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GuruFocus has detected 6 Warning Signs with 3M Co $FRA:MMM.
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3M Co (FRA:MMM)
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

3M Co has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

FRA:MMM' 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 3M Co 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 (Mar17) TTM:Last Year (Mar16) TTM:
Net Income was 1148.98540406 + 1184.17535418 + 1094.89051095 + 1237.02664797 = €4,665 Mil.
Cash Flow from Operations was 1143.64542542 + 1700.08019246 + 2094.03734951 + 923.796166433 = €5,862 Mil.
Revenue was 6819.15272339 + 6868.92987615 + 6947.57796948 + 7185.60074801 = €27,821 Mil.
Gross Profit was 3438.05624778 + 3441.14764323 + 3424.96919139 + 3568.02244039 = €13,872 Mil.
Average Total Assets from the begining of this year (Mar16)
to the end of this year (Mar17) was
(29617.4568966 + 29579.0316839 + 30340.3724494 + 31193.4780548 + 31128.5647499) / 5 = €30371.7807669 Mil.
Total Assets at the begining of this year (Mar16) was €29,617 Mil.
Long-Term Debt was €10,100 Mil.
Total Current Assets was €11,128 Mil.
Total Current Liabilities was €5,605 Mil.
Net Income was 1158.3355609 + 1154.77145148 + 952.905535665 + 1144.93534483 = €4,411 Mil.

Revenue was 6848.43624699 + 6871.60295821 + 6699.71541357 + 6653.19683908 = €27,073 Mil.
Gross Profit was 3410.85271318 + 3417.08990466 + 3186.45001377 + 3350.39511494 = €13,365 Mil.
Average Total Assets from the begining of last year (Mar15)
to the end of last year (Mar16) was
(28312.8522591 + 27967.5666043 + 29633.7877573 + 30187.2762324 + 29617.4568966) / 5 = €29143.7879499 Mil.
Total Assets at the begining of last year (Mar15) was €28,313 Mil.
Long-Term Debt was €8,016 Mil.
Total Current Assets was €9,765 Mil.
Total Current Liabilities was €6,446 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.

3M Co's current net income (TTM) was 4,665. ==> 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.

3M Co's current cash flow from operations (TTM) was 5,862. ==> 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 (Mar16)
=4665.07791716/29617.4568966
=0.15751109

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=4410.94789288/28312.8522591
=0.15579313

3M Co's return on assets of this year was 0.15751109. 3M Co's return on assets of last year was 0.15579313. ==> 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.

3M Co's current net income (TTM) was 4,665. 3M Co's current cash flow from operations (TTM) was 5,862. ==> 5,862 > 4,665 ==> 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: Mar17)=Long-Term Debt/Average Total Assets from Mar16 to Mar17
=10100.0467508/30371.7807669
=0.33254707

Gearing (Last Year: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=8016.3433908/29143.7879499
=0.27506182

3M Co's gearing of this year was 0.33254707. 3M Co's gearing of last year was 0.27506182. ==> Last year is lower than this year ==> Score 0.

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: Mar17)=Total Current Assets/Total Current Liabilities
=11127.6297335/5605.4230949
=1.9851543

Current Ratio (Last Year: Mar16)=Total Current Assets/Total Current Liabilities
=9764.72701149/6445.76149425
=1.51490666

3M Co's current ratio of this year was 1.9851543. 3M Co's current ratio of last year was 1.51490666. ==> 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.

3M Co's number of shares in issue this year was 612. 3M Co's number of shares in issue last year was 621.3. ==> 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
=13872.1955228/27821.261317
=0.4986185

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=13364.7877466/27072.9514579
=0.49365832

3M Co's gross margin of this year was 0.4986185. 3M Co's gross margin of last year was 0.49365832. ==> 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 (Mar16)
=27821.261317/29617.4568966
=0.93935348

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=27072.9514579/28312.8522591
=0.95620714

3M Co's asset turnover of this year was 0.93935348. 3M Co's asset turnover of last year was 0.95620714. ==> 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+0+1+1+1+0
=7

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

3M Co 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.

3M Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Question 1 1111111111
Question 2 1111111111
Question 3 1001010110
Question 4 1111111111
Question 5 0011011000
Question 6 1010100101
Question 7 1100111111
Question 8 0011011111
Question 9 1001010110
F-score 7467586876

3M Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Question 1 1111111111
Question 2 1111111111
Question 3 1111100001
Question 4 1111111111
Question 5 0000001000
Question 6 1111000111
Question 7 1111111111
Question 8 1111111111
Question 9 1111100000
F-score 8888756667
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