The Piotroski F-Score calculation for QSR / Restaurant Brands International Inc. is shown here. In 2000, Joseph Piotroski published a paper titled "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers." This paper described a method of using data from a company's financial reports to help predict future performance.

The Piotroski F-Score, as it is known, is a 9-point discrete score, where 9 is the best, that ranks companies based on a number of financial factors. To calculate the score, we compare nine factors from the two most recent annual reports. If the change in the factor is "good", then we add one to the score. If the change in the factor is "not good", then we add zero. The following explanations are quoted from the paper.

QSR / Restaurant Brands International Inc. Piotroski F-Score

6

Profitability

Current profitability and cash flow realizations provide information about the firm’s ability to generate funds internally. Given the poor historical earnings performance of many value firms, any firm currently generating positive cash flow or profits is demonstrating a capacity to generate funds through operating activities. Similarly, a positive earnings trend is suggestive of an improvement in the firm’s underlying ability to generate positive future cash flows.

ROA : Net Income before Extraordinary Items, scaled by Total Assets at beginning of year

0.06

+1


CFO: Cash Flow from Operations, scaled by Total Assets at beginning of year

0.07

+1


ΔROA: Current Year's ROA less Prior Year's ROA. If this negative, ROA (and therefore profitability) has decreased.

0.01

+1


ACCRUAL: Current Year's Net Income before Extraordinary Items less Cash Flow from Operations, scaled by Total Assets at beginning of year. In short, one if CFO > ROA. The relationship between earnings and cash flow levels is also considered. Earnings driven by positive accrual adjustments (i.e., profits are greater than cash flow from operations) is a bad signal about future profitability and returns. This relationship may be particularly important among value firms, where the incentive to manage earnings through positive accruals (e.g., to prevent covenant violations) is strong.

-0.01

+0

Financial Leverage, Liquidity, and Source of Funds

Three of the nine financial signals are designed to measure changes in capital structure and the firm's ability to meet future debt service obligations. Since many value firms are financially constrained, we assume that an increase in leverage, a deterioration of liquidity, or the use of external financing is a bad signal about financial risk.

ΔLEVER: The historical change in the ratio of long-term debt to average total assets. By raising external capital, a financially distressed firm is signaling its inability to generate sufficient internal funds. In addition, an increase in long-term debt is likely to place additional constraints on the firm’s financial flexibility. An increase in financial leverage is a negative.

0.32

+0


ΔLIQUID: The historical change in the firm’s current ratio between the current and prior year, where we define the current ratio as the ratio of current assets to current liabilities at fiscal year-end. An improvement in liquidity is a good signal.

-0.67

+0


EQ_OFFER: One if the firm did not issue common equity in the year, zero otherwise. Similar to an increase in long-term debt, financially distressed firms that raise external capital could be signaling their inability to generate sufficient internal funds to service future obligations. Moreover, the fact that these firms are willing to issue equity when their stock prices are likely to be depressed (i.e., high cost of capital) highlights the poor financial condition facing these firms.

9,300,526

+0

Operating Efficiency

The remaining two signals are designed to measure changes in the efficiency of the firm’s operations. These ratios are important because they reflect two key constructs underlying a decomposition of return on assets.

ΔMARGIN: The firm’s current gross margin ratio (gross margin scaled by total sales) less the prior year’s gross margin ratio. An improvement in margins signifies a potential improvement in factor costs, a reduction in inventory costs, or a rise in the price of the firm’s product.

0.01

+1


ΔTURN: The firm’s current year asset turnover ratio (total sales scaled by beginning of the year total assets) less the prior year’s asset turnover ratio. An improvement in asset turnover signifies greater productivity from the asset base. Such an improvement can arise from more efficient operations (fewer assets generating the same levels of sales) or an increase in sales (which could also signify improved market conditions for the firm’s products).

0.01

+1

Peers - Restaurants, Dining, and Eating Places (5812)

Related Articles

DMPI: DelMar Pharmaceuticals Analysis and Research Report

5h - Asif

Background DelMar Pharmaceuticals, Inc. is a clinical stage drug development company with a focus on the treatment of cancer. The company's mission is to benefit patients and create shareholder value by developing and commercializing anti-cancer therapies for patients whose tumors exhibit features that make them resistant to, or unlikely to respond to, currently available therapies, particularly for orphan cancer indications where patients have failed, or are unlikely to respond to, currently available therapy. DelMar Pharmaceuticals is developing VAL-083, a novel, DNA-targeting agent, for the treatment of glioblastoma multiforme (“GBM”) and potentially other solid tumors, including ovarian cancer. VAL-083 is a first-in-class, DNA-targeting chemotherapeutic that demonstrated activity against a range of tumor types in prior Phase 1 and Phase 2 clinical studies sponsored by the US National Cancer Institute (“NCI”). The company's recent research has highlighted the opportunit...

