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GuruFocus has detected 6 Warning Signs with Micron Technology Inc $MU.
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Micron Technology Inc (NAS:MU)
Piotroski F-Score
4 (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

Micron Technology Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

MU' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 9
Current: 4

2
9

During the past 13 years, the highest Piotroski F-Score of Micron Technology Inc was 9. The lowest was 2. 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 (Feb17) TTM:Last Year (Feb16) TTM:
Net Income was -215 + -170 + 180 + 894 = $689 Mil.
Cash Flow from Operations was 389 + 896 + 1138 + 1405 = $3,828 Mil.
Revenue was 2898 + 3217 + 3970 + 4648 = $14,733 Mil.
Gross Profit was 498 + 579 + 1011 + 1704 = $3,792 Mil.
Average Total Assets from the begining of this year (Feb16)
to the end of this year (Feb17) was
(24819 + 27001 + 27540 + 27836 + 32355) / 5 = $27910.2 Mil.
Total Assets at the begining of this year (Feb16) was $24,819 Mil.
Long-Term Debt was $11,336 Mil.
Total Current Assets was $9,945 Mil.
Total Current Liabilities was $5,207 Mil.
Net Income was 491 + 471 + 206 + -97 = $1,071 Mil.

Revenue was 3853 + 3600 + 3350 + 2934 = $13,737 Mil.
Gross Profit was 1202 + 970 + 849 + 579 = $3,600 Mil.
Average Total Assets from the begining of last year (Feb15)
to the end of last year (Feb16) was
(23818 + 25136 + 24143 + 24388 + 24819) / 5 = $24460.8 Mil.
Total Assets at the begining of last year (Feb15) was $23,818 Mil.
Long-Term Debt was $6,494 Mil.
Total Current Assets was $8,805 Mil.
Total Current Liabilities was $4,411 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.

Micron Technology Inc's current net income (TTM) was 689. ==> 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.

Micron Technology Inc's current cash flow from operations (TTM) was 3,828. ==> 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.

Micron Technology Inc's return on assets of this year was 0.02776099. Micron Technology Inc's return on assets of last year was 0.04496599. ==> 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.

Micron Technology Inc's current net income (TTM) was 689. Micron Technology Inc's current cash flow from operations (TTM) was 3,828. ==> 3,828 > 689 ==> 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
=11336/27910.2
=0.40615976

Gearing (Last Year: Feb16)=Long-Term Debt/Average Total Assets from Feb15 to Feb16
=6494/24460.8
=0.265486

Micron Technology Inc's gearing of this year was 0.40615976. Micron Technology Inc's gearing of last year was 0.265486. ==> 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: Feb17)=Total Current Assets/Total Current Liabilities
=9945/5207
=1.90992894

Current Ratio (Last Year: Feb16)=Total Current Assets/Total Current Liabilities
=8805/4411
=1.996146

Micron Technology Inc's current ratio of this year was 1.90992894. Micron Technology Inc's current ratio of last year was 1.996146. ==> 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.

Micron Technology Inc's number of shares in issue this year was 1160. Micron Technology Inc's number of shares in issue last year was 1036. ==> 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
=3792/14733
=0.25738139

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3600/13737
=0.26206595

Micron Technology Inc's gross margin of this year was 0.25738139. Micron Technology Inc's gross margin of last year was 0.26206595. ==> 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 (TTM)/Total Assets at the Beginning of This Year (Feb16)
=14733/24819
=0.59361779

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Feb15)
=13737/23818
=0.57674868

Micron Technology Inc's asset turnover of this year was 0.59361779. Micron Technology Inc's asset turnover of last year was 0.57674868. ==> 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+0+0+0+0+1
=4

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

Micron Technology Inc has an F-score of 4 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.

Micron Technology Inc Annual Data

Aug07Aug08Aug09Aug10Aug11Aug12Aug13Aug14Aug15Aug16
Question 1 0001101110
Question 2 1111111111
Question 3 0001001100
Question 4 1111111111
Question 5 0001100100
Question 6 0001110010
Question 7 0000100011
Question 8 0001001100
Question 9 0001001100
F-score 2228636753

Micron Technology Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
Question 1 1111111001
Question 2 1111111111
Question 3 1000000000
Question 4 1111111111
Question 5 1000000000
Question 6 1111001000
Question 7 1111111100
Question 8 1110000000
Question 9 1000000001
F-score 9665445324
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