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GuruFocus has detected 3 Warning Signs with Cintas Corp $CTAS.
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Cintas Corp (NAS:CTAS)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Cintas Corp has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

CTAS' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 7

3
9

During the past 13 years, the highest Piotroski F-Score of Cintas Corp was 9. The lowest was 3. 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 local exchange's currency.

This Year (Feb17) TTM:Last Year (Feb16) TTM:
Net Income was 130.898 + 138.091 + 140.377 + 118.005 = $527 Mil.
Cash Flow from Operations was 168.691 + 157.588 + 144.133 + 182.037 = $652 Mil.
Revenue was 1271.405 + 1294.13 + 1296.923 + 1281.135 = $5,144 Mil.
Gross Profit was 553.718 + 583.774 + 571.427 + 566.424 = $2,275 Mil.
Average Total Assets from the begining of this year (Feb16)
to the end of this year (Feb17) was
(4231.21 + 4104.393 + 4167.145 + 4214.579 + 4271.164) / 5 = $4197.6982 Mil.
Total Assets at the begining of this year (Feb16) was $4,231 Mil.
Long-Term Debt was $745 Mil.
Total Current Assets was $1,630 Mil.
Total Current Liabilities was $944 Mil.
Net Income was 105.215 + 100.181 + 345.1 + 117.341 = $668 Mil.

Revenue was 1142.583 + 1198.89 + 1219.08 + 1216.083 = $4,777 Mil.
Gross Profit was 486.66 + 524.144 + 527.4 + 524.608 = $2,063 Mil.
Average Total Assets from the begining of last year (Feb15)
to the end of last year (Feb16) was
(4266.346 + 4192.46 + 4122.949 + 4450.792 + 4231.21) / 5 = $4252.7514 Mil.
Total Assets at the begining of last year (Feb15) was $4,266 Mil.
Long-Term Debt was $1,050 Mil.
Total Current Assets was $1,759 Mil.
Total Current Liabilities was $859 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.

Cintas Corp's current net income (TTM) was 527. ==> 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.

Cintas Corp's current cash flow from operations (TTM) was 652. ==> 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 (Feb16)
=527.371/4231.21
=0.12463834

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Feb15)
=667.837/4266.346
=0.15653606

Cintas Corp's return on assets of this year was 0.12463834. Cintas Corp's return on assets of last year was 0.15653606. ==> 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.

Cintas Corp's current net income (TTM) was 527. Cintas Corp's current cash flow from operations (TTM) was 652. ==> 652 > 527 ==> 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: Feb17)=Long-Term Debt/Average Total Assets from Feb16 to Feb17
=745.189/4197.6982
=0.17752324

Gearing (Last Year: Feb16)=Long-Term Debt/Average Total Assets from Feb15 to Feb16
=1050/4252.7514
=0.24689898

Cintas Corp's gearing of this year was 0.17752324. Cintas Corp's gearing of last year was 0.24689898. ==> 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: Feb17)=Total Current Assets/Total Current Liabilities
=1629.941/943.968
=1.72669095

Current Ratio (Last Year: Feb16)=Total Current Assets/Total Current Liabilities
=1758.824/858.804
=2.04799232

Cintas Corp's current ratio of this year was 1.72669095. Cintas Corp's current ratio of last year was 2.04799232. ==> 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.

Cintas Corp's number of shares in issue this year was 107.9. Cintas Corp's number of shares in issue last year was 109.5. ==> 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
=2275.343/5143.593
=0.44236451

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2062.812/4776.636
=0.43185455

Cintas Corp's gross margin of this year was 0.44236451. Cintas Corp's gross margin of last year was 0.43185455. ==> This year's gross margin is higher. ==> Score 1.

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 (Feb16)
=5143.593/4231.21
=1.2156317

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Feb15)
=4776.636/4266.346
=1.11960821

Cintas Corp's asset turnover of this year was 1.2156317. Cintas Corp's asset turnover of last year was 1.11960821. ==> 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+0+1+1+0+1+1+1
=7

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Cintas Corp has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.


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 local exchange's currency.

Cintas Corp Annual Data

May07May08May09May10May11May12May13May14May15May16
Question 1 1111111111
Question 2 1111111111
Question 3 0000111111
Question 4 1111111110
Question 5 0011010111
Question 6 0110001010
Question 7 1111111111
Question 8 0101110111
Question 9 0100101011
F-score 4766777797

Cintas Corp Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
Question 1 1111111111
Question 2 1111111111
Question 3 1110111100
Question 4 1111000001
Question 5 1111111001
Question 6 0010000110
Question 7 1111111111
Question 8 1111111111
Question 9 0011111111
F-score 7797777767
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