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The Scotts Miracle Gro Co (NYSE:SMG)
Piotroski F-Score
4 (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

The Scotts Miracle Gro Co has an F-score of 4 indicating the company's financial situation is typical for a stable company.

SMG' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 7
Current: 4

4
7

During the past 13 years, the highest Piotroski F-Score of The Scotts Miracle Gro Co was 7. The lowest was 4. 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 (Sep15) TTM:Last Year (Sep14) TTM:
Net Income was -74.6 + 124.6 + 133.4 + -23.6 = $160 Mil.
Cash Flow from Operations was -267 + -381.7 + 672.9 + 222.7 = $247 Mil.
Revenue was 216.2 + 1102.3 + 1214.8 + 483.2 = $3,017 Mil.
Gross Profit was 29.3 + 433.3 + 449.2 + 153.1 = $1,065 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(2058.3 + 2265.2 + 3009.8 + 3018.1 + 2527.2) / 5 = $2575.72 Mil.
Total Assets at the begining of this year (Sep14) was $2,058 Mil.
Long-Term Debt was $1,029 Mil.
Total Current Assets was $949 Mil.
Total Current Liabilities was $613 Mil.
Net Income was -65.6 + 125.7 + 121.7 + -15.2 = $167 Mil.

Revenue was 196.4 + 1081 + 1116.4 + 454.3 = $2,848 Mil.
Gross Profit was 34.9 + 433.8 + 423.3 + 140.4 = $1,032 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(1937.2 + 2159.4 + 3071.2 + 2506.4 + 2058.3) / 5 = $2346.5 Mil.
Total Assets at the begining of last year (Sep13) was $1,937 Mil.
Long-Term Debt was $692 Mil.
Total Current Assets was $935 Mil.
Total Current Liabilities was $545 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.

The Scotts Miracle Gro Co's current net income (TTM) was 160. ==> 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.

The Scotts Miracle Gro Co's current cash flow from operations (TTM) was 247. ==> 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 (Sep14)
=159.8/2058.3
=0.07763688

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=166.6/1937.2
=0.08600041

The Scotts Miracle Gro Co's return on assets of this year was 0.07763688. The Scotts Miracle Gro Co's return on assets of last year was 0.08600041. ==> 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.

The Scotts Miracle Gro Co's current net income (TTM) was 160. The Scotts Miracle Gro Co's current cash flow from operations (TTM) was 247. ==> 247 > 160 ==> 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: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=1028.5/2575.72
=0.39930583

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=692.4/2346.5
=0.29507778

The Scotts Miracle Gro Co's gearing of this year was 0.39930583. The Scotts Miracle Gro Co's gearing of last year was 0.29507778. ==> 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: Sep15)=Total Current Assets/Total Current Liabilities
=948.6/613.1
=1.54721905

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=935/544.7
=1.71654122

The Scotts Miracle Gro Co's current ratio of this year was 1.54721905. The Scotts Miracle Gro Co's current ratio of last year was 1.71654122. ==> Last year's current ratio is higher ==> Score 0.

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.

The Scotts Miracle Gro Co's number of shares in issue this year was 62.2. The Scotts Miracle Gro Co's number of shares in issue last year was 62.7. ==> 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
=1064.9/3016.5
=0.35302503

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1032.4/2848.1
=0.36248727

The Scotts Miracle Gro Co's gross margin of this year was 0.35302503. The Scotts Miracle Gro Co's gross margin of last year was 0.36248727. ==> 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 (Sep14)
=3016.5/2058.3
=1.46552981

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=2848.1/1937.2
=1.47021474

The Scotts Miracle Gro Co's asset turnover of this year was 1.46552981. The Scotts Miracle Gro Co's asset turnover of last year was 1.47021474. ==> 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+0+1+0+0
=4

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

The Scotts Miracle Gro Co has an F-score of 4 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.

The Scotts Miracle Gro Co Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
Question 1 1101111111
Question 2 1111111111
Question 3 1001100110
Question 4 1111101111
Question 5 0011100100
Question 6 1000011000
Question 7 0110011001
Question 8 0001100110
Question 9 1011001010
F-score 6457646664

The Scotts Miracle Gro Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1111100000
Question 4 1111101111
Question 5 1110000000
Question 6 0001010000
Question 7 0001011110
Question 8 1111110000
Question 9 0111110001
F-score 6778664444
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