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Pep Boys - Manny Moe & Jack  (NYSE:PBY) Piotroski F-Score: 0 (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

Pep Boys - Manny Moe & Jack has an F-score of 5 indicating the company's financial situation is typical for a stable company.


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.

Pep Boys - Manny Moe & Jack Annual Data

Jan06 Jan07 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.00 4.00 4.00 6.00 5.00

Pep Boys - Manny Moe & Jack Quarterly Data

Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15
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 5.00 5.00 5.00 5.00 5.00

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 (Oct15) TTM:Last Year (Oct14) TTM:
Net Income was -26.668 + 11.893 + 4.81 + 1.266 = $-9 Mil.
Cash Flow from Operations was 15.819 + 33.829 + 33.446 + 13.671 = $97 Mil.
Revenue was 502.424 + 542.261 + 526.546 + 508.136 = $2,079 Mil.
Gross Profit was 99.684 + 133.767 + 127.572 + 117.797 = $479 Mil.
Average Total Assets from the begining of this year (Oct14)
to the end of this year (Oct15) was
(1572.401 + 1541.741 + 1520.728 + 1507.18 + 1492.355) / 5 = $1526.881 Mil.
Total Assets at the begining of this year ({FiscalYear0}) was $1,572 Mil.
Long-Term Debt & Capital Lease Obligation was $193 Mil.
Total Current Assets was $797 Mil.
Total Current Liabilities was $614 Mil.
Total Assets was -3.331 + 1.608 + -0.273 + -1.964 = $-4 Mil.

Revenue was 495.733 + 538.821 + 525.773 + 517.584 = $2,078 Mil.
Gross Profit was 104.016 + 133.126 + 124.297 + 118.334 = $480 Mil.
Average Total Assets from the begining of last year (Oct13)
to the end of last year (Oct14) was
(1589.247 + 1605.481 + 1592.951 + 1580.732 + 1572.401) / 5 = $1588.1624 Mil.
Total Assets at the begining of last year (Oct13) was $1,589 Mil.
Long-Term Debt & Capital Lease Obligation was $230 Mil.
Total Current Assets was $807 Mil.
Total Current Liabilities was $642 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.

Pep Boys - Manny Moe & Jack's current Net Income (TTM) was {NetIncome0_f}. ==> 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.

Pep Boys - Manny Moe & Jack's current Cash Flow from Operations (TTM) was 97. ==> 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(Oct14)
=-8.699/1572.401
=-0.0055323

ROA (Last Year)=Net Income/Total Assets(Oct13)
=-3.96/1589.247
=-0.00249175

Pep Boys - Manny Moe & Jack's return on assets of this year was -0.0055323. Pep Boys - Manny Moe & Jack's return on assets of last year was -0.00249175. ==> 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.

Pep Boys - Manny Moe & Jack's current Net Income (TTM) was -9. Pep Boys - Manny Moe & Jack's current Cash Flow from Operations (TTM) was 97. ==> 97 > -9 ==> 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: Oct15)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Oct14 to Oct15
=192.5/1526.881
=0.126074

Gearing (Last Year: Oct14)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Oct13 to Oct14
=229.5/1588.1624
=0.14450663

Pep Boys - Manny Moe & Jack's gearing of this year was 0.126074. Pep Boys - Manny Moe & Jack's gearing of last year was 0.14450663. ==> 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: Oct15)=Total Current Assets/Total Current Liabilities
=797.481/613.818
=1.2992141

Current Ratio (Last Year: Oct14)=Total Current Assets/Total Current Liabilities
=806.91/642.251
=1.25637796

Pep Boys - Manny Moe & Jack's current ratio of this year was 1.2992141. Pep Boys - Manny Moe & Jack's current ratio of last year was 1.25637796. ==> 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.

Pep Boys - Manny Moe & Jack's number of shares in issue this year was 54.6. Pep Boys - Manny Moe & Jack's number of shares in issue last year was 53.6. ==> 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
=478.82/2079.367
=0.230272

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=479.773/2077.911
=0.23089199

Pep Boys - Manny Moe & Jack's gross margin of this year was 0.230272. Pep Boys - Manny Moe & Jack's gross margin of last year was 0.23089199. ==> 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 (Oct14)
=2079.367/1572.401
=1.32241521

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Oct13)
=2077.911/1589.247
=1.30748147

Pep Boys - Manny Moe & Jack's asset turnover of this year was 1.32241521. Pep Boys - Manny Moe & Jack's asset turnover of last year was 1.30748147. ==> 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
=0+1+0+1+1+1+0+0+1
=5

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

Pep Boys - Manny Moe & Jack has an F-score of 5 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.


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