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Medtronic PLC (NYSE:MDT)
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

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

MDT' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 5

3
9

During the past 13 years, the highest Piotroski F-Score of Medtronic PLC was 9. The lowest was 3. 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 (Jan15) TTM:Last Year (Jan14) TTM:
Net Income was 448 + 871 + 828 + 977 = $3,124 Mil.
Cash Flow from Operations was 1328 + 310 + 913 + 1767 = $4,318 Mil.
Revenue was 4565 + 4273 + 4366 + 4318 = $17,522 Mil.
Gross Profit was 3394 + 3168 + 3224 + 3190 = $12,976 Mil.
Average Total Assets from the begining of this year (Jan14)
to the end of this year (Jan15) was
(37231 + 37943 + 37554 + 38780 + 55233) / 5 = $41348.2 Mil.
Total Assets at the begining of this year (Jan14) was $37,231 Mil.
Long-Term Debt was $26,641 Mil.
Total Current Assets was $38,161 Mil.
Total Current Liabilities was $5,613 Mil.
Net Income was 969 + 953 + 902 + 762 = $3,586 Mil.

Revenue was 4460 + 4083 + 4194 + 4163 = $16,900 Mil.
Gross Profit was 3326 + 3061 + 3104 + 3113 = $12,604 Mil.
Average Total Assets from the begining of last year (Jan13)
to the end of last year (Jan14) was
(34949 + 34900 + 34972 + 36468 + 37231) / 5 = $35704 Mil.
Total Assets at the begining of last year (Jan13) was $34,949 Mil.
Long-Term Debt was $9,601 Mil.
Total Current Assets was $20,386 Mil.
Total Current Liabilities was $5,632 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.

Medtronic PLC's current net income (TTM) was 3,124. ==> 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.

Medtronic PLC's current cash flow from operations (TTM) was 4,318. ==> 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.

Medtronic PLC's return on assets of this year was 0.08390857. Medtronic PLC's return on assets of last year was 0.10260666. ==> 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.

Medtronic PLC's current net income (TTM) was 3,124. Medtronic PLC's current cash flow from operations (TTM) was 4,318. ==> 4,318 > 3,124 ==> 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: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=26641/41348.2
=0.64430858

Gearing (Last Year: Jan14)=Long-Term Debt/Average Total Assets from Jan13 to Jan14
=9601/35704
=0.26890544

Medtronic PLC's gearing of this year was 0.64430858. Medtronic PLC's gearing of last year was 0.26890544. ==> 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: Jan15)=Total Current Assets/Total Current Liabilities
=38161/5613
=6.79868163

Current Ratio (Last Year: Jan14)=Total Current Assets/Total Current Liabilities
=20386/5632
=3.6196733

Medtronic PLC's current ratio of this year was 6.79868163. Medtronic PLC's current ratio of last year was 3.6196733. ==> 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.

Medtronic PLC's number of shares in issue this year was 995.8. Medtronic PLC's number of shares in issue last year was 1010. ==> 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
=12976/17522
=0.74055473

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=12604/16900
=0.74579882

Medtronic PLC's gross margin of this year was 0.74055473. Medtronic PLC's gross margin of last year was 0.74579882. ==> 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 (Jan14)
=17522/37231
=0.47062931

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=16900/34949
=0.48356176

Medtronic PLC's asset turnover of this year was 0.47062931. Medtronic PLC's asset turnover of last year was 0.48356176. ==> Last year's asset turnover is higher ==> Score 0.

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+1+1+0+0
=5

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

Medtronic PLC 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.

Medtronic PLC Annual Data

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
Question 1 1111111111
Question 2 1111111111
Question 3 0100010100
Question 4 1011111111
Question 5 0011110101
Question 6 1110101110
Question 7 1111111111
Question 8 1001101000
Question 9 0001010000
F-score 6567776755

Medtronic PLC Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
Question 1 1111111111
Question 2 1111111111
Question 3 0000100000
Question 4 1111111111
Question 5 1100001010
Question 6 0011110001
Question 7 1111111111
Question 8 0000000000
Question 9 0000000000
F-score 5555655455
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