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Scotts Miracle Gro Co (NYSE:SMG)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, 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 7 indicating the company's financial situation is typical for a stable company.

SMG' s 10-Year Piotroski F-Score Range
Min: 4   Max: 8
Current: 7

4
8

During the past 13 years, the highest Piotroski F-Score of Scotts Miracle Gro Co was 8. 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was -65.6 + 125.7 + 121.7 + -15.2 = $167 Mil.
Cash Flow from Operations was -180.2 + -434.4 + 648.9 + 206.6 = $241 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 this year (Sep13)
to the end of this year (Sep14) was
(1937.2 + 2159.4 + 3071.2 + 2506.4 + 2058.3) / 5 = $2,347 Mil.
Total Assets as of Sep13 was $1,937 Mil.
Long-Term Debt was $692 Mil.
Total Current Assets was $935 Mil.
Total Current Liabilities was $545 Mil.
Net Income was -67.7 + 100 + 148.2 + -19.4 = $161 Mil.

Revenue was 205.8 + 1007.9 + 1137.1 + 433.6 = $2,784 Mil.
Gross Profit was 31.1 + 377.2 + 440.3 + 130.1 = $979 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(2074.4 + 2128.1 + 2896.9 + 2362.3 + 1937.2) / 5 = $2,280 Mil.
Total Assets as of Sep12 was $2,074 Mil.
Long-Term Debt was $478 Mil.
Total Current Assets was $881 Mil.
Total Current Liabilities was $510 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 167. ==> 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 241. ==> 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 (Sep13)
=166.6/1937.2
=0.08600041

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Sep12)
=161.1/2074.4
=0.07766101

Scotts Miracle Gro Co's return on assets of this year was 0.08600041. Scotts Miracle Gro Co's return on assets of last year was 0.07766101. ==> 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 167. Scotts Miracle Gro Co's current cash flow from operations (ttm) was 241. ==> 241 > 167 ==> 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: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=692.4/2346.5
=0.29507778

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=478.1/2279.78
=0.20971322

Scotts Miracle Gro Co's gearing of this year was 0.29507778. Scotts Miracle Gro Co's gearing of last year was 0.20971322. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=935/544.7
=1.71654122

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=881/509.8
=1.72812868

Scotts Miracle Gro Co's current ratio of this year was 1.71654122. Scotts Miracle Gro Co's current ratio of last year was 1.72812868. ==> Last year's current ratio is higher ==> Score 0.

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 62.9. ==> 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
=1032.4/2848.1
=0.36248727

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=978.7/2784.4
=0.35149404

Scotts Miracle Gro Co's gross margin of this year was 0.36248727. Scotts Miracle Gro Co's gross margin of last year was 0.35149404. ==> 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 (Sep13)
=2848.1/1937.2
=1.47021474

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Sep12)
=2784.4/2074.4
=1.34226764

Scotts Miracle Gro Co's asset turnover of this year was 1.47021474. Scotts Miracle Gro Co's asset turnover of last year was 1.34226764. ==> 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+0+1+1+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Scotts Miracle Gro Co has an F-score of 7 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, 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

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
Q1 1110111111
Q2 1111111111
Q3 0100110011
Q4 1111110111
Q5 1001110010
Q6 0100001100
Q7 0011001100
Q8 0000110011
Q9 1101100101
F-score 5645764666

Scotts Miracle Gro Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 1111111111
Q3 0000111111
Q4 1111111111
Q5 1011111100
Q6 0111000010
Q7 1100000011
Q8 0000111111
Q9 0110101111
F-score 5665767787
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