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Nike Inc (NYSE:NKE)
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

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

NKE' 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 Nike Inc was 9. The lowest was 3. 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 (Nov14) TTM:Last Year (Nov13) TTM:
Net Income was 685 + 698 + 962 + 655 = $3,000 Mil.
Cash Flow from Operations was 754 + 1320 + 588 + 0 = $2,662 Mil.
Revenue was 6972 + 7425 + 7982 + 7380 = $29,759 Mil.
Gross Profit was 3103 + 3385 + 3721 + 3327 = $13,536 Mil.
Average Total Assets from the begining of this year (Nov13)
to the end of this year (Nov14) was
(17820 + 17803 + 18594 + 18521 + 19167) / 5 = $18381 Mil.
Total Assets at the begining of this year (Nov13) was $17,820 Mil.
Long-Term Debt was $1,084 Mil.
Total Current Assets was $14,033 Mil.
Total Current Liabilities was $4,937 Mil.
Net Income was 866 + 655 + 779 + 537 = $2,837 Mil.

Revenue was 6187 + 6697 + 6971 + 6431 = $26,286 Mil.
Gross Profit was 2736 + 2940 + 3132 + 2826 = $11,634 Mil.
Average Total Assets from the begining of last year (Nov12)
to the end of last year (Nov13) was
(15171 + 15615 + 17545 + 17674 + 17820) / 5 = $16765 Mil.
Total Assets at the begining of last year (Nov12) was $15,171 Mil.
Long-Term Debt was $1,201 Mil.
Total Current Assets was $13,607 Mil.
Total Current Liabilities was $3,851 Mil.

Profitability

Q1. 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.

Nike Inc's current net income (TTM) was 3,000. ==> Positive ==> Score 1.

Q2. 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.

Nike Inc's current cash flow from operations (TTM) was 2,662. ==> 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.

Nike Inc's return on assets of this year was 0.16835017. Nike Inc's return on assets of last year was 0.18700152. ==> 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.

Nike Inc's current net income (TTM) was 3,000. Nike Inc's current cash flow from operations (TTM) was 2,662. ==> 2,662 <= 3,000 ==> CFROA <= ROA ==> Score 0.

Funding

Q5. 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: Nov14)=Long-Term Debt/Average Total Assets from Nov13 to Nov14
=1084/18381
=0.05897394

Gearing (Last Year: Nov13)=Long-Term Debt/Average Total Assets from Nov12 to Nov13
=1201/16765
=0.07163734

Nike Inc's gearing of this year was 0.05897394. Nike Inc's gearing of last year was 0.07163734. ==> 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: Nov14)=Total Current Assets/Total Current Liabilities
=14033/4937
=2.84241442

Current Ratio (Last Year: Nov13)=Total Current Assets/Total Current Liabilities
=13607/3851
=3.53336796

Nike Inc's current ratio of this year was 2.84241442. Nike Inc's current ratio of last year was 3.53336796. ==> Last year's current ratio is higher ==> Score 0.

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.

Nike Inc's number of shares in issue this year was 884.8. Nike Inc's number of shares in issue last year was 910.6. ==> 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
=13536/29759
=0.45485399

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=11634/26286
=0.44259302

Nike Inc's gross margin of this year was 0.45485399. Nike Inc's gross margin of last year was 0.44259302. ==> 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 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 (Nov13)
=29759/17820
=1.66997755

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Nov12)
=26286/15171
=1.73264781

Nike Inc's asset turnover of this year was 1.66997755. Nike Inc's asset turnover of last year was 1.73264781. ==> 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+0+1+0+1+1+0
=5

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

Nike 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.

Nike Inc Annual Data

May05May06May07May08May09May10May11May12May13May14
Q1 1111111111
Q2 1111111111
Q3 1101011110
Q4 1111110011
Q5 1111111101
Q6 1010110110
Q7 0111101111
Q8 1001010011
Q9 0001000110
F-score 7668675786

Nike Inc Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
Q1 111111111
Q2 111111111
Q3 011111000
Q4 111101110
Q5 110000111
Q6 011111000
Q7 111111111
Q8 001111111
Q9 111111000
F-score 6688878665
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