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Scotts Miracle Gro Co (NYSE:SMG)
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

Scotts Miracle Gro Co has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

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

3
8

During the past 13 years, the highest Piotroski F-Score of Scotts Miracle Gro Co was 8. 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was -19.4 + -65.6 + 125.7 + 121.7 = $162 Mil.
Cash Flow from Operations was 198.9 + -180.2 + -434.4 + 648.9 = $233 Mil.
Revenue was 443 + 196.4 + 1081 + 1116.4 = $2,837 Mil.
Gross Profit was 130.8 + 34.9 + 433.8 + 423.3 = $1,023 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(2362.3 + 1937.2 + 2159.4 + 3071.2 + 2506.4) / 5 = $2,407 Mil.
Total Assets as of Jun13 was $2,362 Mil.
Long-Term Debt was $629 Mil.
Total Current Assets was $1,411 Mil.
Total Current Liabilities was $908 Mil.
Net Income was -40.1 + -67.7 + 100 + 148.2 = $140 Mil.

Revenue was 379.2 + 205.8 + 1019.6 + 1148.1 = $2,753 Mil.
Gross Profit was 107.2 + 31.1 + 378.7 + 441.8 = $959 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(2384.1 + 2074.4 + 2128.1 + 2896.9 + 2362.3) / 5 = $2,369 Mil.
Total Assets as of Jun12 was $2,384 Mil.
Long-Term Debt was $548 Mil.
Total Current Assets was $1,309 Mil.
Total Current Liabilities was $846 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

Scotts Miracle Gro Co's current net income (ttm) was 162. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

Scotts Miracle Gro Co's current cash flow from operations (ttm) was 233. ==> 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 (TTM)/Beginning of This Year Total Assets (Jun13)
=162.4/2362.3
=0.06874656

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Jun12)
=140.4/2384.1
=0.05889015

Scotts Miracle Gro Co's return on assets of this year was 0.06874656. Scotts Miracle Gro Co's return on assets of last year was 0.05889015. ==> 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.

Scotts Miracle Gro Co's current net income (ttm) was 162. Scotts Miracle Gro Co's current cash flow from operations (ttm) was 233. ==> 233 > 162 ==> 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: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=628.7/2407.3
=0.26116396

Gearing (Last Year: Jun13)=Long-Term Debt/Average Total Assets from Jun12 to Jun13
=548.1/2369.16
=0.23134782

Scotts Miracle Gro Co's gearing of this year was 0.26116396. Scotts Miracle Gro Co's gearing of last year was 0.23134782. ==> Last year is lower than this year ==> Score 0.

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: Jun14)=Total Current Assets/Total Current Liabilities
=1411/908.4
=1.55328049

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=1308.5/846.4
=1.54595936

Scotts Miracle Gro Co's current ratio of this year was 1.55328049. Scotts Miracle Gro Co's current ratio of last year was 1.54595936. ==> This year's current ratio is higher. ==> Score 1.

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.

Scotts Miracle Gro Co's number of shares in issue this year was 62.4. Scotts Miracle Gro Co's number of shares in issue last year was 62.6. ==> 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
=1022.8/2836.8
=0.3605471

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=958.8/2752.7
=0.34831257

Scotts Miracle Gro Co's gross margin of this year was 0.3605471. Scotts Miracle Gro Co's gross margin of last year was 0.34831257. ==> 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 begining of the year total assets) 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)/Beginning of This Year Total Assets (Jun13)
=2836.8/2362.3
=1.20086357

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Jun12)
=2752.7/2384.1
=1.15460761

Scotts Miracle Gro Co's asset turnover of this year was 1.20086357. Scotts Miracle Gro Co's asset turnover of last year was 1.15460761. ==> 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+0+1+1+1+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Scotts Miracle Gro Co 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, Altman Z-Score, Beneish M-Score


Historical Data

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

Scotts Miracle Gro Co Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
Q1 1111011111
Q2 1111111111
Q3 0010011001
Q4 1111111011
Q5 1100111001
Q6 1010000110
Q7 0001100110
Q8 1000011001
Q9 1110110010
F-score 7564576466

Scotts Miracle Gro Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 0000011111
Q4 0111111111
Q5 0101111110
Q6 1011100001
Q7 1110000001
Q8 0000011111
Q9 0011010111
F-score 4566576778
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