Switch to:
McCormick & Company Inc (NYSE:MKC)
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

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

MKC' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 8
Current: 5

4
8

During the past 13 years, the highest Piotroski F-Score of McCormick & Company Inc was 8. The lowest was 4. And the median was 7.


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 (Aug15) TTM:Last Year (Aug14) TTM:
Net Income was 145.9 + 71.7 + 85.5 + 95.7 = $399 Mil.
Cash Flow from Operations was 227.8 + 95.9 + 90 + 130.7 = $544 Mil.
Revenue was 1173.6 + 1010.4 + 1024.1 + 1059.9 = $4,268 Mil.
Gross Profit was 506.1 + 389.7 + 404 + 421.9 = $1,722 Mil.
Average Total Assets from the begining of this year (Aug14)
to the end of this year (Aug15) was
(4472.1 + 4414.3 + 4197.5 + 4378.4 + 4490.7) / 5 = $4390.6 Mil.
Total Assets at the begining of this year (Aug14) was $4,472 Mil.
Long-Term Debt was $807 Mil.
Total Current Assets was $1,375 Mil.
Total Current Liabilities was $1,405 Mil.
Net Income was 130 + 83.5 + 85.2 + 123.3 = $422 Mil.

Revenue was 1170 + 993.4 + 1033.4 + 1042.8 = $4,240 Mil.
Gross Profit was 502.2 + 391.5 + 412.5 + 420.1 = $1,726 Mil.
Average Total Assets from the begining of last year (Aug13)
to the end of last year (Aug14) was
(4353 + 4449.7 + 4429.7 + 4409.3 + 4472.1) / 5 = $4422.76 Mil.
Total Assets at the begining of last year (Aug13) was $4,353 Mil.
Long-Term Debt was $1,014 Mil.
Total Current Assets was $1,409 Mil.
Total Current Liabilities was $1,078 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.

McCormick & Company Inc's current net income (TTM) was 399. ==> 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.

McCormick & Company Inc's current cash flow from operations (TTM) was 544. ==> 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 (Aug14)
=398.8/4472.1
=0.08917511

McCormick & Company Inc's return on assets of this year was 0.08917511. McCormick & Company Inc's return on assets of last year was 0.09694464. ==> 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.

McCormick & Company Inc's current net income (TTM) was 399. McCormick & Company Inc's current cash flow from operations (TTM) was 544. ==> 544 > 399 ==> 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: Aug15)=Long-Term Debt/Average Total Assets from Aug14 to Aug15
=807.2/4390.6
=0.18384731

Gearing (Last Year: Aug14)=Long-Term Debt/Average Total Assets from Aug13 to Aug14
=1014.3/4422.76
=0.22933643

McCormick & Company Inc's gearing of this year was 0.18384731. McCormick & Company Inc's gearing of last year was 0.22933643. ==> 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: Aug15)=Total Current Assets/Total Current Liabilities
=1374.5/1404.6
=0.97857041

Current Ratio (Last Year: Aug14)=Total Current Assets/Total Current Liabilities
=1408.8/1077.6
=1.30734967

McCormick & Company Inc's current ratio of this year was 0.97857041. McCormick & Company Inc's current ratio of last year was 1.30734967. ==> 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.

McCormick & Company Inc's number of shares in issue this year was 129.2. McCormick & Company Inc's number of shares in issue last year was 130.6. ==> 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
=1721.7/4268
=0.40339738

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1726.3/4239.6
=0.40718464

McCormick & Company Inc's gross margin of this year was 0.40339738. McCormick & Company Inc's gross margin of last year was 0.40718464. ==> 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 (Aug14)
=4268/4472.1
=0.95436149

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Aug13)
=4239.6/4353
=0.973949

McCormick & Company Inc's asset turnover of this year was 0.95436149. McCormick & Company Inc's asset turnover of last year was 0.973949. ==> 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+1+0+1+0+0
=5

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

McCormick & Company 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 own currency.

McCormick & Company Inc Annual Data

Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14Nov15
Question 1 1111111111
Question 2 1111111111
Question 3 0111110010
Question 4 1011101111
Question 5 0101101010
Question 6 1001110100
Question 7 1100011111
Question 8 1001100110
Question 9 1010010101
F-score 7557765775

McCormick & Company Inc Quarterly Data

Aug13Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15
Question 1 1111111111
Question 2 1111111111
Question 3 0000010100
Question 4 1111111111
Question 5 1000111110
Question 6 0111100000
Question 7 1111111111
Question 8 0111111000
Question 9 0110000001
F-score 5776776655
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK