Switch to:
GuruFocus has detected 1 Warning Sign with Hormel Foods Corp $HRL.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Hormel Foods Corp (NYSE:HRL)
Beneish M-Score
-2.53 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Hormel Foods Corp has a M-score of -2.53 suggests that the company is not a manipulator.

HRL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.2   Max: -1.87
Current: -2.53

-3.2
-1.87

During the past 13 years, the highest Beneish M-Score of Hormel Foods Corp was -1.87. The lowest was -3.20. And the median was -2.54.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Hormel Foods Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 0.9218+0.528 * 0.927+0.404 * 0.9891+0.892 * 1.0381+0.115 * 1.0254
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0866+4.679 * -0.0003-0.327 * 0.8739
=-2.53

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jan17) TTM:Last Year (Jan16) TTM:
Accounts Receivable was $531 Mil.
Revenue was 2280.227 + 2627.941 + 2302.376 + 2300.235 = $9,511 Mil.
Gross Profit was 552.28 + 598.52 + 475.285 + 526.359 = $2,152 Mil.
Total Current Assets was $2,120 Mil.
Total Assets was $6,366 Mil.
Property, Plant and Equipment(Net PPE) was $1,035 Mil.
Depreciation, Depletion and Amortization(DDA) was $131 Mil.
Selling, General & Admin. Expense(SGA) was $872 Mil.
Total Current Liabilities was $920 Mil.
Long-Term Debt was $250 Mil.
Net Income was 235.147 + 243.94 + 195.654 + 215.397 = $890 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 177.619 + 371.162 + 212.551 + 130.444 = $892 Mil.
Accounts Receivable was $555 Mil.
Revenue was 2292.672 + 2400.858 + 2188.587 + 2279.345 = $9,161 Mil.
Gross Profit was 558.011 + 495.03 + 409.39 + 459.556 = $1,922 Mil.
Total Current Assets was $1,946 Mil.
Total Assets was $6,041 Mil.
Property, Plant and Equipment(Net PPE) was $1,014 Mil.
Depreciation, Depletion and Amortization(DDA) was $132 Mil.
Selling, General & Admin. Expense(SGA) was $773 Mil.
Total Current Liabilities was $1,020 Mil.
Long-Term Debt was $250 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(530.851 / 9510.779) / (554.738 / 9161.462)
=0.05581572 / 0.06055125
=0.9218

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1921.987 / 9161.462) / (2152.444 / 9510.779)
=0.20979042 / 0.22631627
=0.927

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2119.586 + 1035.275) / 6366.398) / (1 - (1946.083 + 1014.003) / 6040.889)
=0.50445118 / 0.50999166
=0.9891

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=9510.779 / 9161.462
=1.0381

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(132.479 / (132.479 + 1014.003)) / (131.483 / (131.483 + 1035.275))
=0.11555262 / 0.11269089
=1.0254

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(872.243 / 9510.779) / (773.26 / 9161.462)
=0.09171099 / 0.08440356
=1.0866

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((250 + 919.762) / 6366.398) / ((250 + 1020.098) / 6040.889)
=0.18374 / 0.21025018
=0.8739

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(890.138 - 0 - 891.776) / 6366.398
=-0.0003

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Hormel Foods Corp has a M-score of -2.53 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Hormel Foods Corp Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
DSRI 0.99481.02780.93651.04740.97861.05481.02291.03820.99930.9497
GMI 1.48681.030.93470.98041.01521.04431.00240.9610.86040.8615
AQI 1.06950.94260.95010.9961.00420.91591.34681.09321.17341.0172
SGI 1.07791.09070.96721.10521.09341.04251.06331.06450.99441.028
DEPI 1.01241.0140.9710.98220.99561.05190.99031.00590.98611.0926
SGAI 0.51720.96971.06110.96580.93470.93950.97380.97471.14881.1407
LVGI 0.97861.04610.89620.9690.89180.93730.92641.04981.07980.858
TATA -0.00880.0038-0.0585-0.0222-0.0101-0.0039-0.0227-0.0264-0.0498-0.0161
M-score -2.08-2.37-2.88-2.44-2.41-2.38-2.34-2.51-2.78-2.61

Hormel Foods Corp Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 1.03821.07361.06040.98950.99930.99150.98091.04110.94970.9218
GMI 0.9610.97140.93510.9090.86040.8110.82190.83550.86150.927
AQI 1.09321.09211.08821.33741.17341.22421.21871.02761.01720.9891
SGI 1.06451.06651.05941.03420.99440.96760.96620.98821.0281.0381
DEPI 1.00590.99740.98051.00120.98611.00511.05581.05221.09261.0254
SGAI 0.97470.97791.03171.10171.14881.20171.19371.14721.14071.0866
LVGI 1.04981.00711.01121.23041.07980.98450.97540.87930.8580.8739
TATA -0.0264-0.0104-0.0456-0.0612-0.0498-0.0455-0.0279-0.0141-0.0161-0.0003
M-score -2.51-2.38-2.59-2.75-2.78-2.77-2.68-2.57-2.61-2.53
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK