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CarMax Inc (NYSE:KMX)
Piotroski F-Score
2 (As of Today)

Warning Sign:

Piotroski F-Score of 2 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

CarMax Inc has an F-score of 2. 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: 2

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 (Feb14) TTM:Last Year (Feb13) TTM:
Net Income was 99.209 + 106.452 + 140.274 + 146.651 = $493 Mil.
Cash Flow from Operations was -120.023 + -229.531 + -186.03 + -77.579 = $-613 Mil.
Revenue was 3076.283 + 2941.407 + 3245.552 + 3311.057 = $12,574 Mil.
Gross Profit was 384.141 + 381.721 + 434.743 + 448.096 = $1,649 Mil.
Total Assets at the begining of this year (Feb13) was $9,889 Mil.
Total Assets was $11,707 Mil.
Long-Term Debt was $7,340 Mil.
Total Current Assets was $2,643 Mil.
Total Current Liabilities was $875 Mil.
Net Income was 107.221 + 94.681 + 111.636 + 120.746 = $434 Mil.

Revenue was 2827.948 + 2602.446 + 2758.004 + 2774.42 = $10,963 Mil.
Gross Profit was 369.235 + 345.219 + 367.993 + 381.915 = $1,464 Mil.
Total Assets at the begining of last year (Feb12) was $8,332 Mil.
Total Assets was $9,889 Mil.
Long-Term Debt was $6,010 Mil.
Total Current Assets was $2,310 Mil.
Total Current Liabilities was $684 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 was 493. ==> 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 was -613. ==> 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/Total Assets at the beginning of this year (Feb13)
=492.586/9888.602
=0.04981351

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Feb12)
=434.284/8331.543
=0.05212528

CarMax Inc's return on assets of this year was 0.04981351. CarMax Inc's return on assets of last year was 0.05212528. ==> 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 was 493. CarMax Inc's current cash flow from operations was -613. ==> -613 =< 493 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=7340.431/11707.157
=0.62700372

Gearing (Last Year)=Long-Term Debt/Total Assets
=6009.627/9888.602
=0.60773272

CarMax Inc's gearing of this year was 0.62700372. CarMax Inc's gearing of last year was 0.60773272. ==> 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
=2643.224/875.497
=3.01911257

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=2310.131/684.173
=3.3765305

CarMax Inc's current ratio of this year was 3.01911257. CarMax Inc's current ratio of last year was 3.3765305. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

CarMax Inc's number of shares in issue this year was 226.7. CarMax Inc's number of shares in issue last year was 231.1. ==> There is the same number of shares in issue this year, or fewer. ==> 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)=Gross Profit/Revenue
=1648.701/12574.299
=0.13111673

Gross Margin (Last Year)=Gross Profit/Revenue
=1464.362/10962.818
=0.13357533

CarMax Inc's gross margin of this year was 0.13111673. CarMax Inc's gross margin of last year was 0.13357533. ==> Last year's gross margin is higher ==> Score 0.

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 (Feb13)
=12574.299/9888.602
=1.27159522

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Feb12)
=10962.818/8331.543
=1.31582085

CarMax Inc's asset turnover of this year was 1.27159522. CarMax Inc's asset turnover of last year was 1.31582085. ==> 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+0+0+1+0+0
=2

Good or high score = 8 or 9

Bad or low score = 0 or 1

CarMax Inc has an F-score of 2. 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 0110110000
Q6 0001010110
Q7 0000100001
Q8 0111110000
Q9 1010011000
F-score 3564673222

CarMax Inc Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
Q1 1111111111
Q2 1000000000
Q3 0000000000
Q4 0000000000
Q5 1000000000
Q6 1111111000
Q7 0000011111
Q8 0000000000
Q9 0000000000
F-score 4222233220
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