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Toro Co (NYSE:TTC)
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

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

TTC' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 9
Current: 6

4
9

During the past 13 years, the highest Piotroski F-Score of Toro Co was 9. The lowest was 4. And the median was 7.


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 (Jan16) TTM:Last Year (Jan15) TTM:
Net Income was 93.763 + 53.324 + 23.554 + 39.261 = $210 Mil.
Cash Flow from Operations was 118.639 + 72.766 + 68.855 + 1.24 = $262 Mil.
Revenue was 826.242 + 609.615 + 480.807 + 486.398 = $2,403 Mil.
Gross Profit was 281.972 + 216.39 + 168.574 + 182.654 = $850 Mil.
Average Total Assets from the begining of this year (Jan15)
to the end of this year (Jan16) was
(1322.168 + 1479.127 + 1359.951 + 1303.658 + 1393.834) / 5 = $1371.7476 Mil.
Total Assets at the begining of this year (Jan15) was $1,322 Mil.
Long-Term Debt was $341 Mil.
Total Current Assets was $805 Mil.
Total Current Liabilities was $550 Mil.
Net Income was 87.086 + 50.013 + 10.902 + 30.95 = $179 Mil.

Revenue was 745.03 + 567.54 + 414.14 + 474.211 = $2,201 Mil.
Gross Profit was 264.54 + 202.08 + 143.137 + 168.999 = $779 Mil.
Average Total Assets from the begining of last year (Jan14)
to the end of last year (Jan15) was
(1039.595 + 1179.246 + 1127.827 + 1192.415 + 1322.168) / 5 = $1172.2502 Mil.
Total Assets at the begining of last year (Jan14) was $1,040 Mil.
Long-Term Debt was $365 Mil.
Total Current Assets was $734 Mil.
Total Current Liabilities was $508 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.

Toro Co's current net income (TTM) was 210. ==> 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.

Toro Co's current cash flow from operations (TTM) was 262. ==> 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 (Jan15)
=209.902/1322.168
=0.15875592

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jan14)
=178.951/1039.595
=0.1721353

Toro Co's return on assets of this year was 0.15875592. Toro Co's return on assets of last year was 0.1721353. ==> 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.

Toro Co's current net income (TTM) was 210. Toro Co's current cash flow from operations (TTM) was 262. ==> 262 > 210 ==> 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: Jan16)=Long-Term Debt/Average Total Assets from Jan15 to Jan16
=341.127/1371.7476
=0.24868059

Gearing (Last Year: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=364.662/1172.2502
=0.31107864

Toro Co's gearing of this year was 0.24868059. Toro Co's gearing of last year was 0.31107864. ==> 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: Jan16)=Total Current Assets/Total Current Liabilities
=805.089/550.414
=1.46269717

Current Ratio (Last Year: Jan15)=Total Current Assets/Total Current Liabilities
=734.089/508.208
=1.44446565

Toro Co's current ratio of this year was 1.46269717. Toro Co's current ratio of last year was 1.44446565. ==> 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.

Toro Co's number of shares in issue this year was 56.2. Toro Co's number of shares in issue last year was 57.2. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=849.59/2403.062
=0.35354477

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=778.756/2200.921
=0.35383187

Toro Co's gross margin of this year was 0.35354477. Toro Co's gross margin of last year was 0.35383187. ==> 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 (Jan15)
=2403.062/1322.168
=1.81751638

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan14)
=2200.921/1039.595
=2.11709464

Toro Co's asset turnover of this year was 1.81751638. Toro Co's asset turnover of last year was 2.11709464. ==> 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+1+0+0
=6

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

Toro Co 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.

Toro Co Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
Question 1 1111111111
Question 2 1111111111
Question 3 1100111110
Question 4 1111101111
Question 5 1000011101
Question 6 1110001110
Question 7 1111111111
Question 8 1100101110
Question 9 1100111000
F-score 9854769875

Toro Co Quarterly Data

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16
Question 1 1111111111
Question 2 1111111111
Question 3 1101111100
Question 4 1111101011
Question 5 1111000011
Question 6 1000100001
Question 7 1111111111
Question 8 1100110000
Question 9 0001011000
F-score 8757766456
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