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AutoZone Inc  (NYSE:AZO) 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

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

NYSE:AZO' 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 AutoZone Inc was 9. The lowest was 4. And the median was 6.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

AutoZone Inc Annual Data

Aug08 Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 Aug15 Aug16 Aug17
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.00 7.00 6.00 6.00 6.00

AutoZone Inc Quarterly Data

Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.00 8.00 7.00 7.00 6.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Aug17) TTM:Last Year (Aug16) TTM:
Net Income was 278.125 + 237.145 + 331.7 + 433.9 = $1,281 Mil.
Cash Flow from Operations was 406.5 + 157.398 + 445.332 + 561.382 = $1,571 Mil.
Revenue was 2467.845 + 2289.219 + 2619.007 + 3512.605 = $10,889 Mil.
Gross Profit was 1301.542 + 1205.536 + 1378.418 + 1854.124 = $5,740 Mil.
Average Total Assets from the begining of this year (Aug16)
to the end of this year (Aug17) was
(8599.787 + 8742.544 + 8902.63 + 9028.264 + 9259.781) / 5 = $8906.6012 Mil.
Total Assets at the begining of this year (Aug16) was $8,600 Mil.
Long-Term Debt & Capital Lease Obligation was $5,081 Mil.
Total Current Assets was $4,611 Mil.
Total Current Liabilities was $4,766 Mil.
Net Income was 258.112 + 228.613 + 327.515 + 426.768 = $1,241 Mil.

Revenue was 2386.043 + 2257.192 + 2593.672 + 3398.769 = $10,636 Mil.
Gross Profit was 1252.934 + 1190.596 + 1370.458 + 1794.748 = $5,609 Mil.
Average Net Income from the begining of last year (Aug15)
to the end of last year (Aug16) was
(8102.349 + 8217.528 + 8366.414 + 8464.105 + 8599.787) / 5 = $8350.0366 Mil.
Total Assets at the begining of last year (Aug15) was $8,102 Mil.
Long-Term Debt & Capital Lease Obligation was $4,924 Mil.
Total Current Assets was $4,240 Mil.
Total Current Liabilities was $4,690 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.

AutoZone Inc's current Net Income (TTM) was 1,281. ==> 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.

AutoZone Inc's current Cash Flow from Operations (TTM) was 1,571. ==> 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/Total Assets(Aug16)
=1280.87/8599.787
=0.14894206

ROA (Last Year)=Net Income/Total Assets(Aug15)
=1241.008/8102.349
=0.15316645

AutoZone Inc's return on assets of this year was 0.14894206. AutoZone Inc's return on assets of last year was 0.15316645. ==> 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.

AutoZone Inc's current Net Income (TTM) was 1,281. AutoZone Inc's current Cash Flow from Operations (TTM) was 1,571. ==> 1,571 > 1,281 ==> 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: Aug17)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Aug16 to Aug17
=5081.238/8906.6012
=0.57050247

Gearing (Last Year: Aug16)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Aug15 to Aug16
=4924.119/8350.0366
=0.58971227

AutoZone Inc's gearing of this year was 0.57050247. AutoZone Inc's gearing of last year was 0.58971227. ==> 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: Aug17)=Total Current Assets/Total Current Liabilities
=4611.255/4766.301
=0.96747037

Current Ratio (Last Year: Aug16)=Total Current Assets/Total Current Liabilities
=4239.573/4690.32
=0.90389845

AutoZone Inc's current ratio of this year was 0.96747037. AutoZone Inc's current ratio of last year was 0.90389845. ==> 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.

AutoZone Inc's number of shares in issue this year was 28.2. AutoZone Inc's number of shares in issue last year was 29.6. ==> 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
=5739.62/10888.676
=0.52711826

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=5608.736/10635.676
=0.52735115

AutoZone Inc's gross margin of this year was 0.52711826. AutoZone Inc's gross margin of last year was 0.52735115. ==> 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/Total Assets at the Beginning of This Year (Aug16)
=10888.676/8599.787
=1.26615648

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Aug15)
=10635.676/8102.349
=1.31266575

AutoZone Inc's asset turnover of this year was 1.26615648. AutoZone Inc's asset turnover of last year was 1.31266575. ==> 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

AutoZone Inc 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.


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