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PetSmart Inc. (NAS:PETM)
Piotroski F-Score
8 (As of Today)

Good Sign:

Piotroski F-Score of 8 is 8, 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 8. It is a good or high score, which usually indicates a very healthy situation.

PETM' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 8

3
9

During the past 13 years, the highest Piotroski F-Score of PetSmart 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 (Jan14) TTM:Last Year (Jan13) TTM:
Net Income was 131.516 + 92.221 + 93.368 + 102.415 = $420 Mil.
Cash Flow from Operations was 273.907 + 107.238 + 86.789 + 147.246 = $615 Mil.
Revenue was 1804.866 + 1695.168 + 1705.997 + 1710.596 = $6,917 Mil.
Gross Profit was 565.998 + 504.973 + 515.22 + 529.746 = $2,116 Mil.
Total Assets at the begining of this year (Jan13) was $2,537 Mil.
Total Assets was $2,522 Mil.
Long-Term Debt was $452 Mil.
Total Current Assets was $1,318 Mil.
Total Current Liabilities was $794 Mil.
Net Income was 134.01 + 82.316 + 78.52 + 94.683 = $390 Mil.

Revenue was 1879.166 + 1629.511 + 1619.667 + 1629.893 = $6,758 Mil.
Gross Profit was 593.438 + 482.512 + 488.815 + 497.374 = $2,062 Mil.
Total Assets at the begining of last year (Jan12) was $2,544 Mil.
Total Assets was $2,537 Mil.
Long-Term Debt was $465 Mil.
Total Current Assets was $1,317 Mil.
Total Current Liabilities was $755 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 420. ==> 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 615. ==> 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 (Jan13)
=419.52/2536.981
=0.1653619

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jan12)
=389.529/2544.084
=0.15311169

PetSmart Inc.'s return on assets of this year was 0.1653619. PetSmart Inc.'s return on assets of last year was 0.15311169. ==> 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 420. PetSmart Inc.'s current cash flow from operations was 615. ==> 615 > 420 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=451.597/2521.968
=0.17906532

Gearing (Last Year)=Long-Term Debt/Total Assets
=464.578/2536.981
=0.18312238

PetSmart Inc.'s gearing of this year was 0.17906532. PetSmart Inc.'s gearing of last year was 0.18312238. ==> This year is lower. ==> 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
=1318.243/794.345
=1.65953459

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1317.136/754.892
=1.74480058

PetSmart Inc.'s current ratio of this year was 1.65953459. PetSmart Inc.'s current ratio of last year was 1.74480058. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

PetSmart Inc.'s number of shares in issue this year was 103.4. PetSmart Inc.'s number of shares in issue last year was 108.1. ==> There is the same number of shares in issue this year, or fewer. ==> 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
=2115.937/6916.627
=0.30592036

Gross Margin (Last Year)=Gross Profit/Revenue
=2062.139/6758.237
=0.30512973

PetSmart Inc.'s gross margin of this year was 0.30592036. PetSmart Inc.'s gross margin of last year was 0.30512973. ==> This year's gross margin is higher. ==> Score 1.

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 (Jan13)
=6916.627/2536.981
=2.72632196

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jan12)
=6758.237/2544.084
=2.65645199

PetSmart Inc.'s asset turnover of this year was 2.72632196. PetSmart Inc.'s asset turnover of last year was 2.65645199. ==> 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+1+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

PetSmart Inc. has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.


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

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Q1 1111111111
Q2 1111111111
Q3 1111111111
Q4 1111111111
Q5 1111111111
Q6 0000000010
Q7 1111111111
Q8 1111111111
Q9 1111111111
F-score 8888888898
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