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McCormick & Company Inc (NYSE:MKC)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

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

McCormick & Company Inc has an F-score of 7 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: 7

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 (Aug14) TTM:Last Year (Aug13) TTM:
Net Income was 128.7 + 82.5 + 84.5 + 122.9 = $419 Mil.
Cash Flow from Operations was 237.8 + 76.7 + 105.4 + 93.7 = $514 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 this year (Aug13)
to the end of this year (Aug14) was
(4353 + 4449.7 + 4429.7 + 4409.3 + 4472.1) / 5 = $4,423 Mil.
Total Assets was $4,472 Mil.
Long-Term Debt was $1,014 Mil.
Total Current Assets was $1,409 Mil.
Total Current Liabilities was $1,078 Mil.
Net Income was 145 + 76 + 78.6 + 104.4 = $404 Mil.

Revenue was 1145.8 + 934.4 + 1002.6 + 1016.4 = $4,099 Mil.
Gross Profit was 482.4 + 361.7 + 394.4 + 407.6 = $1,646 Mil.
Average Total Assets from the begining of last year (Aug12)
to the end of last year (Aug13) was
(4057 + 4165.4 + 4086.1 + 4208.8 + 4353) / 5 = $4,174 Mil.
Total Assets was $4,353 Mil.
Long-Term Debt was $1,019 Mil.
Total Current Assets was $1,371 Mil.
Total Current Liabilities was $1,054 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.

McCormick & Company Inc's current net income (ttm) was 419. ==> 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.

McCormick & Company Inc's current cash flow from operations (ttm) was 514. ==> 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 Aug13 to Aug14
=418.6/4422.76
=0.09464678

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Aug12 to Aug13
=404/4174.06
=0.09678826

McCormick & Company Inc's return on assets of this year was 0.09464678. McCormick & Company Inc's return on assets of last year was 0.09678826. ==> Last year is higher ==> Score 0.

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.

McCormick & Company Inc's current net income (ttm) was 419. McCormick & Company Inc's current cash flow from operations (ttm) was 514. ==> 514 > 419 ==> 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: Aug14)=Long-Term Debt/Total Assets
=1014.3/4472.1
=0.2268062

Gearing (Last Year: Aug13)=Long-Term Debt/Total Assets
=1018.6/4353
=0.23399954

McCormick & Company Inc's gearing of this year was 0.2268062. McCormick & Company Inc's gearing of last year was 0.23399954. ==> This year is lower or equal to last year. ==> Score 1.

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: Aug14)=Total Current Assets/Total Current Liabilities
=1408.8/1077.6
=1.30734967

Current Ratio (Last Year: Aug13)=Total Current Assets/Total Current Liabilities
=1370.9/1054.3
=1.30029403

McCormick & Company Inc's current ratio of this year was 1.30734967. McCormick & Company Inc's current ratio of last year was 1.30029403. ==> This year's current ratio is higher. ==> Score 1.

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.

McCormick & Company Inc's number of shares in issue this year was 130.6. McCormick & Company Inc's number of shares in issue last year was 133.5. ==> 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
=1726.3/4239.6
=0.40718464

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1646.1/4099.2
=0.40156616

McCormick & Company Inc's gross margin of this year was 0.40718464. McCormick & Company Inc's gross margin of last year was 0.40156616. ==> 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 Aug13 to Aug14
=4239.6/4422.76
=0.95858695

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Aug12 to Aug13
=4099.2/4174.06
=0.98206542

McCormick & Company Inc's asset turnover of this year was 0.95858695. McCormick & Company Inc's asset turnover of last year was 0.98206542. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+1+1+1+0
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

McCormick & Company Inc has an F-score of 7 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.

McCormick & Company Inc Annual Data

Nov04Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13
Q1 1111111111
Q2 1111111111
Q3 1101111110
Q4 1110111011
Q5 1001011010
Q6 1110011101
Q7 1111100111
Q8 1110011001
Q9 1111101111
F-score 9876678677

McCormick & Company Inc Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
Q1 1111111111
Q2 1111111111
Q3 0001100000
Q4 1111111111
Q5 0111110001
Q6 1000001111
Q7 1011111111
Q8 0000001111
Q9 0000000000
F-score 5456656667
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