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

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

MKC' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 6

3
9

During the past 13 years, the highest Piotroski F-Score of McCormick & Company Inc 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 (Feb15) TTM:Last Year (Feb14) TTM:
Net Income was 84.5 + 122.9 + 148 + 71.7 = $427 Mil.
Cash Flow from Operations was 105.4 + 93.7 + 227.8 + 95.9 = $523 Mil.
Revenue was 1033.4 + 1042.8 + 1173.6 + 1010.4 = $4,260 Mil.
Gross Profit was 412.5 + 420.1 + 506.1 + 389.7 = $1,728 Mil.
Average Total Assets from the begining of this year (Feb14)
to the end of this year (Feb15) was
(4429.7 + 4409.3 + 4472.1 + 4414.3 + 4197.5) / 5 = $4384.58 Mil.
Total Assets at the begining of this year (Feb14) was $4,430 Mil.
Long-Term Debt was $807 Mil.
Total Current Assets was $1,305 Mil.
Total Current Liabilities was $1,221 Mil.
Net Income was 78.6 + 104.4 + 130 + 83.5 = $397 Mil.

Revenue was 1002.6 + 1016.4 + 1170 + 993.4 = $4,182 Mil.
Gross Profit was 394.4 + 407.6 + 502.2 + 391.5 = $1,696 Mil.
Average Total Assets from the begining of last year (Feb13)
to the end of last year (Feb14) was
(4086.1 + 4208.8 + 4353 + 4449.7 + 4429.7) / 5 = $4305.46 Mil.
Total Assets at the begining of last year (Feb13) was $4,086 Mil.
Long-Term Debt was $1,017 Mil.
Total Current Assets was $1,340 Mil.
Total Current Liabilities was $1,012 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 427. ==> 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 523. ==> 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 (Feb14)
=427.1/4429.7
=0.09641736

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Feb13)
=396.5/4086.1
=0.09703629

McCormick & Company Inc's return on assets of this year was 0.09641736. McCormick & Company Inc's return on assets of last year was 0.09703629. ==> 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 427. McCormick & Company Inc's current cash flow from operations (TTM) was 523. ==> 523 > 427 ==> 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: Feb15)=Long-Term Debt/Average Total Assets from Feb14 to Feb15
=806.8/4384.58
=0.1840085

Gearing (Last Year: Feb14)=Long-Term Debt/Average Total Assets from Feb13 to Feb14
=1016.6/4305.46
=0.23611879

McCormick & Company Inc's gearing of this year was 0.1840085. McCormick & Company Inc's gearing of last year was 0.23611879. ==> 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: Feb15)=Total Current Assets/Total Current Liabilities
=1304.7/1221
=1.06855037

Current Ratio (Last Year: Feb14)=Total Current Assets/Total Current Liabilities
=1340.1/1012.1
=1.32407865

McCormick & Company Inc's current ratio of this year was 1.06855037. McCormick & Company Inc's current ratio of last year was 1.32407865. ==> 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 129.3. McCormick & Company Inc's number of shares in issue last year was 132.2. ==> 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
=1728.4/4260.2
=0.40570865

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1695.7/4182.4
=0.40543707

McCormick & Company Inc's gross margin of this year was 0.40570865. McCormick & Company Inc's gross margin of last year was 0.40543707. ==> This year's gross margin is higher. ==> Score 1.

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 (Feb14)
=4260.2/4429.7
=0.96173556

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Feb13)
=4182.4/4086.1
=1.02356771

McCormick & Company Inc's asset turnover of this year was 0.96173556. McCormick & Company Inc's asset turnover of last year was 1.02356771. ==> 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+1+0
=6

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

McCormick & Company 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


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

Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14
Question 1 1111111111
Question 2 1111111111
Question 3 0011111001
Question 4 1101110111
Question 5 1010110101
Question 6 1100111010
Question 7 1111001111
Question 8 1100110011
Question 9 0101001010
F-score 7756776577

McCormick & Company Inc Quarterly Data

Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15
Question 1 1111111111
Question 2 1111111111
Question 3 0000000010
Question 4 1111111111
Question 5 1111000111
Question 6 0000111100
Question 7 1111111111
Question 8 0000111111
Question 9 0000110000
F-score 5555776776
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