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MercadoLibre Inc (NAS:MELI)
Piotroski F-Score
6 (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

MercadoLibre Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

MELI' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 8
Current: 6

3
8

During the past 13 years, the highest Piotroski F-Score of MercadoLibre Inc was 8. 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 local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Net Income was 38.965 + 30.247 + 15.858 + 38.912 = $124.0 Mil.
Cash Flow from Operations was 110.091 + -11.802 + 56.657 + 102.827 = $257.8 Mil.
Revenue was 180.732 + 157.63 + 199.644 + 230.847 = $768.9 Mil.
Gross Profit was 117.57 + 102.182 + 126.298 + 145.648 = $491.7 Mil.
Average Total Assets from the begining of this year (Sep15)
to the end of this year (Sep16) was
(1068.828 + 1003.606 + 1083.469 + 1140.149 + 1256.057) / 5 = $1110.4218 Mil.
Total Assets at the begining of this year (Sep15) was $1,068.8 Mil.
Long-Term Debt was $299.5 Mil.
Total Current Assets was $759.1 Mil.
Total Current Liabilities was $496.3 Mil.
Net Income was 34.146 + 1.721 + 19.463 + 45.64 = $101.0 Mil.

Revenue was 161.37 + 148.103 + 154.314 + 168.641 = $632.4 Mil.
Gross Profit was 113.705 + 103.395 + 104.003 + 111.828 = $432.9 Mil.
Average Total Assets from the begining of last year (Sep14)
to the end of last year (Sep15) was
(939.199 + 966.848 + 976.783 + 1020.635 + 1068.828) / 5 = $994.4586 Mil.
Total Assets at the begining of last year (Sep14) was $939.2 Mil.
Long-Term Debt was $292.7 Mil.
Total Current Assets was $625.2 Mil.
Total Current Liabilities was $367.3 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.

MercadoLibre Inc's current net income (TTM) was 124.0. ==> 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.

MercadoLibre Inc's current cash flow from operations (TTM) was 257.8. ==> 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 (Sep15)
=123.982/1068.828
=0.11599808

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=100.97/939.199
=0.1075065

MercadoLibre Inc's return on assets of this year was 0.11599808. MercadoLibre Inc's return on assets of last year was 0.1075065. ==> 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.

MercadoLibre Inc's current net income (TTM) was 124.0. MercadoLibre Inc's current cash flow from operations (TTM) was 257.8. ==> 257.8 > 124.0 ==> 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: Sep16)=Long-Term Debt/Average Total Assets from Sep15 to Sep16
=299.472/1110.4218
=0.26969211

Gearing (Last Year: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=292.726/994.4586
=0.29435715

MercadoLibre Inc's gearing of this year was 0.26969211. MercadoLibre Inc's gearing of last year was 0.29435715. ==> This year is lower or equal to last year. ==> Score 1.

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: Sep16)=Total Current Assets/Total Current Liabilities
=759.107/496.313
=1.52949248

Current Ratio (Last Year: Sep15)=Total Current Assets/Total Current Liabilities
=625.214/367.311
=1.70213797

MercadoLibre Inc's current ratio of this year was 1.52949248. MercadoLibre Inc's current ratio of last year was 1.70213797. ==> 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.

MercadoLibre Inc's number of shares in issue this year was 44.2. MercadoLibre Inc's number of shares in issue last year was 44.2. ==> 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
=491.698/768.853
=0.63952147

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=432.931/632.428
=0.68455381

MercadoLibre Inc's gross margin of this year was 0.63952147. MercadoLibre Inc's gross margin of last year was 0.68455381. ==> 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 (Sep15)
=768.853/1068.828
=0.71934212

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=632.428/939.199
=0.67336954

MercadoLibre Inc's asset turnover of this year was 0.71934212. MercadoLibre Inc's asset turnover of last year was 0.67336954. ==> 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+1+1+0+1+0+1
=7

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

MercadoLibre Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.


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.

MercadoLibre Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 111111111
Question 2 111111111
Question 3 101100000
Question 4 011111111
Question 5 101001101
Question 6 101010010
Question 7 001001000
Question 8 010000000
Question 9 101100000
F-score 648545444

MercadoLibre Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Question 1 1111111111
Question 2 1111111111
Question 3 0000000111
Question 4 1111111111
Question 5 0000111111
Question 6 1111000010
Question 7 0000000000
Question 8 0000000000
Question 9 0001000011
F-score 4445444576
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