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Walgreen Co (NYSE:WAG)
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

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

WAG' 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 Walgreen Co was 8. The lowest was 3. 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 (Aug14) TTM:Last Year (Aug13) TTM:
Net Income was 695 + 754 + 722 + -239 = $1,932 Mil.
Cash Flow from Operations was 133 + 1104 + 1272 + 1384 = $3,893 Mil.
Revenue was 18329 + 19605 + 19401 + 19057 = $76,392 Mil.
Gross Profit was 5152 + 5650 + 5440 + 5327 = $21,569 Mil.
Average Total Assets from the begining of this year (Aug13)
to the end of this year (Aug14) was
(35481 + 36481 + 37081 + 37391 + 37182) / 5 = $36,723 Mil.
Total Assets was $37,182 Mil.
Long-Term Debt was $3,736 Mil.
Total Current Assets was $12,242 Mil.
Total Current Liabilities was $8,895 Mil.
Net Income was 413 + 756 + 624 + 657 = $2,450 Mil.

Revenue was 17316 + 18647 + 18313 + 17941 = $72,217 Mil.
Gross Profit was 5099 + 5607 + 5222 + 5191 = $21,119 Mil.
Average Total Assets from the begining of last year (Aug12)
to the end of last year (Aug13) was
(33462 + 35259 + 35564 + 35841 + 35481) / 5 = $35,121 Mil.
Total Assets was $35,481 Mil.
Long-Term Debt was $4,477 Mil.
Total Current Assets was $11,874 Mil.
Total Current Liabilities was $8,883 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Walgreen Co's current net income (ttm) was 1,932. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Walgreen Co's current cash flow from operations (ttm) was 3,893. ==> 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 (TTM)/Average Total Assets from Aug13 to Aug14
=1932/36723.2
=0.05260979

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Aug12 to Aug13
=2450/35121.4
=0.06975804

Walgreen Co's return on assets of this year was 0.05260979. Walgreen Co's return on assets of last year was 0.06975804. ==> 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.

Walgreen Co's current net income (ttm) was 1,932. Walgreen Co's current cash flow from operations (ttm) was 3,893. ==> 3,893 > 1,932 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

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

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Aug14)=Long-Term Debt/Total Assets
=3736/37182
=0.10047873

Gearing (Last Year: Aug13)=Long-Term Debt/Total Assets
=4477/35481
=0.12618021

Walgreen Co's gearing of this year was 0.10047873. Walgreen Co's gearing of last year was 0.12618021. ==> This year is lower or equal to last year. ==> 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: Aug14)=Total Current Assets/Total Current Liabilities
=12242/8895
=1.37627881

Current Ratio (Last Year: Aug13)=Total Current Assets/Total Current Liabilities
=11874/8883
=1.33671057

Walgreen Co's current ratio of this year was 1.37627881. Walgreen Co's current ratio of last year was 1.33671057. ==> This year's current ratio is higher. ==> Score 1.

Q7. 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.

Walgreen Co's number of shares in issue this year was 967.9. Walgreen Co's number of shares in issue last year was 957.3. ==> There is larger number of shares in issue this year. ==> Score 0.

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: TTM)=Gross Profit/Revenue
=21569/76392
=0.28234632

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=21119/72217
=0.29243807

Walgreen Co's gross margin of this year was 0.28234632. Walgreen Co's gross margin of last year was 0.29243807. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by average total assets throughout 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)/Average Total Assets from Aug13 to Aug14
=76392/36723.2
=2.08021087

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Aug12 to Aug13
=72217/35121.4
=2.05621074

Walgreen Co's asset turnover of this year was 2.08021087. Walgreen Co's asset turnover of last year was 2.05621074. ==> 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+1+0+0+1
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Walgreen 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, Altman Z-Score, Beneish M-Score


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Walgreen Co Annual Data

Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13Aug14
Q1 1111111111
Q2 1111111111
Q3 1111001010
Q4 0111111111
Q5 1110011001
Q6 0001100011
Q7 1111111100
Q8 1010011110
Q9 1111111001
F-score 7787678566

Walgreen Co Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
Q1 1111111111
Q2 1111111111
Q3 1000001110
Q4 1111111111
Q5 0000001111
Q6 0000011111
Q7 1100000000
Q8 0111111000
Q9 1000000001
F-score 6544457666
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