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Hormel Foods Piotroski F-Score

: 5 (As of Today)
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The zones of discrimination were as such:

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

Hormel Foods has an F-score of 5 indicating the company's financial situation is typical for a stable company.

NYSE:HRL' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 8
Current: 5

3
8

During the past 13 years, the highest Piotroski F-Score of Hormel Foods was 8. The lowest was 3. And the median was 6.


Hormel Foods Piotroski F-Score 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.

Hormel Foods Annual Data
Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16 Oct17 Oct18
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.00 6.00 8.00 5.00 4.00

Hormel Foods Quarterly Data
Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17 Oct17 Jan18 Apr18 Jul18 Oct18 Jan19 Apr19
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 4.00 5.00 4.00 4.00 5.00

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.


Hormel Foods Piotroski F-Score Distribution

* The bar in red indicates where Hormel Foods's Piotroski F-Score falls into.


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 (Apr19) TTM:Last Year (Apr18) TTM:
Net Income was 210.243 + 261.406 + 241.425 + 282.429 = $996 Mil.
Cash Flow from Operations was 299.864 + 498.524 + 187.425 + 178.168 = $1,164 Mil.
Revenue was 2359.142 + 2524.697 + 2360.355 + 2344.744 = $9,589 Mil.
Gross Profit was 459.172 + 537.396 + 488.334 + 469.149 = $1,954 Mil.
Average Total Assets from the begining of this year (Apr18)
to the end of this year (Apr19) was
(7829.749 + 7895.373 + 8142.292 + 8155.398 + 7935.745) / 5 = $7991.7114 Mil.
Total Assets at the begining of this year (Apr18) was $7,830 Mil.
Long-Term Debt & Capital Lease Obligation was $250 Mil.
Total Current Assets was $2,251 Mil.
Total Current Liabilities was $1,052 Mil.
Net Income was 182.508 + 218.154 + 303.107 + 237.384 = $941 Mil.

Revenue was 2207.375 + 2492.608 + 2331.293 + 2330.568 = $9,362 Mil.
Gross Profit was 452.409 + 511.554 + 498.296 + 492.803 = $1,955 Mil.
Average Net Income from the begining of last year (Apr17)
to the end of last year (Apr18) was
(6385.707 + 6507.965 + 6975.908 + 7858.848 + 7829.749) / 5 = $7111.6354 Mil.
Total Assets at the begining of last year (Apr17) was $6,386 Mil.
Long-Term Debt & Capital Lease Obligation was $625 Mil.
Total Current Assets was $1,851 Mil.
Total Current Liabilities was $1,148 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.

Hormel Foods's current Net Income (TTM) was 996. ==> 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.

Hormel Foods's current Cash Flow from Operations (TTM) was 1,164. ==> 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(Apr18)
=995.503/7829.749
=0.12714367

ROA (Last Year)=Net Income/Total Assets(Apr17)
=941.153/6385.707
=0.14738431

Hormel Foods's return on assets of this year was 0.12714367. Hormel Foods's return on assets of last year was 0.14738431. ==> 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.

Hormel Foods's current Net Income (TTM) was 996. Hormel Foods's current Cash Flow from Operations (TTM) was 1,164. ==> 1,164 > 996 ==> 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: Apr19)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Apr18 to Apr19
=250/7991.7114
=0.03128241

Gearing (Last Year: Apr18)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Apr17 to Apr18
=624.763/7111.6354
=0.08785082

Hormel Foods's gearing of this year was 0.03128241. Hormel Foods's gearing of last year was 0.08785082. ==> 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: Apr19)=Total Current Assets/Total Current Liabilities
=2250.667/1051.676
=2.14007641

Current Ratio (Last Year: Apr18)=Total Current Assets/Total Current Liabilities
=1850.78/1148.461
=1.61153056

Hormel Foods's current ratio of this year was 2.14007641. Hormel Foods's current ratio of last year was 1.61153056. ==> 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.

Hormel Foods's number of shares in issue this year was 546.3. Hormel Foods's number of shares in issue last year was 542.8. ==> 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
=1954.051/9588.938
=0.2037818

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1955.062/9361.844
=0.208833

Hormel Foods's gross margin of this year was 0.2037818. Hormel Foods's gross margin of last year was 0.208833. ==> 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 (Apr18)
=9588.938/7829.749
=1.22468013

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Apr17)
=9361.844/6385.707
=1.46606225

Hormel Foods's asset turnover of this year was 1.22468013. Hormel Foods's asset turnover of last year was 1.46606225. ==> 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+0+0+0
=5

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

Hormel Foods has an F-score of 5 indicating the company's financial situation is typical for a stable company.

Hormel Foods  (NYSE:HRL) Piotroski F-Score 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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