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Valspar Corporation (NYSE:VAL)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

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

VAL' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 6

3
8

During the past 13 years, the highest Piotroski F-Score of Valspar Corporation was 8. The lowest was 3. 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 (Jan14) TTM:Last Year (Jan13) TTM:
Net Income was 53.553 + 63.51 + 93.808 + 76.908 = $288 Mil.
Cash Flow from Operations was 9.317 + 188.901 + 189.925 + 17.814 = $406 Mil.
Revenue was 956.119 + 1108.302 + 1089.013 + 1031.219 = $4,185 Mil.
Gross Profit was 319.053 + 355.793 + 369.361 + 338.553 = $1,383 Mil.
Total Assets at the begining of this year (Jan13) was $3,631 Mil.
Total Assets was $3,983 Mil.
Long-Term Debt was $1,012 Mil.
Total Current Assets was $1,528 Mil.
Total Current Liabilities was $1,504 Mil.
Net Income was 55.029 + 73.769 + 86.406 + 76.54 = $292 Mil.

Revenue was 875.242 + 1024.284 + 1078.348 + 1032.572 = $4,010 Mil.
Gross Profit was 294.351 + 340.998 + 363.95 + 355.44 = $1,355 Mil.
Total Assets at the begining of last year (Jan12) was $3,604 Mil.
Total Assets was $3,631 Mil.
Long-Term Debt was $1,013 Mil.
Total Current Assets was $1,413 Mil.
Total Current Liabilities was $1,041 Mil.

Profitability

Q1. 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.

Valspar Corporation's current net income was 288. ==> Positive ==> Score 1.

Q2. 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.

Valspar Corporation's current cash flow from operations was 406. ==> Positive ==> Score 1.

Q3. 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/Total Assets at the beginning of this year (Jan13)
=287.779/3630.667
=0.0792634

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jan12)
=291.744/3603.771
=0.0809552

Valspar Corporation's return on assets of this year was 0.0792634. Valspar Corporation's return on assets of last year was 0.0809552. ==> Last year is higher ==> Score 0.

Q4. 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.

Valspar Corporation's current net income was 288. Valspar Corporation's current cash flow from operations was 406. ==> 406 > 288 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=1012.354/3982.564
=0.25419654

Gearing (Last Year)=Long-Term Debt/Total Assets
=1012.563/3630.667
=0.27889173

Valspar Corporation's gearing of this year was 0.25419654. Valspar Corporation's gearing of last year was 0.27889173. ==> This year is lower. ==> Score 1.

Q6. 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)=Total Current Assets/Total Current Liabilities
=1527.85/1504.484
=1.01553091

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1413.257/1041.153
=1.35739608

Valspar Corporation's current ratio of this year was 1.01553091. Valspar Corporation's current ratio of last year was 1.35739608. ==> Last year's current ratio is higher ==> Score 0.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Valspar Corporation's number of shares in issue this year was 87.6. Valspar Corporation's number of shares in issue last year was 92.4. ==> There is the same number of shares in issue this year, or fewer. ==> Score 1.

Efficiency

Q8. 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)=Gross Profit/Revenue
=1382.76/4184.653
=0.330436

Gross Margin (Last Year)=Gross Profit/Revenue
=1354.739/4010.446
=0.33780258

Valspar Corporation's gross margin of this year was 0.330436. Valspar Corporation's gross margin of last year was 0.33780258. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Jan13)
=4184.653/3630.667
=1.15258519

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jan12)
=4010.446/3603.771
=1.11284707

Valspar Corporation's asset turnover of this year was 1.15258519. Valspar Corporation's asset turnover of last year was 1.11284707. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+0+1+0+1
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Valspar Corporation 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.

Valspar Corporation Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Q1 1111111011
Q2 1111111111
Q3 1010011010
Q4 1111111111
Q5 1010001101
Q6 0101110010
Q7 0111101101
Q8 0010010010
Q9 1110001110
F-score 6685567575

Valspar Corporation Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Q1 0000111111
Q2 1111111111
Q3 0000111100
Q4 1111111111
Q5 1000011111
Q6 0111100000
Q7 1111011111
Q8 0011111100
Q9 1100111101
F-score 5555788856
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