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Treehouse Foods Inc (NYSE:THS)
Piotroski F-Score
5 (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

Treehouse Foods Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.

THS' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 8
Current: 5

4
8

During the past 13 years, the highest Piotroski F-Score of Treehouse Foods Inc was 8. The lowest was 4. And the median was 5.


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 (Dec15) TTM:Last Year (Dec14) TTM:
Net Income was 17.852 + 31.362 + 28.441 + 37.255 = $115 Mil.
Cash Flow from Operations was 81.602 + 67.197 + 20.391 + 116.128 = $285 Mil.
Revenue was 783.145 + 759.208 + 798.638 + 865.414 = $3,206 Mil.
Gross Profit was 152.437 + 151.371 + 158.697 + 181.798 = $644 Mil.
Average Total Assets from the begining of this year (Dec14)
to the end of this year (Dec15) was
(3858.322 + 3815.384 + 3817.088 + 3843.722 + 3702.796) / 5 = $3807.4624 Mil.
Total Assets at the begining of this year (Dec14) was $3,858 Mil.
Long-Term Debt was $1,222 Mil.
Total Current Assets was $847 Mil.
Total Current Liabilities was $275 Mil.
Net Income was 14.322 + 21.759 + 19.882 + 33.917 = $90 Mil.

Revenue was 618.903 + 627.96 + 795.726 + 903.513 = $2,946 Mil.
Gross Profit was 132.991 + 135.677 + 158.588 + 179.348 = $607 Mil.
Average Total Assets from the begining of last year (Dec13)
to the end of last year (Dec14) was
(2721.054 + 2676.422 + 2912.356 + 3946.599 + 3858.322) / 5 = $3222.9506 Mil.
Total Assets at the begining of last year (Dec13) was $2,721 Mil.
Long-Term Debt was $1,438 Mil.
Total Current Assets was $914 Mil.
Total Current Liabilities was $310 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.

Treehouse Foods Inc's current net income (TTM) was 115. ==> 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.

Treehouse Foods Inc's current cash flow from operations (TTM) was 285. ==> 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 (Dec14)
=114.91/3858.322
=0.02978238

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=89.88/2721.054
=0.03303132

Treehouse Foods Inc's return on assets of this year was 0.02978238. Treehouse Foods Inc's return on assets of last year was 0.03303132. ==> 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.

Treehouse Foods Inc's current net income (TTM) was 115. Treehouse Foods Inc's current cash flow from operations (TTM) was 285. ==> 285 > 115 ==> 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: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=1221.741/3807.4624
=0.32088065

Gearing (Last Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=1437.749/3222.9506
=0.44609713

Treehouse Foods Inc's gearing of this year was 0.32088065. Treehouse Foods Inc's gearing of last year was 0.44609713. ==> This year is lower or equal to last year. ==> Score 1.

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: Dec15)=Total Current Assets/Total Current Liabilities
=847.203/275.473
=3.07544841

Current Ratio (Last Year: Dec14)=Total Current Assets/Total Current Liabilities
=913.872/309.854
=2.94936325

Treehouse Foods Inc's current ratio of this year was 3.07544841. Treehouse Foods Inc's current ratio of last year was 2.94936325. ==> This year's current ratio is higher. ==> Score 1.

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.

Treehouse Foods Inc's number of shares in issue this year was 43.7. Treehouse Foods Inc's number of shares in issue last year was 40.2. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=644.303/3206.405
=0.20094249

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=606.604/2946.102
=0.20590054

Treehouse Foods Inc's gross margin of this year was 0.20094249. Treehouse Foods Inc's gross margin of last year was 0.20590054. ==> 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 (Dec14)
=3206.405/3858.322
=0.83103613

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=2946.102/2721.054
=1.08270619

Treehouse Foods Inc's asset turnover of this year was 0.83103613. Treehouse Foods Inc's asset turnover of last year was 1.08270619. ==> 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+1+1+0+0+0
=5

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

Treehouse Foods Inc has an F-score of 5 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.

Treehouse Foods Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1001100000
Question 4 1111111111
Question 5 0011011001
Question 6 1001011011
Question 7 0100000000
Question 8 1001100000
Question 9 1001101110
F-score 7448656455

Treehouse Foods Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 0000001100
Question 4 1111111111
Question 5 1000000111
Question 6 1000011101
Question 7 0000000000
Question 8 0011100000
Question 9 1111111100
F-score 6455556745
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