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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 10-Year Piotroski F-Score Range
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 (Apr15) TTM:Last Year (Apr14) TTM:
Net Income was 50.013 + 10.902 + 30.95 + 93.763 = $186 Mil.
Cash Flow from Operations was 86.264 + 18.152 + -23.391 + 118.639 = $200 Mil.
Revenue was 567.54 + 414.14 + 474.211 + 826.242 = $2,282 Mil.
Gross Profit was 202.08 + 143.137 + 168.999 + 281.972 = $796 Mil.
Average Total Assets from the begining of this year (Apr14)
to the end of this year (Apr15) was
(1179.246 + 1127.827 + 1192.415 + 1322.168 + 1479.127) / 5 = $1260.1566 Mil.
Total Assets at the begining of this year (Apr14) was $1,179 Mil.
Long-Term Debt was $361 Mil.
Total Current Assets was $884 Mil.
Total Current Liabilities was $619 Mil.
Net Income was 40.097 + 4.95 + 25.869 + 87.086 = $158 Mil.

Revenue was 509.918 + 382.366 + 445.981 + 745.03 = $2,083 Mil.
Gross Profit was 178.031 + 128.648 + 163.514 + 264.54 = $735 Mil.
Average Total Assets from the begining of last year (Apr13)
to the end of last year (Apr14) was
(1114.954 + 1031.13 + 1002.748 + 1039.595 + 1179.246) / 5 = $1073.5346 Mil.
Total Assets at the begining of last year (Apr13) was $1,115 Mil.
Long-Term Debt was $224 Mil.
Total Current Assets was $814 Mil.
Total Current Liabilities was $539 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 186. ==> 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 200. ==> 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 (Apr14)
=185.628/1179.246
=0.15741245

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Apr13)
=158.002/1114.954
=0.14171168

Toro Co's return on assets of this year was 0.15741245. Toro Co's return on assets of last year was 0.14171168. ==> 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.

Toro Co's current net income (TTM) was 186. Toro Co's current cash flow from operations (TTM) was 200. ==> 200 > 186 ==> 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: Apr15)=Long-Term Debt/Average Total Assets from Apr14 to Apr15
=361.428/1260.1566
=0.28681197

Gearing (Last Year: Apr14)=Long-Term Debt/Average Total Assets from Apr13 to Apr14
=223.855/1073.5346
=0.20852146

Toro Co's gearing of this year was 0.28681197. Toro Co's gearing of last year was 0.20852146. ==> 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: Apr15)=Total Current Assets/Total Current Liabilities
=883.749/619.24
=1.42715102

Current Ratio (Last Year: Apr14)=Total Current Assets/Total Current Liabilities
=814.354/538.626
=1.51190993

Toro Co's current ratio of this year was 1.42715102. Toro Co's current ratio of last year was 1.51190993. ==> 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.

Toro Co's number of shares in issue this year was 57.1. Toro Co's number of shares in issue last year was 57.8. ==> 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
=796.188/2282.133
=0.34887888

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=734.733/2083.295
=0.35267833

Toro Co's gross margin of this year was 0.34887888. Toro Co's gross margin of last year was 0.35267833. ==> 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 (Apr14)
=2282.133/1179.246
=1.93524761

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Apr13)
=2083.295/1114.954
=1.8685031

Toro Co's asset turnover of this year was 1.93524761. Toro Co's asset turnover of last year was 1.8685031. ==> This year's asset turnover is higher. ==> Score 1.

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+0+1+0+1
=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

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Apr15
Question 1 111111111
Question 2 111111111
Question 3 110011111
Question 4 111110111
Question 5 001000110
Question 6 111000111
Question 7 111111111
Question 8 110010111
Question 9 110011100
F-score 886475987

Toro Co Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
Question 1 1111111111
Question 2 1111111111
Question 3 1111101111
Question 4 1011111101
Question 5 1111111000
Question 6 1111000100
Question 7 1111111111
Question 8 1111100110
Question 9 0100001011
F-score 8888757766
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