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Zale Corp (NYSE:ZLC)
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

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

ZLC' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 6

2
9

During the past 13 years, the highest Piotroski F-Score of Zale Corp was 9. The lowest was 2. 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 50.786 + -27.306 + -7.984 + 5.052 = $21 Mil.
Cash Flow from Operations was 80.563 + -86.945 + 47.481 + 15.697 = $57 Mil.
Revenue was 656.449 + 362.615 + 417.089 + 442.708 = $1,879 Mil.
Gross Profit was 347.619 + 193.788 + 221.582 + 232.847 = $996 Mil.
Total Assets at the begining of this year (Jan13) was $1,257 Mil.
Total Assets was $1,281 Mil.
Long-Term Debt was $445 Mil.
Total Current Assets was $936 Mil.
Total Current Liabilities was $466 Mil.
Net Income was 41.208 + -28.265 + -19.747 + -4.527 = $-11 Mil.

Revenue was 670.752 + 357.468 + 406.963 + 445.17 = $1,880 Mil.
Gross Profit was 339.651 + 190.335 + 209.885 + 228.193 = $968 Mil.
Total Assets at the begining of last year (Jan12) was $1,257 Mil.
Total Assets was $1,257 Mil.
Long-Term Debt was $474 Mil.
Total Current Assets was $901 Mil.
Total Current Liabilities was $441 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.

Zale Corp's current net income was 21. ==> 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.

Zale Corp's current cash flow from operations was 57. ==> 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)
=20.548/1257.296
=0.01634301

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jan12)
=-11.331/1256.66
=-0.00901676

Zale Corp's return on assets of this year was 0.01634301. Zale Corp's return on assets of last year was -0.00901676. ==> This year is higher. ==> Score 1.

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.

Zale Corp's current net income was 21. Zale Corp's current cash flow from operations was 57. ==> 57 > 21 ==> 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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year)=Long-Term Debt/Total Assets
=445.267/1280.704
=0.34767362

Gearing (Last Year)=Long-Term Debt/Total Assets
=473.975/1257.296
=0.37697965

Zale Corp's gearing of this year was 0.34767362. Zale Corp's gearing of last year was 0.37697965. ==> 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)=Total Current Assets/Total Current Liabilities
=935.786/466.053
=2.0078961

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=901.289/441.215
=2.04274333

Zale Corp's current ratio of this year was 2.0078961. Zale Corp's current ratio of last year was 2.04274333. ==> 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 0 if there is larger number of shares in issue this year, 1 otherwise.

Zale Corp's number of shares in issue this year was 45. Zale Corp's number of shares in issue last year was 40.3. ==> 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)=Gross Profit/Revenue
=995.836/1878.861
=0.53002111

Gross Margin (Last Year)=Gross Profit/Revenue
=968.064/1880.353
=0.51483099

Zale Corp's gross margin of this year was 0.53002111. Zale Corp's gross margin of last year was 0.51483099. ==> This year's gross margin is higher. ==> Score 1.

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)
=1878.861/1257.296
=1.49436648

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jan12)
=1880.353/1256.66
=1.49631006

Zale Corp's asset turnover of this year was 1.49436648. Zale Corp's asset turnover of last year was 1.49631006. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

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

Good or high score = 8 or 9

Bad or low score = 0 or 1

Zale Corp 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.

Zale Corp Annual Data

Jul04Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13
Q1 1111100001
Q2 1111111001
Q3 1001001011
Q4 1110111101
Q5 0100001001
Q6 1011000010
Q7 1111110000
Q8 1101001111
Q9 1000001111
F-score 8656436347

Zale Corp Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Q1 0000000111
Q2 0000000111
Q3 1111111111
Q4 1100100111
Q5 0000000111
Q6 0001010010
Q7 0100000000
Q8 1111111111
Q9 1111100100
F-score 4534432776
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