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Main Street Capital Piotroski F-Score

: 2 (As of Today)
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Warning Sign:

Piotroski F-Score of 2 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

Main Street Capital has an F-score of 2. It is a bad or low score, which usually implies poor business operation.

NYSE:MAIN' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Med: 3   Max: 7
Current: 2

1
7

During the past 13 years, the highest Piotroski F-Score of Main Street Capital was 7. The lowest was 1. And the median was 3.

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 (Jun20) TTM:Last Year (Jun19) TTM:
Net Income was 33.902 + 16.014 + -171.438 + 43.369 = $-78.15 Mil.
Cash Flow from Operations was -10.626 + -35.728 + 61.363 + -21.658 = $-6.65 Mil.
Revenue was 39.704 + 24.718 + -170.894 + 46.493 = $-59.98 Mil.
Average Total Assets from the begining of this year (Jun19)
to the end of this year (Jun20) was
(2629.778 + 2665.378 + 2711.549 + 2475.487 + 2545.795) / 5 = $2605.5974 Mil.
Total Assets at the begining of this year (Jun19) was $2,629.78 Mil.
Long-Term Debt & Capital Lease Obligation was $1,131.89 Mil.
Total Assets was $2,545.80 Mil.
Total Liabilities was $1,174.85 Mil.
Net Income was 68.74 + 9.505 + 41.401 + 38.254 = $157.90 Mil.

Revenue was 83.417 + 18.677 + 56.071 + 52.741 = $210.91 Mil.
Average Total Assets from the begining of last year (Jun18)
to the end of last year (Jun19) was
(2461.345 + 2524.463 + 2553.426 + 2594.899 + 2629.778) / 5 = $2552.7822 Mil.
Total Assets at the begining of last year (Jun18) was $2,461.35 Mil.
Long-Term Debt & Capital Lease Obligation was $1,040.87 Mil.
Total Assets was $2,629.78 Mil.
Total Liabilities was $1,108.70 Mil.

*Note: If the latest quarterly/semi-annual/annual total assets data is 0, then we will use previous quarterly/semi-annual/annual data for all the items in the balance sheet.

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.

Main Street Capital's current Net Income (TTM) was -78.15. ==> Negative ==> Score 0.

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.

Main Street Capital's current Cash Flow from Operations (TTM) was -6.65. ==> Negative ==> Score 0.

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 (Jun19)
=-78.153/2629.778
=-0.02971848

ROA (Last Year)=Net Income/Total Assets (Jun18)
=157.9/2461.345
=0.06415192

Main Street Capital's return on assets of this year was -0.02971848. Main Street Capital's return on assets of last year was 0.06415192. ==> 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.

Main Street Capital's current Net Income (TTM) was -78.15. Main Street Capital's current Cash Flow from Operations (TTM) was -6.65. ==> -6.65 > -78.15 ==> 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: Jun20)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Jun19 to Jun20
=1131.888/2605.5974
=0.43440633

Gearing (Last Year: Jun19)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Jun18 to Jun19
=1040.867/2552.7822
=0.40773827

Main Street Capital's gearing of this year was 0.43440633. Main Street Capital's gearing of last year was 0.40773827. ==> 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

* Note that for banks and insurance companies, there's no Total Current Assets and Total Current Liabilities reported. Thus, we use Total Assets and Total Liabilities to calculate current ratio for banks and insurance companies.

Current Ratio (This Year: Jun20)=Total Assets/Total Liabilities
=2545.795/1174.851
=2.16690883

Current Ratio (Last Year: Jun19)=Total Assets/Total Liabilities
=2629.778/1108.696
=2.37195588

Main Street Capital's current ratio of this year was 2.16690883. Main Street Capital's current ratio of last year was 2.37195588. ==> 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.

Main Street Capital's number of shares in issue this year was 65.304. Main Street Capital's number of shares in issue last year was 62.88. ==> 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.

* Note that for banks and insurance companies, there's no Gross Profit reported. Thus, we use net income instead of gross profit and calculate Net Margin for this score.

Net Margin (This Year: TTM)=Net Income/Revenue
=-78.153/-59.979
=1.30300605

Net Margin (Last Year: TTM)=Net Income/Revenue
=157.9/210.906
=0.74867477

Main Street Capital's net margin of this year was 1.30300605. Main Street Capital's net margin of last year was 0.74867477. ==> This year's net 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/Total Assets at the Beginning of This Year (Jun19)
=-59.979/2629.778
=-0.02280763

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jun18)
=210.906/2461.345
=0.0856873

Main Street Capital's asset turnover of this year was -0.02280763. Main Street Capital's asset turnover of last year was 0.0856873. ==> 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
=0+0+0+1+0+0+0+1+0
=2

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

Main Street Capital has an F-score of 2. It is a bad or low score, which usually implies poor business operation.

Main Street Capital  (NYSE:MAIN) 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.


Main Street Capital Piotroski F-Score Related Terms

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