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GuruFocus has detected 4 Warning Signs with Dollar Tree Inc $DLTR.
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Dollar Tree Inc (NAS:DLTR)
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

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

DLTR' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 6

3
9

During the past 13 years, the highest Piotroski F-Score of Dollar Tree Inc was 9. 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 local exchange's currency.

This Year (Apr17) TTM:Last Year (Apr16) TTM:
Net Income was 170.2 + 171.6 + 321.8 + 200.5 = $864 Mil.
Cash Flow from Operations was 369.3 + -25 + 1018 + 430.7 = $1,793 Mil.
Revenue was 4996.3 + 5001.6 + 5635.5 + 5287.1 = $20,921 Mil.
Gross Profit was 1512.4 + 1520.5 + 1807.3 + 1627.1 = $6,467 Mil.
Average Total Assets from the begining of this year (Apr16)
to the end of this year (Apr17) was
(16060.9 + 16329.4 + 16195 + 15701.6 + 15994.7) / 5 = $16056.32 Mil.
Total Assets at the begining of this year (Apr16) was $16,061 Mil.
Long-Term Debt was $6,132 Mil.
Total Current Assets was $4,278 Mil.
Total Current Liabilities was $2,241 Mil.
Net Income was -98 + 81.9 + 229 + 232.7 = $446 Mil.

Revenue was 3011.2 + 4945.2 + 5365.3 + 5085.8 = $18,408 Mil.
Gross Profit was 855.2 + 1400 + 1652.6 + 1554.6 = $5,462 Mil.
Average Total Assets from the begining of last year (Apr15)
to the end of last year (Apr16) was
(10869.2 + 16565.1 + 16699 + 15901.2 + 16060.9) / 5 = $15219.08 Mil.
Total Assets at the begining of last year (Apr15) was $10,869 Mil.
Long-Term Debt was $7,210 Mil.
Total Current Assets was $4,172 Mil.
Total Current Liabilities was $2,049 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.

Dollar Tree Inc's current net income (TTM) was 864. ==> 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.

Dollar Tree Inc's current cash flow from operations (TTM) was 1,793. ==> 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 (Apr16)
=864.1/16060.9
=0.05380147

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Apr15)
=445.6/10869.2
=0.04099658

Dollar Tree Inc's return on assets of this year was 0.05380147. Dollar Tree Inc's return on assets of last year was 0.04099658. ==> This year is higher. ==> Score 1.

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.

Dollar Tree Inc's current net income (TTM) was 864. Dollar Tree Inc's current cash flow from operations (TTM) was 1,793. ==> 1,793 > 864 ==> 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: Apr17)=Long-Term Debt/Average Total Assets from Apr16 to Apr17
=6131.7/16056.32
=0.38188701

Gearing (Last Year: Apr16)=Long-Term Debt/Average Total Assets from Apr15 to Apr16
=7209.8/15219.08
=0.47373429

Dollar Tree Inc's gearing of this year was 0.38188701. Dollar Tree Inc's gearing of last year was 0.47373429. ==> 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: Apr17)=Total Current Assets/Total Current Liabilities
=4278.1/2240.6
=1.90935464

Current Ratio (Last Year: Apr16)=Total Current Assets/Total Current Liabilities
=4172.1/2049.1
=2.03606461

Dollar Tree Inc's current ratio of this year was 1.90935464. Dollar Tree Inc's current ratio of last year was 2.03606461. ==> 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.

Dollar Tree Inc's number of shares in issue this year was 237.3. Dollar Tree Inc's number of shares in issue last year was 236.4. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=6467.3/20920.5
=0.30913697

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=5462.4/18407.5
=0.29674861

Dollar Tree Inc's gross margin of this year was 0.30913697. Dollar Tree Inc's gross margin of last year was 0.29674861. ==> 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 (Apr16)
=20920.5/16060.9
=1.30257333

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Apr15)
=18407.5/10869.2
=1.6935469

Dollar Tree Inc's asset turnover of this year was 1.30257333. Dollar Tree Inc's asset turnover of last year was 1.6935469. ==> 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+1+1+1+0+0+1+0
=6

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

Dollar Tree 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.


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.

Dollar Tree Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
Question 1 1111111111
Question 2 1111111111
Question 3 1111110000
Question 4 1111111111
Question 5 0111110101
Question 6 0110010100
Question 7 1011111100
Question 8 1010110001
Question 9 1100110110
F-score 7786894745

Dollar Tree Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
Question 1 1111111111
Question 2 1111111111
Question 3 0000000001
Question 4 1111111111
Question 5 1000011111
Question 6 1111000000
Question 7 1100000000
Question 8 0000000011
Question 9 1111100000
F-score 7655444456
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