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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

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

SMG' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 4

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 (Jun15) TTM:Last Year (Jun14) TTM:
Net Income was -15.2 + -74.6 + 124.6 + 133.4 = $168 Mil.
Cash Flow from Operations was 206.6 + -267 + -381.7 + 672.9 = $231 Mil.
Revenue was 454.3 + 216.2 + 1102.3 + 1214.8 = $2,988 Mil.
Gross Profit was 140.4 + 29.3 + 433.3 + 449.2 = $1,052 Mil.
Average Total Assets from the begining of this year (Jun14)
to the end of this year (Jun15) was
(2506.4 + 2058.3 + 2265.2 + 3009.8 + 3018.1) / 5 = $2571.56 Mil.
Total Assets at the begining of this year (Jun14) was $2,506 Mil.
Long-Term Debt was $738 Mil.
Total Current Assets was $1,440 Mil.
Total Current Liabilities was $1,343 Mil.
Net Income was -19.4 + -65.6 + 125.7 + 121.7 = $162 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 last year (Jun13)
to the end of last year (Jun14) was
(2362.3 + 1937.2 + 2159.4 + 3071.2 + 2506.4) / 5 = $2407.3 Mil.
Total Assets at the begining of last year (Jun13) was $2,362 Mil.
Long-Term Debt was $629 Mil.
Total Current Assets was $1,411 Mil.
Total Current Liabilities was $908 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.

Scotts Miracle Gro Co's current net income (TTM) was 168. ==> 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.

Scotts Miracle Gro Co's current cash flow from operations (TTM) was 231. ==> 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 (Jun14)
=168.2/2506.4
=0.0671082

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=162.4/2362.3
=0.06874656

Scotts Miracle Gro Co's return on assets of this year was 0.0671082. Scotts Miracle Gro Co's return on assets of last year was 0.06874656. ==> 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.

Scotts Miracle Gro Co's current net income (TTM) was 168. Scotts Miracle Gro Co's current cash flow from operations (TTM) was 231. ==> 231 > 168 ==> 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: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=738.4/2571.56
=0.28714088

Gearing (Last Year: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=628.7/2407.3
=0.26116396

Scotts Miracle Gro Co's gearing of this year was 0.28714088. Scotts Miracle Gro Co's gearing of last year was 0.26116396. ==> 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: Jun15)=Total Current Assets/Total Current Liabilities
=1440.2/1342.9
=1.07245513

Current Ratio (Last Year: Jun14)=Total Current Assets/Total Current Liabilities
=1411/908.4
=1.55328049

Scotts Miracle Gro Co's current ratio of this year was 1.07245513. Scotts Miracle Gro Co's current ratio of last year was 1.55328049. ==> 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.

Scotts Miracle Gro Co's number of shares in issue this year was 62.3. Scotts Miracle Gro Co's number of shares in issue last year was 62.4. ==> 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
=1052.2/2987.6
=0.35218905

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1022.8/2836.8
=0.3605471

Scotts Miracle Gro Co's gross margin of this year was 0.35218905. Scotts Miracle Gro Co's gross margin of last year was 0.3605471. ==> 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 (Jun14)
=2987.6/2506.4
=1.19198851

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=2836.8/2362.3
=1.20086357

Scotts Miracle Gro Co's asset turnover of this year was 1.19198851. Scotts Miracle Gro Co's asset turnover of last year was 1.20086357. ==> 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

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.

Scotts Miracle Gro Co Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
Question 1 1110111111
Question 2 1111111111
Question 3 0100110011
Question 4 1111110111
Question 5 1001110010
Question 6 0100001100
Question 7 0010001101
Question 8 0000110011
Question 9 1101100101
F-score 5644764667

Scotts Miracle Gro Co Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Question 1 1111111111
Question 2 1111111111
Question 3 0111111000
Question 4 1111111011
Question 5 1111100000
Question 6 1000010100
Question 7 0000011111
Question 8 0111111100
Question 9 0101111100
F-score 5767787644
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