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PetSmart Inc (NAS:PETM)
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

PetSmart Inc has an F-score of 7 indicating the company's financial situation is typical for a stable company.

PETM' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 7

2
9

During the past 13 years, the highest Piotroski F-Score of PetSmart Inc was 9. The lowest was 2. 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 (Apr14) TTM:Last Year (Apr13) TTM:
Net Income was 103.766 + 131.516 + 92.221 + 93.368 = $421 Mil.
Cash Flow from Operations was 136.506 + 273.907 + 107.238 + 86.789 = $604 Mil.
Revenue was 1729.132 + 1804.866 + 1695.168 + 1705.997 = $6,935 Mil.
Gross Profit was 530.838 + 565.998 + 504.973 + 515.22 = $2,117 Mil.
Total Assets at the begining of this year (Apr13) was $2,474 Mil.
Total Assets was $2,497 Mil.
Long-Term Debt was $451 Mil.
Total Current Assets was $1,313 Mil.
Total Current Liabilities was $800 Mil.
Net Income was 102.415 + 134.01 + 82.316 + 78.52 = $397 Mil.

Revenue was 1710.596 + 1879.166 + 1629.511 + 1619.667 = $6,839 Mil.
Gross Profit was 529.746 + 593.438 + 482.512 + 488.815 = $2,095 Mil.
Total Assets at the begining of last year (Apr12) was $2,466 Mil.
Total Assets was $2,474 Mil.
Long-Term Debt was $462 Mil.
Total Current Assets was $1,280 Mil.
Total Current Liabilities was $770 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.

PetSmart Inc's current net income was 421. ==> 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.

PetSmart Inc's current cash flow from operations was 604. ==> 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/Total Assets at the beginning of this year (Apr13)
=420.871/2474.184
=0.17010497

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Apr12)
=397.261/2466.4
=0.16106917

PetSmart Inc's return on assets of this year was 0.17010497. PetSmart Inc's return on assets of last year was 0.16106917. ==> This year is higher. ==> Score 1.

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.

PetSmart Inc's current net income was 421. PetSmart Inc's current cash flow from operations was 604. ==> 604 > 421 ==> CFROA > ROA ==> Score 1.

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)=Long-Term Debt/Total Assets
=450.538/2497.055
=0.18042774

Gearing (Last Year)=Long-Term Debt/Total Assets
=462.436/2474.184
=0.18690445

PetSmart Inc's gearing of this year was 0.18042774. PetSmart Inc's gearing of last year was 0.18690445. ==> 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)=Total Current Assets/Total Current Liabilities
=1312.666/800.213
=1.64039574

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1280.409/769.57
=1.66379797

PetSmart Inc's current ratio of this year was 1.64039574. PetSmart Inc's current ratio of last year was 1.66379797. ==> 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.

PetSmart Inc's number of shares in issue this year was 99.8. PetSmart Inc's number of shares in issue last year was 104.6. ==> 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)=Gross Profit/Revenue
=2117.029/6935.163
=0.30526016

Gross Margin (Last Year)=Gross Profit/Revenue
=2094.511/6838.94
=0.30626252

PetSmart Inc's gross margin of this year was 0.30526016. PetSmart Inc's gross margin of last year was 0.30626252. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Apr13)
=6935.163/2474.184
=2.8030102

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Apr12)
=6838.94/2466.4
=2.77284301

PetSmart Inc's asset turnover of this year was 2.8030102. PetSmart Inc's asset turnover of last year was 2.77284301. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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

Good or high score = 8 or 9

Bad or low score = 0 or 1

PetSmart 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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

PetSmart Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Q1 1111111111
Q2 1111111111
Q3 1001001111
Q4 1111111111
Q5 0000011111
Q6 1000111000
Q7 0111111111
Q8 1100001111
Q9 0011101111
F-score 6556669888

PetSmart Inc Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
Q1 1111111111
Q2 1111111111
Q3 1111111111
Q4 1111111111
Q5 1111111111
Q6 0000000100
Q7 1111111111
Q8 1111111110
Q9 1111111111
F-score 8888888987
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