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Lexmark International Inc (NYSE:LXK)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

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

Lexmark International Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

LXK' s 10-Year Piotroski F-Score Range
Min: 4   Max: 8
Current: 6

4
8

During the past 13 years, the highest Piotroski F-Score of Lexmark International Inc was 8. 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 own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 28.5 + 109.6 + 29.3 + 37.5 = $205 Mil.
Cash Flow from Operations was 140.3 + 210.4 + 10 + 101.7 = $462 Mil.
Revenue was 890.5 + 1006.1 + 877.7 + 891.8 = $3,666 Mil.
Gross Profit was 346.2 + 423 + 341.6 + 351.2 = $1,462 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(3543.7 + 3589.1 + 3619.5 + 3512.8 + 3525.8) / 5 = $3,558 Mil.
Total Assets was $3,526 Mil.
Long-Term Debt was $700 Mil.
Total Current Assets was $1,924 Mil.
Total Current Liabilities was $1,066 Mil.
Net Income was 0 + 6.3 + 40 + 94.1 = $140 Mil.

Revenue was 919.2 + 967.4 + 884.3 + 886.7 = $3,658 Mil.
Gross Profit was 328.4 + 329.6 + 336.4 + 341.9 = $1,336 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(3575.1 + 3500.8 + 3523.4 + 3460.9 + 3543.7) / 5 = $3,521 Mil.
Total Assets was $3,544 Mil.
Long-Term Debt was $700 Mil.
Total Current Assets was $2,020 Mil.
Total Current Liabilities was $1,059 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Lexmark International Inc's current net income (ttm) was 205. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Lexmark International Inc's current cash flow from operations (ttm) was 462. ==> Positive ==> Score 1.

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)/Average Total Assets from Jun13 to Jun14
=204.9/3558.18
=0.05758562

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jun12 to Jun13
=140.4/3520.78
=0.03987753

Lexmark International Inc's return on assets of this year was 0.05758562. Lexmark International Inc's return on assets of last year was 0.03987753. ==> This year is higher. ==> Score 1.

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.

Lexmark International Inc's current net income (ttm) was 205. Lexmark International Inc's current cash flow from operations (ttm) was 462. ==> 462 > 205 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by total assets) to last year’s gearing.

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

Gearing (This Year: Jun14)=Long-Term Debt/Total Assets
=699.7/3525.8
=0.19845142

Gearing (Last Year: Jun13)=Long-Term Debt/Total Assets
=699.6/3543.7
=0.19742077

Lexmark International Inc's gearing of this year was 0.19845142. Lexmark International Inc's gearing of last year was 0.19742077. ==> Last year is lower than this year ==> 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: Jun14)=Total Current Assets/Total Current Liabilities
=1924.1/1066.2
=1.80463328

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=2019.8/1058.8
=1.90763128

Lexmark International Inc's current ratio of this year was 1.80463328. Lexmark International Inc's current ratio of last year was 1.90763128. ==> 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.

Lexmark International Inc's number of shares in issue this year was 63.4. Lexmark International Inc's number of shares in issue last year was 64.1. ==> 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
=1462/3666.1
=0.3987889

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1336.3/3657.6
=0.36534886

Lexmark International Inc's gross margin of this year was 0.3987889. Lexmark International Inc's gross margin of last year was 0.36534886. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by average total assets throughout 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)/Average Total Assets from Jun13 to Jun14
=3666.1/3558.18
=1.03033011

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jun12 to Jun13
=3657.6/3520.78
=1.03886071

Lexmark International Inc's asset turnover of this year was 1.03033011. Lexmark International Inc's asset turnover of last year was 1.03886071. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+0+0+1+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Lexmark International Inc has an F-score of 6 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, Altman Z-Score, Beneish M-Score


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Lexmark International Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1000001001
Q4 1111111111
Q5 1001011010
Q6 0000111101
Q7 0111110111
Q8 1010101101
Q9 1000001000
F-score 7455668657

Lexmark International Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 0000001111
Q4 1111111111
Q5 0111000010
Q6 0000111100
Q7 1111111111
Q8 1110000111
Q9 0000000000
F-score 5665556776
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