RIGL: Rigel Pharmaceuticals Analysis and Research Report

2018-09-18 - Asif

Overview Rigel Pharmaceuticals is a biotechnology company dedicated to discovering, developing and providing novel small molecule drugs that significantly improve the lives of patients with immune and hematologic disorders, cancer and rare diseases. The company's pioneering research focuses on signaling pathways that are critical to disease mechanisms. The company's first FDA-approved product is TAVALISSE™ (fostamatinib disodium hexahydrate), an oral spleen tyrosine kinase (SYK) inhibitor, for the treatment of adult patients with chronic immune thrombocytopenia who have had an insufficient response to a previous treatment. The company's current clinical programs include Phase 2 studies of fostamatinib in autoimmune hemolytic anemia and IgA nephropathy, and a Phase 1 study for its IRAK program. In addition, Rigel Pharmaceuticals has product candidates in development with partners BerGenBio AS, Daiichi Sankyo, and Aclaris Therapeutics. Since inception, Rigel Pharmaceuticals h...

EKSO: Ekso Bionics Holdings Analysis and Research Report

2018-09-18 - Asif

Overview The company design, develop and sell exoskeleton technology to augment human strength, endurance and mobility. The company's exoskeleton technology serves multiple markets and can be used both by able-bodied users as well as by persons with physical disabilities. Ekso Bionics has sold, rented or leased devices that (a) enable individuals with neurological conditions affecting gait (stroke and spinal cord injury) to rehabilitate and to walk again and (b) allow industrial workers to perform heavy duty work for extended periods. Today, its medical exoskeleton, Ekso GT, is used as a rehabilitation tool to allow physicians and therapists to rehabilitate patients who have suffered a stroke or spinal cord injury. With its unique features designed specifically for hospitals and its proprietary SmartAssist software, Ekso GT allows for the early mobilization of patients, with high step count and high dosage treatments. The intent is to allow the patient’s central nervous syst...

Related News Stories

3 Legal Highs for Your Portfolio

2018-09-20 investorplace
Marijuana stocks are hot in today’s market, but pot stocks are not the only way for you to profit from the habits of other people. Alcohol has been legal in America for 85 years, and the industry’s consolidation has delivered some solid investment opportunities. These are companies with solid growth prospect that you can invest in with confidence. (10-0)

Bet On Coffee Stocks For The Long Run

2018-09-20 seekingalpha
Worldwide consumption of coffee, tea, and other hot drinks is projected to grow at a CAGR of 6.4 percent through 2021, according to BMI Research. Emerging markets are expected to comprise the bulk of the gains, with China alone growing at 20 percent a year. Even developed markets such as the U.S. are expected to see a rise in demand for coffee as the millennial generation picks up a caffeine habit. (9-0)

Burger King, Pizza Hut, 6 chains to end 'no-poaching' pacts

2018-09-14 theedgemarkets
(Sept 14): Eight fast-food chains, including Burger King, Pizza Hut, Papa John’s and Denny’s, will no longer enforce “no-poaching” pacts that require their franchisees not to hire away each other’s employees, under the terms of settlements filed in court by Washington state’s attorney general. (4-0)

Bears Could Get Scalded as Dunkin Stock Brews up More Gains

2018-09-10 investorplace
Dunkin Brands (NASDAQ:DNKN) has surprised a lot of people since its IPO back in 2012. At the time, many observers felt that Dunkin was a washed up or tired brand. People weren’t buying the growth strategy that Dunkin was selling. Interest in the IPO was modest, and Dunkin stock didn’t do much initially. (13-0)

Kraft Heinz sees rising costs, still weighing M&A deal -CEO

2018-09-07 reuters
NEW YORK (Reuters) - Kraft Heinz Co (KHC.O) is feeling the pinch from trade conflicts and rising costs, but is still willing to consider an acquisition to fuel growth, its chief executive officer said on Friday. (11-0)

23.6% To 47.6% Gains Top 35 'Safer' Consumer Cyclical WallStars Per September Targets

2018-09-07 seekingalpha
A roaring Casino stock, Melco Resorts & Entertainment, topped sector net gains leaders per analyst target-price and dividend estimates calculated 9/5/18. (4-0)

Tracking Chase Coleman's Tiger Global Portfolio - Q2 2018 Update

2018-09-05 seekingalpha
The largest three positions are Spotify, Amazon.com, and JD.com, and they add up to ~30% of the portfolio. (152-6)

Tim Hortons seizes ownership of four locations from outspoken franchisee

2018-09-04 thestar
This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com (4-0)

Tim Hortons seizes 4 locations from disgruntled franchisee

2018-09-04 cbc.ca
The parent company of Tim Hortons seized ownership of four locations from a restaurant owner heading an unsanctioned franchisee group after he allegedly leaked sensitive corporate news to the media. (4-0)

PRESS DIGEST- Canada - Sept 4

2018-09-04 reuters
Sept 4 (Reuters) - The following are the top stories from selected Canadian newspapers. Reuters has not verified these stories and does not vouch for their accuracy. (18-0)

CUSIP: 76131D103