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R.R.Donnelley & Sons Co (NYSE:RRD)
Piotroski F-Score
6 (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

R.R.Donnelley & Sons Co has an F-score of 6 indicating the company's financial situation is typical for a stable company.

RRD' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 8
Current: 6

2
8

During the past 13 years, the highest Piotroski F-Score of R.R.Donnelley & Sons Co was 8. 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 local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Net Income was 71 + 39.8 + -14.5 + -7.1 = $89 Mil.
Cash Flow from Operations was 447.8 + -192.8 + 92.5 + 108.1 = $456 Mil.
Revenue was 2934.6 + 2651.4 + 2729.7 + 2772.4 = $11,088 Mil.
Gross Profit was 648.6 + 569.3 + 604.9 + 607.7 = $2,431 Mil.
Average Total Assets from the begining of this year (Sep15)
to the end of this year (Sep16) was
(7470.6 + 7279.3 + 7086.1 + 7088.2 + 7472.5) / 5 = $7279.34 Mil.
Total Assets at the begining of this year (Sep15) was $7,471 Mil.
Long-Term Debt was $3,635 Mil.
Total Current Assets was $3,313 Mil.
Total Current Liabilities was $2,222 Mil.
Net Income was 19.5 + 22.3 + 43.5 + 14.3 = $100 Mil.

Revenue was 3069.3 + 2746.1 + 2748.1 + 2828 = $11,392 Mil.
Gross Profit was 667.6 + 579.7 + 615.8 + 619.9 = $2,483 Mil.
Average Total Assets from the begining of last year (Sep14)
to the end of last year (Sep15) was
(7566.9 + 7608.8 + 7205.3 + 7492.4 + 7470.6) / 5 = $7468.8 Mil.
Total Assets at the begining of last year (Sep14) was $7,567 Mil.
Long-Term Debt was $3,216 Mil.
Total Current Assets was $3,185 Mil.
Total Current Liabilities was $2,450 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.

R.R.Donnelley & Sons Co's current net income (TTM) was 89. ==> 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.

R.R.Donnelley & Sons Co's current cash flow from operations (TTM) was 456. ==> 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 (Sep15)
=89.2/7470.6
=0.01194014

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=99.6/7566.9
=0.01316259

R.R.Donnelley & Sons Co's return on assets of this year was 0.01194014. R.R.Donnelley & Sons Co's return on assets of last year was 0.01316259. ==> 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.

R.R.Donnelley & Sons Co's current net income (TTM) was 89. R.R.Donnelley & Sons Co's current cash flow from operations (TTM) was 456. ==> 456 > 89 ==> 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: Sep16)=Long-Term Debt/Average Total Assets from Sep15 to Sep16
=3635.3/7279.34
=0.49939967

Gearing (Last Year: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=3216.1/7468.8
=0.43060465

R.R.Donnelley & Sons Co's gearing of this year was 0.49939967. R.R.Donnelley & Sons Co's gearing of last year was 0.43060465. ==> Last year is lower than this year ==> Score 0.

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: Sep16)=Total Current Assets/Total Current Liabilities
=3312.5/2221.6
=1.49104249

Current Ratio (Last Year: Sep15)=Total Current Assets/Total Current Liabilities
=3184.5/2450.3
=1.29963678

R.R.Donnelley & Sons Co's current ratio of this year was 1.49104249. R.R.Donnelley & Sons Co's current ratio of last year was 1.29963678. ==> 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.

R.R.Donnelley & Sons Co's number of shares in issue this year was 70. R.R.Donnelley & Sons Co's number of shares in issue last year was 70.1. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=2430.5/11088.1
=0.21919896

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2483/11391.5
=0.21796954

R.R.Donnelley & Sons Co's gross margin of this year was 0.21919896. R.R.Donnelley & Sons Co's gross margin of last year was 0.21796954. ==> This year's gross margin is higher. ==> Score 1.

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 (Sep15)
=11088.1/7470.6
=1.48423152

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=11391.5/7566.9
=1.50543816

R.R.Donnelley & Sons Co's asset turnover of this year was 1.48423152. R.R.Donnelley & Sons Co's asset turnover of last year was 1.50543816. ==> 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+0+1+1+1+0
=6

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

R.R.Donnelley & Sons Co has an F-score of 6 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.

R.R.Donnelley & Sons Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1000100111
Question 2 1111111111
Question 3 1001100101
Question 4 1111111111
Question 5 1010010011
Question 6 1011101100
Question 7 0111011000
Question 8 0000010000
Question 9 1101111110
F-score 7456665655

R.R.Donnelley & Sons Co Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Question 1 1111111111
Question 2 1111111111
Question 3 1101001100
Question 4 1111111111
Question 5 0011111110
Question 6 0001100001
Question 7 0000000001
Question 8 0000000111
Question 9 1111000100
F-score 5557545756
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