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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: 3   Max: 8
Current: 7

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 (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 125.7 + -65.6 + -19.4 + 148.2 = $189 Mil.
Cash Flow from Operations was -434.4 + -180.2 + 198.9 + 688.4 = $273 Mil.
Revenue was 1081 + 196.4 + 443 + 1148.1 = $2,869 Mil.
Gross Profit was 433.8 + 34.9 + 130.8 + 441.8 = $1,041 Mil.
Total Assets at the begining of this year (Mar13) was $2,897 Mil.
Total Assets was $3,071 Mil.
Long-Term Debt was $1,145 Mil.
Total Current Assets was $1,938 Mil.
Total Current Liabilities was $1,018 Mil.
Net Income was 100 + -67.7 + -40.1 + 93.3 = $86 Mil.

Revenue was 1007.9 + 205.8 + 401.2 + 1054.9 = $2,670 Mil.
Gross Profit was 377.2 + 31.1 + 105 + 369 = $882 Mil.
Total Assets at the begining of last year (Mar12) was $3,070 Mil.
Total Assets was $2,897 Mil.
Long-Term Debt was $1,163 Mil.
Total Current Assets was $1,837 Mil.
Total Current Liabilities was $888 Mil.

Profitability

Q1. 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 was 189. ==> Positive ==> Score 1.

Q2. 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 was 273. ==> 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/Total Assets at the beginning of this year (Mar13)
=188.9/2896.9
=0.06520764

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=85.5/3069.7
=0.02785288

Scotts Miracle Gro Co's return on assets of this year was 0.06520764. Scotts Miracle Gro Co's return on assets of last year was 0.02785288. ==> 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 was 189. Scotts Miracle Gro Co's current cash flow from operations was 273. ==> 273 > 189 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=1145.3/3071.2
=0.37291612

Gearing (Last Year)=Long-Term Debt/Total Assets
=1163/2896.9
=0.40146363

Scotts Miracle Gro Co's gearing of this year was 0.37291612. Scotts Miracle Gro Co's gearing of last year was 0.40146363. ==> This year is lower. ==> Score 1.

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)=Total Current Assets/Total Current Liabilities
=1937.6/1018.1
=1.90315293

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1836.7/888.2
=2.06789011

Scotts Miracle Gro Co's current ratio of this year was 1.90315293. Scotts Miracle Gro Co's current ratio of last year was 2.06789011. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Scotts Miracle Gro Co's number of shares in issue this year was 62.9. Scotts Miracle Gro Co's number of shares in issue last year was 62.4. ==> There is more number of shares in issue this year. ==> Score 0.

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)=Gross Profit/Revenue
=1041.3/2868.5
=0.36301203

Gross Margin (Last Year)=Gross Profit/Revenue
=882.3/2669.8
=0.33047419

Scotts Miracle Gro Co's gross margin of this year was 0.36301203. Scotts Miracle Gro Co's gross margin of last year was 0.33047419. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Mar13)
=2868.5/2896.9
=0.99019642

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=2669.8/3069.7
=0.86972668

Scotts Miracle Gro Co's asset turnover of this year was 0.99019642. Scotts Miracle Gro Co's asset turnover of last year was 0.86972668. ==> 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+1+0+0+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


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 1100111011
Q6 1010001110
Q7 0001100110
Q8 1000011001
Q9 1110110010
F-score 7564577476

Scotts Miracle Gro Co Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111111
Q2 1111111111
Q3 0000001111
Q4 0011111111
Q5 0011111111
Q6 1101110000
Q7 1111000000
Q8 0000001111
Q9 0001101011
F-score 4457657677
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