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Tesco PLC (OTCPK:TSCDY)
Piotroski F-Score
6 (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

Tesco PLC has an F-score of 6 indicating the company's financial situation is typical for a stable company.

TSCDY' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 8
Current: 6

2
8

During the past 13 years, the highest Piotroski F-Score of Tesco PLC was 8. The lowest was 2. 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 (Feb16) TTM:Last Year (Feb15) TTM:
Net Income was $197 Mil.
Cash Flow from Operations was $3,037 Mil.
Revenue was $77,761 Mil.
Gross Profit was $4,077 Mil.
Average Total Assets from the begining of this year (Feb15)
to the end of this year (Feb16) was (67812.8834356 + 62720) / 2 = $65266.4417178 Mil.
Total Assets at the begining of this year (Feb15) was $67,813 Mil.
Long-Term Debt was $15,301 Mil.
Total Current Assets was $21,183 Mil.
Total Current Liabilities was $28,163 Mil.
Net Income was $-8,805 Mil.

Revenue was $95,528 Mil.
Gross Profit was $-3,239 Mil.
Average Total Assets from the begining of last year (Feb14)
to the end of last year (Feb15) was (83052.9801325 + 67812.8834356) / 2 = $75432.931784 Mil.
Total Assets at the begining of last 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.

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 197. ==> 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.

Tesco PLC's current cash flow from operations (TTM) was 3,037. ==> 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 (Feb15)
=197.142857143/67812.8834356
=0.00290716

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Feb14)
=-8805.21472393/83052.9801325
=-0.10601925

Tesco PLC's return on assets of this year was 0.00290716. Tesco PLC's return on assets of last year was -0.10601925. ==> This year is higher. ==> Score 1.

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 197. Tesco PLC's current cash flow from operations (TTM) was 3,037. ==> 3,037 > 197 ==> 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: Feb16)=Long-Term Debt/Average Total Assets from Feb15 to Feb16
=15301.4285714/65266.4417178
=0.23444558

Gearing (Last Year: Feb15)=Long-Term Debt/Average Total Assets from Feb14 to Feb15
=16335.8895706/75432.931784
=0.21656177

Tesco PLC's gearing of this year was 0.23444558. Tesco PLC's gearing of last year was 0.21656177. ==> 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: Feb16)=Total Current Assets/Total Current Liabilities
=21182.8571429/28162.8571429
=0.75215583

Current Ratio (Last Year: Feb15)=Total Current Assets/Total Current Liabilities
=18340.4907975/30383.4355828
=0.60363453

Tesco PLC's current ratio of this year was 0.75215583. Tesco PLC's current ratio of last year was 0.60363453. ==> 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.

Tesco PLC's number of shares in issue this year was 2717.3. Tesco PLC's number of shares in issue last year was 2702.3. ==> 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
=4077.14285714/77761.4285714
=0.05243143

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=-3239.26380368/95527.607362
=-0.03390919

Tesco PLC's gross margin of this year was 0.05243143. Tesco PLC's gross margin of last year was -0.03390919. ==> This year's gross margin is higher. ==> Score 1.

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 (Feb15)
=77761.4285714/67812.8834356
=1.14670583

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Feb14)
=95527.607362/83052.9801325
=1.15020084

Tesco PLC's asset turnover of this year was 1.14670583. Tesco PLC's asset turnover of last year was 1.15020084. ==> 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+1+1+0+1+0+1+0
=6

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

Tesco PLC has an F-score of 6 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.

Tesco PLC Annual Data

Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16
Question 1 1111111101
Question 2 1111111111
Question 3 1001100101
Question 4 1111111111
Question 5 0001111100
Question 6 1110001101
Question 7 0110011000
Question 8 0111100101
Question 9 1001100100
F-score 6667756826
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