last Year (Nov14) TTM:
Net Income was 143.138 + 181.974 + 172.228 + 128.199 = $626 Mil.
Cash Flow from Operations was -183.515 + 117.554 + -202.298 + -296.835 = $-565 Mil.
Revenue was 3514.092 + 4014.888 + 3884.913 + 3544.069 = $14,958 Mil.
Gross Profit was 475.837 + 543.794 + 521.37 + 464.331 = $2,005 Mil.
Average Total Assets from the begining of this year (Nov14)
to the end of this year (Nov15) was
(12843.406 + 13198.201 + 13670.677 + 13952.565 + 14381.165) / 5 = $13609.2028 Mil.
Total Assets at the begining of this year (Nov14) was $12,843 Mil.
Long-Term Debt was $10,316 Mil.
Total Current Assets was $2,635 Mil.
Total Current Liabilities was $924 Mil.
Net Income was 99.209 + 169.653 + 154.518 + 130.049 = $553 Mil.

Revenue was 3076.283 + 3750.196 + 3599.194 + 3405.234 = $13,831 Mil.
Gross Profit was 384.141 + 501.731 + 463.339 + 446.62 = $1,796 Mil.
Average Total Assets from the begining of last year (Nov13)
to the end of last year (Nov14) was
(11303.875 + 11707.157 + 12148.96 + 12399.913 + 12843.406) / 5 = $12080.6622 Mil.
Total Assets at the begining of last year (Nov13) was $11,304 Mil.
Long-Term Debt was $8,550 Mil.
Total Current Assets was $2,573 Mil.
Total Current Liabilities was $928 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.

CarMax Inc's current net income (TTM) was 626. ==> 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.

CarMax Inc's current cash flow from operations (TTM) was -565. ==> Negative ==> Score 0.

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 (Nov14)
=625.539/12843.406
=0.04870507

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Nov13)
=553.429/11303.875
=0.04895923

CarMax Inc's return on assets of this year was 0.04870507. CarMax Inc's return on assets of last year was 0.04895923. ==> 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.

CarMax Inc's current net income (TTM) was 626. CarMax Inc's current cash flow from operations (TTM) was -565. ==> -565 <= 626 ==> CFROA <= ROA ==> Score 0.

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: Nov15)=Long-Term Debt/Average Total Assets from Nov14 to Nov15
=10315.946/13609.2028
=0.75801251

Gearing (Last Year: Nov14)=Long-Term Debt/Average Total Assets from Nov13 to Nov14
=8550.397/12080.6622
=0.70777552

CarMax Inc's gearing of this year was 0.75801251. CarMax Inc's gearing of last year was 0.70777552. ==> 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: Nov15)=Total Current Assets/Total Current Liabilities
=2634.883/923.554
=2.85298207

Current Ratio (Last Year: Nov14)=Total Current Assets/Total Current Liabilities
=2573.252/928.182
=2.77235715

CarMax Inc's current ratio of this year was 2.85298207. CarMax Inc's current ratio of last year was 2.77235715. ==> 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.

CarMax Inc's number of shares in issue this year was 203.4. CarMax Inc's number of shares in issue last year was 217. ==> 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
=2005.332/14957.962
=0.13406452

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1795.831/13830.907
=0.12984188

CarMax Inc's gross margin of this year was 0.13406452. CarMax Inc's gross margin of last year was 0.12984188. ==> 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 (Nov14)
=14957.962/12843.406
=1.16464137

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Nov13)
=13830.907/11303.875
=1.22355449

CarMax Inc's asset turnover of this year was 1.16464137. CarMax Inc's asset turnover of last year was 1.22355449. ==> 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+0+0+0+0+1+1+1+0
=4

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

CarMax Inc has an F-score of 4 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.

CarMax Inc Annual Data

Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15
Question 1 1111111111
Question 2 1111100000
Question 3 1100110001
Question 4 0001000000
Question 5 1101101000
Question 6 0010101100
Question 7 0001000111
Question 8 1111100001
Question 9 0100110000
F-score 5646733324

CarMax Inc Quarterly Data

Aug13Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15
Question 1 1111111111
Question 2 0000000000
Question 3 0000001110
Question 4 0000000000
Question 5 0001100000
Question 6 0000000001
Question 7 1111111111
Question 8 0000001111
Question 9 0000000000
F-score 2223324444
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