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Meritage Homes Corp (NYSE:MTH)
Beneish M-Score
-2.08 (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 -2.08 signals that the company is a manipulator.

MTH' s Beneish M-Score Range Over the Past 10 Years
Min: -8.25   Max: 15.96
Current: -2.08

-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 -1.47.


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 * 0.8571+0.528 * 1.1274+0.404 * 0.9527+0.892 * 1.2381+0.115 * 0.8912
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9924+4.679 * 0.0614-0.327 * 1.0294
=-2.08

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $60 Mil.
Revenue was 676.81 + 603.299 + 523.791 + 705.528 = $2,509 Mil.
Gross Profit was 131.845 + 118.885 + 99.421 + 145.523 = $496 Mil.
Total Current Assets was $295 Mil.
Total Assets was $2,664 Mil.
Property, Plant and Equipment(Net PPE) was $34 Mil.
Depreciation, Depletion and Amortization(DDA) was $14 Mil.
Selling, General & Admin. Expense(SGA) was $300 Mil.
Total Current Liabilities was $276 Mil.
Long-Term Debt was $1,146 Mil.
Net Income was 30.308 + 29.133 + 16.4 + 49.208 = $125 Mil.
Non Operating Income was -4.119 + -0.033 + 0.292 + 0.094 = $-4 Mil.
Cash Flow from Operations was 23.702 + -38.757 + -38.191 + 18.381 = $-35 Mil.
Accounts Receivable was $56 Mil.
Revenue was 562.308 + 510.352 + 412.445 + 541.67 = $2,027 Mil.
Gross Profit was 115.055 + 113.62 + 94.597 + 128.088 = $451 Mil.
Total Current Assets was $150 Mil.
Total Assets was $2,273 Mil.
Property, Plant and Equipment(Net PPE) was $32 Mil.
Depreciation, Depletion and Amortization(DDA) was $11 Mil.
Selling, General & Admin. Expense(SGA) was $244 Mil.
Total Current Liabilities was $274 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)
=(59.617 / 2509.428) / (56.178 / 2026.775)
=0.02375721 / 0.02771793
=0.8571

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)
=(118.885 / 2026.775) / (131.845 / 2509.428)
=0.22269862 / 0.19752469
=1.1274

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 - (295.026 + 34.403) / 2663.886) / (1 - (150.14 + 31.979) / 2272.812)
=0.87633517 / 0.91987063
=0.9527

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
=2509.428 / 2026.775
=1.2381

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))
=(10.919 / (10.919 + 31.979)) / (13.754 / (13.754 + 34.403))
=0.25453401 / 0.28560749
=0.8912

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)
=(299.58 / 2509.428) / (243.823 / 2026.775)
=0.11938179 / 0.12030097
=0.9924

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)
=((1145.958 + 275.672) / 2663.886) / ((904.629 + 273.652) / 2272.812)
=0.53366773 / 0.51842431
=1.0294

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
=(125.049 - -3.766 - -34.865) / 2663.886
=0.0614

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 -2.08 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.98091.20520.85195.83670.1860.77770.97871.26231.2190.8529
GMI 1.144236.9851-0.2297-5.80540.02341.04650.89750.84321.05081.0922
AQI 0.99660.96490.80250.051817.29891.10991.12170.99791.16360.9474
SGI 1.15330.67710.64990.63710.97050.92161.38851.5221.19451.1835
DEPI 0.87431.00830.894132.29310.03581.01711.01331.10521.17530.8932
SGAI 1.15821.17371.02531.07531.01881.10510.84410.87951.00250.9741
LVGI 0.99281.10251.04381.00320.98511.01190.93091.03150.89021.0241
TATA 0.0991-0.0618-0.3604-0.2143-0.02490.04220.21480.10170.150.0496
M-score -1.8616.06-5.370.252.59-2.51-1.10-1.36-1.25-2.21

Meritage Homes Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.39511.26231.59291.28971.28911.2190.94051.04480.85710.8529
GMI 0.81360.84320.83990.87270.96461.05081.12031.15681.12741.0922
AQI 1.12090.99791.11281.07481.14291.16361.14821.05640.95270.9474
SGI 1.53451.5221.42361.29961.22041.19451.20761.22081.23811.1835
DEPI 1.06191.10521.24571.32221.31951.17531.04170.94870.89120.8932
SGAI 0.83720.87950.90440.9460.99041.00251.02951.03020.99240.9741
LVGI 0.95561.03150.89660.92750.92250.89020.96031.02541.02941.0241
TATA 0.16150.10170.16230.16790.17610.150.10450.09380.06140.0496
M-score -0.88-1.36-0.76-1.13-1.09-1.25-1.72-1.72-2.08-2.21
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