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Sonic Corporation (NAS:SONC)
Piotroski F-Score
9 (As of Today)

Good Sign:

Piotroski F-Score of 9 is 9, 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

Sonic Corporation has an F-score of 7 indicating the company's financial situation is typical for a stable company.

SONC' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 9

3
9

During the past 13 years, the highest Piotroski F-Score of Sonic Corporation was 9. 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 (Feb14) TTM:Last Year (Feb13) TTM:
Net Income was 4.107 + 8.208 + 12.198 + 14.793 = $39.3 Mil.
Cash Flow from Operations was 7.857 + 28.063 + 31.989 + 33.903 = $101.8 Mil.
Revenue was 109.741 + 126.652 + 158.802 + 146.634 = $541.8 Mil.
Gross Profit was 38.23 + 45.269 + 61.527 + 56.578 = $201.6 Mil.
Total Assets at the begining of this year (Feb13) was $624.7 Mil.
Total Assets was $618.6 Mil.
Long-Term Debt was $457.5 Mil.
Total Current Assets was $87.8 Mil.
Total Current Liabilities was $61.1 Mil.
Net Income was 3.577 + 6.133 + 14.502 + 14.407 = $38.6 Mil.

Revenue was 111.141 + 126.008 + 150.94 + 149.427 = $537.5 Mil.
Gross Profit was 37.336 + 43.935 + 58.743 + 58.027 = $198.0 Mil.
Total Assets at the begining of last year (Feb12) was $662.2 Mil.
Total Assets was $624.7 Mil.
Long-Term Debt was $464.7 Mil.
Total Current Assets was $96.1 Mil.
Total Current Liabilities was $63.5 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.

Sonic Corporation's current net income was 39.3. ==> 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.

Sonic Corporation's current cash flow from operations was 101.8. ==> 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 (Feb13)
=39.306/624.663
=0.06292353

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Feb12)
=38.619/662.246
=0.05831519

Sonic Corporation's return on assets of this year was 0.06292353. Sonic Corporation's return on assets of last year was 0.05831519. ==> 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.

Sonic Corporation's current net income was 39.3. Sonic Corporation's current cash flow from operations was 101.8. ==> 101.8 > 39.3 ==> 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
=457.505/618.623
=0.73955382

Gearing (Last Year)=Long-Term Debt/Total Assets
=464.748/624.663
=0.74399796

Sonic Corporation's gearing of this year was 0.73955382. Sonic Corporation's gearing of last year was 0.74399796. ==> 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
=87.784/61.105
=1.43660912

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=96.108/63.482
=1.51394096

Sonic Corporation's current ratio of this year was 1.43660912. Sonic Corporation's current ratio of last year was 1.51394096. ==> 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.

Sonic Corporation's number of shares in issue this year was 57.4. Sonic Corporation's number of shares in issue last year was 56.4. ==> 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
=201.604/541.829
=0.37208049

Gross Margin (Last Year)=Gross Profit/Revenue
=198.041/537.516
=0.3684374

Sonic Corporation's gross margin of this year was 0.37208049. Sonic Corporation's gross margin of last year was 0.3684374. ==> 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 (Feb13)
=541.829/624.663
=0.8673941

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Feb12)
=537.516/662.246
=0.81165609

Sonic Corporation's asset turnover of this year was 0.8673941. Sonic Corporation's asset turnover of last year was 0.81165609. ==> 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

Sonic Corporation 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.

Sonic Corporation Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
Q1 1111111111
Q2 1111111111
Q3 1110000111
Q4 1111111111
Q5 1100111111
Q6 0011110111
Q7 1111110011
Q8 1001011011
Q9 1110000110
F-score 8776675798

Sonic Corporation Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
Q1 1111111111
Q2 1111111111
Q3 0011111111
Q4 1111111111
Q5 0011111111
Q6 1111111110
Q7 1111111110
Q8 0011111111
Q9 1111101011
F-score 6699989890
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