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Meritage Homes Corp (NYSE:MTH)
Beneish M-Score
-1.72 (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.

Meritage Homes Corp has a M-score of -1.72 signals that the company is a manipulator.

MTH' s 10-Year Beneish M-Score Range
Min: -8.25   Max: 15.96
Current: -1.72

-8.25
15.96

During the past 13 years, the highest Beneish M-Score of Meritage Homes Corp was 15.96. The lowest was -8.25. And the median was -1.44.


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 Meritage Homes 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 * 1.0448+0.528 * 1.1568+0.404 * 1.0564+0.892 * 1.2208+0.115 * 0.9487
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0302+4.679 * 0.0938-0.327 * 1.0254
=-1.72

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $65 Mil.
Revenue was 603.299 + 523.791 + 705.528 + 562.308 = $2,395 Mil.
Gross Profit was 118.885 + 99.421 + 145.523 + 115.055 = $479 Mil.
Total Current Assets was $282 Mil.
Total Assets was $2,587 Mil.
Property, Plant and Equipment(Net PPE) was $34 Mil.
Depreciation, Depletion and Amortization(DDA) was $13 Mil.
Selling, General & Admin. Expense(SGA) was $292 Mil.
Total Current Liabilities was $241 Mil.
Long-Term Debt was $1,139 Mil.
Net Income was 29.133 + 16.4 + 49.208 + 32.577 = $127 Mil.
Non Operating Income was -0.033 + 0.292 + 0.094 + 1.864 = $2 Mil.
Cash Flow from Operations was -38.757 + -38.191 + 24.905 + -65.539 = $-118 Mil.
Accounts Receivable was $51 Mil.
Revenue was 510.352 + 412.445 + 541.67 + 497.275 = $1,962 Mil.
Gross Profit was 113.62 + 94.597 + 128.088 + 117.476 = $454 Mil.
Total Current Assets was $341 Mil.
Total Assets was $2,193 Mil.
Property, Plant and Equipment(Net PPE) was $29 Mil.
Depreciation, Depletion and Amortization(DDA) was $10 Mil.
Selling, General & Admin. Expense(SGA) was $232 Mil.
Total Current Liabilities was $236 Mil.
Long-Term Debt was $905 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)
=(64.659 / 2394.926) / (50.695 / 1961.742)
=0.02699833 / 0.02584183
=1.0448

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)
=(99.421 / 1961.742) / (118.885 / 2394.926)
=0.23131533 / 0.19995774
=1.1568

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 - (281.68 + 33.741) / 2586.669) / (1 - (341.269 + 28.828) / 2192.678)
=0.878059 / 0.83121233
=1.0564

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
=2394.926 / 1961.742
=1.2208

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))
=(10.458 / (10.458 + 28.828)) / (13.161 / (13.161 + 33.741))
=0.2662017 / 0.28060637
=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)
=(292.138 / 2394.926) / (232.273 / 1961.742)
=0.12198206 / 0.1184014
=1.0302

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)
=((1138.856 + 240.747) / 2586.669) / ((904.771 + 235.756) / 2192.678)
=0.53335119 / 0.52015253
=1.0254

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
=(127.318 - 2.217 - -117.582) / 2586.669
=0.0938

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.

Meritage Homes Corp has a M-score of -1.72 signals that the company is likely to 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 own currency.

Meritage Homes Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 2.58490.98091.20520.85195.83670.1860.78360.97131.26231.219
GMI 0.851.144236.9851-0.2297-5.80540.02341.08690.86410.84321.0508
AQI 3.78660.99660.96490.80250.051817.29891.10991.12170.99791.1636
SGI 1.47111.15330.67710.64990.63710.97050.91461.3991.5221.1945
DEPI 0.04530.87431.00830.894132.29310.03581.01711.01331.10521.1753
SGAI 0.98981.15821.17371.02531.07531.01881.11350.83770.87951.0025
LVGI 0.95820.99281.10251.04381.00320.98511.01190.93091.03150.8902
TATA 0.09590.0991-0.0618-0.3604-0.2143-0.02490.03690.21450.10170.15
M-score 0.80-1.8616.06-5.370.252.59-2.51-1.12-1.36-1.25

Meritage Homes Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.06621.21141.39511.26231.59291.28971.28911.2190.94051.0448
GMI 0.85660.83970.81360.84320.83990.87270.96461.05081.12031.1568
AQI 0.96310.9531.12090.99791.11281.07481.14291.16361.14821.0564
SGI 1.50521.58241.53451.5221.42361.29961.22041.19451.20761.2208
DEPI 0.98560.96871.06191.10521.24571.32221.31951.17531.04170.9487
SGAI 0.81640.80590.83720.87950.90440.9460.99041.00251.02951.0302
LVGI 0.99660.95010.95561.03150.89660.92750.92250.89020.96031.0254
TATA 0.16920.16250.16130.10170.16230.16790.1790.150.10450.0938
M-score -1.24-1.06-0.88-1.36-0.76-1.13-1.08-1.25-1.72-1.72
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