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Rite Aid Corp (NYSE:RAD)
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

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

RAD' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Max: 8
Current: 5

1
8

During the past 13 years, the highest Piotroski F-Score of Rite Aid Corp was 8. The lowest was 1. And the median was 5.


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 local exchange's currency.

This Year (Nov16) TTM:Last Year (Nov15) TTM:
Net Income was 65.617 + -4.588 + 14.773 + 15.01 = $91 Mil.
Cash Flow from Operations was 327.865 + 159.944 + -147.078 + 152.587 = $493 Mil.
Revenue was 8270.136 + 8184.181 + 8029.806 + 8089.726 = $32,574 Mil.
Gross Profit was 2041.556 + 1894.3 + 1916.743 + 1894.86 = $7,747 Mil.
Average Total Assets from the begining of this year (Nov15)
to the end of this year (Nov16) was
(11718.08 + 11277.01 + 11254.947 + 11610.969 + 11658.926) / 5 = $11503.9864 Mil.
Total Assets at the begining of this year (Nov15) was $11,718 Mil.
Long-Term Debt was $7,252 Mil.
Total Current Assets was $5,017 Mil.
Total Current Liabilities was $3,072 Mil.
Net Income was 1835.032 + 18.836 + 21.469 + 59.543 = $1,935 Mil.

Revenue was 6847.929 + 6647.561 + 7664.776 + 8154.184 = $29,314 Mil.
Gross Profit was 1955.861 + 1859.53 + 1922.291 + 2002.879 = $7,741 Mil.
Average Total Assets from the begining of last year (Nov14)
to the end of last year (Nov15) was
(7185.986 + 8777.425 + 10529.774 + 11979.231 + 11718.08) / 5 = $10038.0992 Mil.
Total Assets at the begining of last year (Nov14) was $7,186 Mil.
Long-Term Debt was $7,338 Mil.
Total Current Assets was $4,805 Mil.
Total Current Liabilities was $3,163 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.

Rite Aid Corp's current net income (TTM) was 91. ==> 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.

Rite Aid Corp's current cash flow from operations (TTM) was 493. ==> 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 (Nov15)
=90.812/11718.08
=0.00774973

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Nov14)
=1934.88/7185.986
=0.26925741

Rite Aid Corp's return on assets of this year was 0.00774973. Rite Aid Corp's return on assets of last year was 0.26925741. ==> 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.

Rite Aid Corp's current net income (TTM) was 91. Rite Aid Corp's current cash flow from operations (TTM) was 493. ==> 493 > 91 ==> 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: Nov16)=Long-Term Debt/Average Total Assets from Nov15 to Nov16
=7252.229/11503.9864
=0.63041008

Gearing (Last Year: Nov15)=Long-Term Debt/Average Total Assets from Nov14 to Nov15
=7338.345/10038.0992
=0.73104926

Rite Aid Corp's gearing of this year was 0.63041008. Rite Aid Corp's gearing of last year was 0.73104926. ==> 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: Nov16)=Total Current Assets/Total Current Liabilities
=5017.168/3071.538
=1.63343836

Current Ratio (Last Year: Nov15)=Total Current Assets/Total Current Liabilities
=4805.167/3162.997
=1.51918165

Rite Aid Corp's current ratio of this year was 1.63343836. Rite Aid Corp's current ratio of last year was 1.51918165. ==> This year's current ratio is higher. ==> Score 1.

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.

Rite Aid Corp's number of shares in issue this year was 1060.8. Rite Aid Corp's number of shares in issue last year was 1057.3. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=7747.459/32573.849
=0.23784291

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=7740.561/29314.45
=0.26405275

Rite Aid Corp's gross margin of this year was 0.23784291. Rite Aid Corp's gross margin of last year was 0.26405275. ==> Last year's gross margin is higher ==> Score 0.

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 (Nov15)
=32573.849/11718.08
=2.77979404

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Nov14)
=29314.45/7185.986
=4.07939147

Rite Aid Corp's asset turnover of this year was 2.77979404. Rite Aid Corp's asset turnover of last year was 4.07939147. ==> 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+1+0+0+0
=5

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

Rite Aid Corp 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 local exchange's currency.

Rite Aid Corp Annual Data

Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16
Question 1 1000001111
Question 2 1110111111
Question 3 0001011110
Question 4 1111111101
Question 5 0010000111
Question 6 1011000000
Question 7 1000000000
Question 8 0100001000
Question 9 0101110110
F-score 5444345654

Rite Aid Corp Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
Question 1 1111111111
Question 2 1111111111
Question 3 0111110000
Question 4 1100001111
Question 5 1110011111
Question 6 0101000011
Question 7 0000000000
Question 8 0001000000
Question 9 0111110000
F-score 4756454455
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