Switch to:
CarMax Inc (NYSE:KMX)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

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 3. It is a bad or low score, which usually implies poor business operation.

KMX' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 3

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 (Aug14) TTM:Last Year (Aug13) TTM:
Net Income was 106.452 + 99.209 + 169.653 + 154.518 = $530 Mil.
Cash Flow from Operations was -229.531 + -120.023 + -209.08 + -227.539 = $-786 Mil.
Revenue was 2941.407 + 3076.283 + 3750.196 + 3599.194 = $13,367 Mil.
Gross Profit was 381.721 + 384.141 + 501.731 + 463.339 = $1,731 Mil.
Average Total Assets from the begining of this year (Aug13)
to the end of this year (Aug14) was
(10933.774 + 11303.875 + 11707.157 + 12148.96 + 12399.913) / 5 = $11698.7358 Mil.
Total Assets at the begining of this year (Aug13) was $10,934 Mil.
Long-Term Debt was $7,959 Mil.
Total Current Assets was $2,516 Mil.
Total Current Liabilities was $907 Mil.
Net Income was 94.681 + 107.221 + 146.651 + 140.274 = $489 Mil.

Revenue was 2602.446 + 2827.948 + 3311.057 + 3245.552 = $11,987 Mil.
Gross Profit was 345.219 + 369.235 + 448.096 + 434.743 = $1,597 Mil.
Average Total Assets from the begining of last year (Aug12)
to the end of last year (Aug13) was
(8871.44 + 9297.683 + 9888.602 + 10450.454 + 10933.774) / 5 = $9888.3906 Mil.
Total Assets at the begining of last year (Aug12) was $8,871 Mil.
Long-Term Debt was $6,838 Mil.
Total Current Assets was $2,481 Mil.
Total Current Liabilities was $730 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.

CarMax Inc's current net income (TTM) was 530. ==> 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.

CarMax Inc's current cash flow from operations (TTM) was -786. ==> Negative ==> Score 0.

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 (TTM)/Total Assets at the Beginning of This Year (Aug13)
=529.832/10933.774
=0.04845829

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Aug12)
=488.827/8871.44
=0.0551012

CarMax Inc's return on assets of this year was 0.04845829. CarMax Inc's return on assets of last year was 0.0551012. ==> Last year is higher ==> Score 0.

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.

CarMax Inc's current net income (TTM) was 530. CarMax Inc's current cash flow from operations (TTM) was -786. ==> -786 <= 530 ==> CFROA <= ROA ==> Score 0.

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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Aug14)=Long-Term Debt/Average Total Assets from Aug13 to Aug14
=7958.973/11698.7358
=0.68032761

Gearing (Last Year: Aug13)=Long-Term Debt/Average Total Assets from Aug12 to Aug13
=6837.82/9888.3906
=0.69149979

CarMax Inc's gearing of this year was 0.68032761. CarMax Inc's gearing of last year was 0.69149979. ==> This year is lower or equal to last year. ==> Score 1.

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: Aug14)=Total Current Assets/Total Current Liabilities
=2516.442/906.927
=2.7746908

Current Ratio (Last Year: Aug13)=Total Current Assets/Total Current Liabilities
=2481.41/729.919
=3.39956899

CarMax Inc's current ratio of this year was 2.7746908. CarMax Inc's current ratio of last year was 3.39956899. ==> Last year's current ratio is higher ==> Score 0.

Q7. 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 221.1. CarMax Inc's number of shares in issue last year was 227.6. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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: TTM)=Gross Profit/Revenue
=1730.932/13367.08
=0.12949216

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1597.293/11987.003
=0.13325207

CarMax Inc's gross margin of this year was 0.12949216. CarMax Inc's gross margin of last year was 0.13325207. ==> Last year's gross margin is higher ==> Score 0.

Q9. 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 (Aug13)
=13367.08/10933.774
=1.22254951

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Aug12)
=11987.003/8871.44
=1.35119022

CarMax Inc's asset turnover of this year was 1.22254951. CarMax Inc's asset turnover of last year was 1.35119022. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+0+0+0+1+0+1+0+0
=3

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

CarMax Inc has an F-score of 3. It is a bad or low score, which usually implies poor business operation.


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

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
Q1 1111111111
Q2 1111110000
Q3 0110011000
Q4 0000100000
Q5 0110110100
Q6 0001010110
Q7 0000100001
Q8 0111110000
Q9 1010011000
F-score 3564673322

CarMax Inc Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
Q1 1111111111
Q2 0000000000
Q3 0000000000
Q4 0000000000
Q5 0000000011
Q6 1111100000
Q7 0001111111
Q8 0000000000
Q9 0000000000
F-score 2223322233
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)
Free 7-day Trial
FEEDBACK