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LKQ Corp (NAS:LKQ)
Piotroski F-Score
5 (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

LKQ Corp has an F-score of 5 indicating the company's financial situation is typical for a stable company.

LKQ' s 10-Year Piotroski F-Score Range
Min: 3   Max: 7
Current: 5

3
7

During the past 13 years, the highest Piotroski F-Score of LKQ Corp was 7. The lowest was 3. 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 (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was 104.653 + 104.882 + 91.515 + 80.469 = $382 Mil.
Cash Flow from Operations was 97.009 + 55.195 + 170.438 + 48.255 = $371 Mil.
Revenue was 1625.777 + 1709.132 + 1721.024 + 1684.131 = $6,740 Mil.
Gross Profit was 651.884 + 671.059 + 664.411 + 664.559 = $2,652 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(4518.774 + 5209.828 + 5498.845 + 5534.578 + 5573.492) / 5 = $5267.1034 Mil.
Total Assets at the begining of this year (Dec13) was $4,519 Mil.
Long-Term Debt was $1,801 Mil.
Total Current Assets was $2,317 Mil.
Total Current Liabilities was $751 Mil.
Net Income was 84.592 + 75.722 + 73.445 + 77.864 = $312 Mil.

Revenue was 1195.997 + 1251.748 + 1298.094 + 1316.689 = $5,063 Mil.
Gross Profit was 501.949 + 509.873 + 517.907 + 545.673 = $2,075 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(3723.456 + 3722.699 + 4218.315 + 4361.059 + 4518.774) / 5 = $4108.8606 Mil.
Total Assets at the begining of last year (Dec12) was $3,723 Mil.
Long-Term Debt was $1,264 Mil.
Total Current Assets was $1,800 Mil.
Total Current Liabilities was $678 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.

LKQ Corp's current net income (TTM) was 382. ==> 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.

LKQ Corp's current cash flow from operations (TTM) was 371. ==> 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 (Dec13)
=381.519/4518.774
=0.08442976

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=311.623/3723.456
=0.08369187

LKQ Corp's return on assets of this year was 0.08442976. LKQ Corp's return on assets of last year was 0.08369187. ==> This year is higher. ==> Score 1.

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.

LKQ Corp's current net income (TTM) was 382. LKQ Corp's current cash flow from operations (TTM) was 371. ==> 371 <= 382 ==> 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: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=1801.047/5267.1034
=0.34194259

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=1264.246/4108.8606
=0.30768773

LKQ Corp's gearing of this year was 0.34194259. LKQ Corp's gearing of last year was 0.30768773. ==> 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: Dec14)=Total Current Assets/Total Current Liabilities
=2317.417/750.696
=3.08702457

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=1799.817/677.953
=2.65478138

LKQ Corp's current ratio of this year was 3.08702457. LKQ Corp's current ratio of last year was 2.65478138. ==> 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.

LKQ Corp's number of shares in issue this year was 306.6. LKQ Corp's number of shares in issue last year was 305.2. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=2651.913/6740.064
=0.39345517

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2075.402/5062.528
=0.40995368

LKQ Corp's gross margin of this year was 0.39345517. LKQ Corp's gross margin of last year was 0.40995368. ==> Last year's gross margin is higher ==> Score 0.

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 (Dec13)
=6740.064/4518.774
=1.49156917

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=5062.528/3723.456
=1.35963148

LKQ Corp's asset turnover of this year was 1.49156917. LKQ Corp's asset turnover of last year was 1.35963148. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+0+0+1+0+0+1
=5

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

LKQ Corp has an F-score of 5 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.

LKQ Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 1010111011
Question 4 1101101010
Question 5 1001110100
Question 6 0011100001
Question 7 0000000000
Question 8 1000100000
Question 9 0010011011
F-score 6355755355

LKQ Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 1000011111
Question 4 0001111110
Question 5 0110000000
Question 6 0011000111
Question 7 0000000000
Question 8 0000000000
Question 9 1000011111
F-score 4344355665
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