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GuruFocus has detected 6 Warning Signs with Toro Co $TTC.
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Toro Co (NYSE:TTC)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

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

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

TTC' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 7

3
9

During the past 13 years, the highest Piotroski F-Score of Toro 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 (Apr17) TTM:Last Year (Apr16) TTM:
Net Income was 55.822 + 30.23 + 44.99 + 120.475 = $252 Mil.
Cash Flow from Operations was 140.468 + 73.035 + 15.392 + 155.039 = $384 Mil.
Revenue was 600.98 + 468.356 + 515.839 + 872.767 = $2,458 Mil.
Gross Profit was 216.617 + 172.137 + 193.48 + 316.314 = $899 Mil.
Average Total Assets from the begining of this year (Apr16)
to the end of this year (Apr17) was
(1542.741 + 1467.462 + 1387.518 + 1402.913 + 1598.758) / 5 = $1479.8784 Mil.
Total Assets at the begining of this year (Apr16) was $1,543 Mil.
Long-Term Debt was $312 Mil.
Total Current Assets was $977 Mil.
Total Current Liabilities was $622 Mil.
Net Income was 53.324 + 23.554 + 39.261 + 105.681 = $222 Mil.

Revenue was 609.615 + 480.807 + 486.398 + 836.441 = $2,413 Mil.
Gross Profit was 216.39 + 168.574 + 182.654 + 303.187 = $871 Mil.
Average Total Assets from the begining of last year (Apr15)
to the end of last year (Apr16) was
(1479.127 + 1359.951 + 1303.658 + 1393.834 + 1542.741) / 5 = $1415.8622 Mil.
Total Assets at the begining of last year (Apr15) was $1,479 Mil.
Long-Term Debt was $338 Mil.
Total Current Assets was $950 Mil.
Total Current Liabilities was $601 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.

Toro Co's current net income (TTM) was 252. ==> 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.

Toro Co's current cash flow from operations (TTM) was 384. ==> 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 (Apr16)
=251.517/1542.741
=0.16303255

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Apr15)
=221.82/1479.127
=0.14996684

Toro Co's return on assets of this year was 0.16303255. Toro Co's return on assets of last year was 0.14996684. ==> 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.

Toro Co's current net income (TTM) was 252. Toro Co's current cash flow from operations (TTM) was 384. ==> 384 > 252 ==> 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: Apr17)=Long-Term Debt/Average Total Assets from Apr16 to Apr17
=311.957/1479.8784
=0.21079908

Gearing (Last Year: Apr16)=Long-Term Debt/Average Total Assets from Apr15 to Apr16
=337.909/1415.8622
=0.23865952

Toro Co's gearing of this year was 0.21079908. Toro Co's gearing of last year was 0.23865952. ==> 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: Apr17)=Total Current Assets/Total Current Liabilities
=976.563/622.415
=1.56899014

Current Ratio (Last Year: Apr16)=Total Current Assets/Total Current Liabilities
=950.107/600.601
=1.5819271

Toro Co's current ratio of this year was 1.56899014. Toro Co's current ratio of last year was 1.5819271. ==> 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.

Toro Co's number of shares in issue this year was 111.1. Toro Co's number of shares in issue last year was 112. ==> 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
=898.548/2457.942
=0.36556924

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=870.805/2413.261
=0.36084162

Toro Co's gross margin of this year was 0.36556924. Toro Co's gross margin of last year was 0.36084162. ==> 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 (Apr16)
=2457.942/1542.741
=1.59323049

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Apr15)
=2413.261/1479.127
=1.63154415

Toro Co's asset turnover of this year was 1.59323049. Toro Co's asset turnover of last year was 1.63154415. ==> 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+1+0+1+1+0
=7

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

Toro 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.

Toro Co Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
Question 1 1111111111
Question 2 1111111111
Question 3 1001111101
Question 4 1111011111
Question 5 0000111011
Question 6 1100011101
Question 7 1111111111
Question 8 1001011101
Question 9 1001110000
F-score 8547698758

Toro Co Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
Question 1 1111111111
Question 2 1111111111
Question 3 1110000111
Question 4 0101111111
Question 5 0001111111
Question 6 0000111110
Question 7 1111111111
Question 8 1000011111
Question 9 1100000000
F-score 6645677887
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