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GuruFocus has detected 6 Warning Signs with Lamar Advertising Co $LAMR.
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Lamar Advertising Co (NAS:LAMR)
Beneish M-Score
-2.66 (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.

Lamar Advertising Co has a M-score of -2.66 suggests that the company is not a manipulator.

LAMR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.32   Max: -1.82
Current: -2.66

-3.32
-1.82

During the past 13 years, the highest Beneish M-Score of Lamar Advertising Co was -1.82. The lowest was -3.32. And the median was -2.82.


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 Lamar Advertising Co 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 * 0.9825+0.528 * 1.0004+0.404 * 1.0425+0.892 * 1.1085+0.115 * 1.0074
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9936+4.679 * -0.0564-0.327 * 1.0588
=-2.66

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $190 Mil.
Revenue was 386.717 + 387.516 + 387.528 + 338.533 = $1,500 Mil.
Gross Profit was 254.348 + 255.738 + 254.803 + 209.808 = $975 Mil.
Total Current Assets was $316 Mil.
Total Assets was $3,900 Mil.
Property, Plant and Equipment(Net PPE) was $1,183 Mil.
Depreciation, Depletion and Amortization(DDA) was $205 Mil.
Selling, General & Admin. Expense(SGA) was $346 Mil.
Total Current Liabilities was $277 Mil.
Long-Term Debt was $2,315 Mil.
Net Income was 80.525 + 85.061 + 81.909 + 51.314 = $299 Mil.
Non Operating Income was 0 + 0 + -0.056 + -3.142 = $-3 Mil.
Cash Flow from Operations was 183.997 + 126.801 + 159.488 + 51.537 = $522 Mil.
Accounts Receivable was $174 Mil.
Revenue was 355.969 + 350.701 + 344.249 + 302.477 = $1,353 Mil.
Gross Profit was 233.068 + 229.025 + 228.298 + 189.245 = $880 Mil.
Total Current Assets was $282 Mil.
Total Assets was $3,364 Mil.
Property, Plant and Equipment(Net PPE) was $1,095 Mil.
Depreciation, Depletion and Amortization(DDA) was $191 Mil.
Selling, General & Admin. Expense(SGA) was $314 Mil.
Total Current Liabilities was $237 Mil.
Long-Term Debt was $1,875 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)
=(189.935 / 1500.294) / (174.398 / 1353.396)
=0.12659852 / 0.12885955
=0.9825

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)
=(879.636 / 1353.396) / (974.697 / 1500.294)
=0.64994724 / 0.64967066
=1.0004

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 - (315.835 + 1182.715) / 3900.466) / (1 - (281.732 + 1095.137) / 3363.744)
=0.61580232 / 0.59067367
=1.0425

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
=1500.294 / 1353.396
=1.1085

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))
=(191.433 / (191.433 + 1095.137)) / (204.958 / (204.958 + 1182.715))
=0.1487933 / 0.14769906
=1.0074

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)
=(345.789 / 1500.294) / (313.941 / 1353.396)
=0.23048083 / 0.23196537
=0.9936

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)
=((2315.267 + 277.324) / 3900.466) / ((1874.941 + 236.83) / 3363.744)
=0.6646875 / 0.62780372
=1.0588

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
=(298.809 - -3.198 - 521.823) / 3900.466
=-0.0564

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.

Lamar Advertising Co has a M-score of -2.66 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.

Lamar Advertising Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.06941.06231.04310.95771.00891.0390.95831.01510.97780.9825
GMI 0.98331.04341.01830.98140.99520.98920.99361.00240.99671.0004
AQI 0.94650.99541.00141.03761.0111.00261.01541.00670.99911.0425
SGI 1.07990.99080.88121.03431.03521.04341.0561.03311.05151.1085
DEPI 1.06370.97750.89140.96970.99251.00060.94911.09731.29421.0074
SGAI 1.00580.96161.01061.03890.97561.01791.03431.00520.99560.9936
LVGI 1.311.02151.0010.98090.95870.99410.93681.0160.98771.0588
TATA -0.0793-0.0841-0.0904-0.0947-0.0908-0.0929-0.1-0.0509-0.0639-0.0564
M-score -2.84-2.81-2.97-2.93-2.85-2.85-2.92-2.67-2.72-2.66

Lamar Advertising Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.97241.01510.99850.94760.990.97781.00891.04131.00360.9825
GMI 0.99991.00240.99460.98780.99480.99671.00521.01051.0031.0004
AQI 1.04331.00671.01391.01161.01010.99911.0531.03681.03291.0425
SGI 1.03491.03311.04021.0491.04991.05151.0651.08671.10151.1085
DEPI 0.99881.09731.17111.27881.33051.29421.26761.16021.06951.0074
SGAI 0.96361.00521.02061.03271.02650.99561.00320.9780.99170.9936
LVGI 0.98541.0161.01891.0051.00060.98771.05991.05491.04761.0588
TATA -0.0899-0.0509-0.0372-0.0369-0.0202-0.0639-0.0509-0.0515-0.0523-0.0564
M-score -2.87-2.67-2.61-2.63-2.50-2.72-2.62-2.58-2.62-2.66
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