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Tesco PLC (OTCPK:TSCDY)
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 = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Tesco PLC has an F-score of 2. It is a bad or low score, which usually implies poor business operation.

TSCDY' 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 Tesco PLC 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 (Feb15) TTM:Last Year (Feb14) TTM:
Net Income was $-8,805 Mil.
Cash Flow from Operations was $742 Mil.
Revenue was $95,528 Mil.
Gross Profit was $-3,239 Mil.
Average Total Assets from the begining of this year (Feb14)
to the end of this year (Feb15) was (83052.9801325 + 67812.8834356) / 2 = $75432.931784 Mil.
Total Assets at the begining of this year (Feb14) was $83,053 Mil.
Long-Term Debt was $16,336 Mil.
Total Current Assets was $18,340 Mil.
Total Current Liabilities was $30,383 Mil.
Net Income was $1,613 Mil.

Revenue was $105,227 Mil.
Gross Profit was $6,639 Mil.
Average Total Assets from the begining of last year (Feb13)
to the end of last year (Feb14) was (77599.0712074 + 83052.9801325) / 2 = $80326.0256699 Mil.
Total Assets at the begining of last year (Feb13) was $77,599 Mil.
Long-Term Debt was $15,402 Mil.
Total Current Assets was $25,781 Mil.
Total Current Liabilities was $35,429 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.

Tesco PLC's current net income (TTM) was -8,805. ==> Negative ==> Score 0.

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.

Tesco PLC's current cash flow from operations (TTM) was 742. ==> 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 (Feb14)
=-8805.21472393/83052.9801325
=-0.10601925

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Feb13)
=1612.58278146/77599.0712074
=0.02078095

Tesco PLC's return on assets of this year was -0.10601925. Tesco PLC's return on assets of last year was 0.02078095. ==> 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.

Tesco PLC's current net income (TTM) was -8,805. Tesco PLC's current cash flow from operations (TTM) was 742. ==> 742 > -8,805 ==> 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: Feb15)=Long-Term Debt/Average Total Assets from Feb14 to Feb15
=16335.8895706/75432.931784
=0.21656177

Gearing (Last Year: Feb14)=Long-Term Debt/Average Total Assets from Feb13 to Feb14
=15402.3178808/80326.0256699
=0.19174754

Tesco PLC's gearing of this year was 0.21656177. Tesco PLC's gearing of last year was 0.19174754. ==> 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: Feb15)=Total Current Assets/Total Current Liabilities
=18340.4907975/30383.4355828
=0.60363453

Current Ratio (Last Year: Feb14)=Total Current Assets/Total Current Liabilities
=25781.4569536/35428.807947
=0.72769756

Tesco PLC's current ratio of this year was 0.60363453. Tesco PLC's current ratio of last year was 0.72769756. ==> 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.

Tesco PLC's number of shares in issue this year was 2702.3. Tesco PLC's number of shares in issue last year was 2692.7. ==> 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
=-3239.26380368/95527.607362
=-0.03390919

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=6639.07284768/105226.821192
=0.06309297

Tesco PLC's gross margin of this year was -0.03390919. Tesco PLC's gross margin of last year was 0.06309297. ==> 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 (Feb14)
=95527.607362/83052.9801325
=1.15020084

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Feb13)
=105226.821192/77599.0712074
=1.35603197

Tesco PLC's asset turnover of this year was 1.15020084. Tesco PLC's asset turnover of last year was 1.35603197. ==> 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
=0+1+0+1+0+0+0+0+0
=2

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

Tesco PLC has an F-score of 2. It is a bad or low score, which usually implies poor business operation.


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.

Tesco PLC Annual Data

Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15
Question 1 1111111110
Question 2 1111111111
Question 3 0100110010
Question 4 1111111111
Question 5 1000111110
Question 6 0111000110
Question 7 0011001100
Question 8 0011110000
Question 9 0100110010
F-score 4666775672
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