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Lowe's Companies Inc (NYSE:LOW)
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

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

LOW' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 9
Current: 5

4
9

During the past 13 years, the highest Piotroski F-Score of Lowe's Companies Inc was 9. 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 local exchange's currency.

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Net Income was 11 + 884 + 1167 + 379 = $2,441 Mil.
Cash Flow from Operations was 238 + 3220 + 1408 + 641 = $5,507 Mil.
Revenue was 13236 + 15234 + 18260 + 15739 = $62,469 Mil.
Gross Profit was 4588 + 5337 + 6288 + 5407 = $21,620 Mil.
Average Total Assets from the begining of this year (Oct15)
to the end of this year (Oct16) was
(33655 + 31266 + 37177 + 36471 + 35370) / 5 = $34787.8 Mil.
Total Assets at the begining of this year (Oct15) was $33,655 Mil.
Long-Term Debt was $14,395 Mil.
Total Current Assets was $12,728 Mil.
Total Current Liabilities was $12,633 Mil.
Net Income was 450 + 673 + 1126 + 736 = $2,985 Mil.

Revenue was 12541 + 14129 + 17348 + 14360 = $58,378 Mil.
Gross Profit was 4347 + 5012 + 5981 + 4990 = $20,330 Mil.
Average Total Assets from the begining of last year (Oct14)
to the end of last year (Oct15) was
(34032 + 31721 + 34315 + 32736 + 33655) / 5 = $33291.8 Mil.
Total Assets at the begining of last year (Oct14) was $34,032 Mil.
Long-Term Debt was $11,541 Mil.
Total Current Assets was $12,395 Mil.
Total Current Liabilities was $12,162 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.

Lowe's Companies Inc's current net income (TTM) was 2,441. ==> 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.

Lowe's Companies Inc's current cash flow from operations (TTM) was 5,507. ==> 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.

Lowe's Companies Inc's return on assets of this year was 0.07253008. Lowe's Companies Inc's return on assets of last year was 0.08771157. ==> 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.

Lowe's Companies Inc's current net income (TTM) was 2,441. Lowe's Companies Inc's current cash flow from operations (TTM) was 5,507. ==> 5,507 > 2,441 ==> CFROA > ROA ==> Score 1.

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: Oct16)=Long-Term Debt/Average Total Assets from Oct15 to Oct16
=14395/34787.8
=0.41379449

Gearing (Last Year: Oct15)=Long-Term Debt/Average Total Assets from Oct14 to Oct15
=11541/33291.8
=0.34666194

Lowe's Companies Inc's gearing of this year was 0.41379449. Lowe's Companies Inc's gearing of last year was 0.34666194. ==> 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: Oct16)=Total Current Assets/Total Current Liabilities
=12728/12633
=1.00751999

Current Ratio (Last Year: Oct15)=Total Current Assets/Total Current Liabilities
=12395/12162
=1.01915803

Lowe's Companies Inc's current ratio of this year was 1.00751999. Lowe's Companies Inc's current ratio of last year was 1.01915803. ==> Last year's current ratio is higher ==> Score 0.

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.

Lowe's Companies Inc's number of shares in issue this year was 874. Lowe's Companies Inc's number of shares in issue last year was 921. ==> 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
=21620/62469
=0.34609166

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=20330/58378
=0.34824763

Lowe's Companies Inc's gross margin of this year was 0.34609166. Lowe's Companies Inc's gross margin of last year was 0.34824763. ==> 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 (Oct15)
=62469/33655
=1.85615807

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct14)
=58378/34032
=1.71538552

Lowe's Companies Inc's asset turnover of this year was 1.85615807. Lowe's Companies Inc's asset turnover of last year was 1.71538552. ==> 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+0+1+0+0+1+0+1
=5

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

Lowe's Companies Inc 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 local exchange's currency.

Lowe's Companies Inc Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
Question 1 1111111111
Question 2 1111111111
Question 3 0000101110
Question 4 1111111111
Question 5 0011000000
Question 6 0011100000
Question 7 1111111111
Question 8 1101100111
Question 9 0000111111
F-score 5567856776

Lowe's Companies Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
Question 1 1111111111
Question 2 1111111111
Question 3 1111110100
Question 4 1111111111
Question 5 0000000000
Question 6 0000000110
Question 7 1111111111
Question 8 1111011000
Question 9 1111111111
F-score 7777676765
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