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GuruFocus has detected 2 Warning Signs with Lee Enterprises Inc $LEE.
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Lee Enterprises Inc (NYSE:LEE)
Beneish M-Score
-3.07 (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.

Lee Enterprises Inc has a M-score of -3.07 suggests that the company is not a manipulator.

LEE' s Beneish M-Score Range Over the Past 10 Years
Min: -5.98   Max: -1.17
Current: -3.07

-5.98
-1.17

During the past 13 years, the highest Beneish M-Score of Lee Enterprises Inc was -1.17. The lowest was -5.98. And the median was -2.83.


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 Lee Enterprises Inc 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 * 0.9094+0.528 * 0.9999+0.404 * 0.9859+0.892 * 0.9393+0.115 * 0.9487
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0212+4.679 * -0.0994-0.327 * 0.9285
=-3.07

* 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 $56.9 Mil.
Revenue was 153.989 + 148.178 + 150.946 + 146.835 = $599.9 Mil.
Gross Profit was 147.096 + 141.411 + 144.342 + 140.782 = $573.6 Mil.
Total Current Assets was $86.1 Mil.
Total Assets was $663.6 Mil.
Property, Plant and Equipment(Net PPE) was $125.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.9 Mil.
Selling, General & Admin. Expense(SGA) was $226.1 Mil.
Total Current Liabilities was $101.5 Mil.
Long-Term Debt was $549.0 Mil.
Net Income was 12.173 + 0.404 + 4.092 + 19.228 = $35.9 Mil.
Non Operating Income was 2.144 + -8.972 + -1.609 + 29.3 = $20.9 Mil.
Cash Flow from Operations was 22.888 + 13.363 + 24.276 + 20.482 = $81.0 Mil.
Accounts Receivable was $66.6 Mil.
Revenue was 168.405 + 156.099 + 158.678 + 155.529 = $638.7 Mil.
Gross Profit was 161.72 + 149.764 + 151.257 + 147.868 = $610.6 Mil.
Total Current Assets was $88.5 Mil.
Total Assets was $743.4 Mil.
Property, Plant and Equipment(Net PPE) was $140.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $45.0 Mil.
Selling, General & Admin. Expense(SGA) was $235.8 Mil.
Total Current Liabilities was $107.1 Mil.
Long-Term Debt was $677.9 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)
=(56.871 / 599.948) / (66.58 / 638.711)
=0.09479322 / 0.1042412
=0.9094

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)
=(610.609 / 638.711) / (573.631 / 599.948)
=0.95600201 / 0.95613453
=0.9999

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 - (86.119 + 125.093) / 663.573) / (1 - (88.542 + 140.845) / 743.404)
=0.68170495 / 0.69143696
=0.9859

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
=599.948 / 638.711
=0.9393

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))
=(45.01 / (45.01 + 140.845)) / (42.878 / (42.878 + 125.093))
=0.24217804 / 0.25527025
=0.9487

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)
=(226.143 / 599.948) / (235.756 / 638.711)
=0.37693767 / 0.36911216
=1.0212

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)
=((549.044 + 101.528) / 663.573) / ((677.861 + 107.129) / 743.404)
=0.98040758 / 1.05593997
=0.9285

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
=(35.897 - 20.863 - 81.009) / 663.573
=-0.0994

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.

Lee Enterprises Inc has a M-score of -3.07 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.

Lee Enterprises Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.02970.91460.97051.09440.92481.00270.97071.01140.96270.92
GMI 1.01220.70930.98340.9821.00880.99550.99050.99290.98860.9957
AQI 1.00350.91670.96151.00470.94191.00370.94221.02631.01411.0059
SGI 0.99910.91240.81840.88890.96630.97750.95880.97510.98130.9473
DEPI 0.95450.94321.0210.99280.91440.98031.05371.05150.97910.9528
SGAI 1.01621.04440.98240.99580.98430.98370.96850.97821.00211.0147
LVGI 0.95581.51971.13250.97671.14451.0221.16020.98160.98040.9303
TATA -0.0815-0.4987-0.1198-0.0357-0.205-0.0514-0.2122-0.0683-0.0692-0.0903
M-score -2.82-5.34-3.29-2.66-3.61-2.75-3.61-2.79-2.85-3.01

Lee Enterprises Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.01140.95020.97390.94070.96430.95710.92020.97930.91860.9094
GMI 0.99090.99120.99080.98990.98870.98860.98930.9910.99560.9999
AQI 1.02631.01551.02241.00011.01411.01811.01051.00381.00590.9859
SGI 0.97510.98540.99720.99640.97980.96670.95150.94620.94880.9393
DEPI 1.05151.0240.99370.95180.97910.97090.95960.96990.95280.9487
SGAI 0.98120.98491.00261.00441.00581.00631.00311.0131.01311.0212
LVGI 0.98160.97360.97490.98180.98040.97970.93950.93520.93030.9285
TATA -0.0683-0.081-0.0777-0.0798-0.0692-0.0682-0.0906-0.0857-0.0903-0.0994
M-score -2.79-2.90-2.86-2.92-2.85-2.86-3.01-2.94-3.01-3.07
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