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Meritage Homes Corp (NYSE:MTH)
Beneish M-Score
-2.21 (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 -2.21 signals that the company is a manipulator.

MTH' s Beneish M-Score Range Over the Past 10 Years
Min: -5.21   Max: 15.98
Current: -2.21

-5.21
15.98

During the past 13 years, the highest Beneish M-Score of Meritage Homes Corp was 15.98. The lowest was -5.21. And the median was -1.23.


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 * 0.8529+0.528 * 1.0922+0.404 * 0.9474+0.892 * 1.1835+0.115 * 0.8932
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9741+4.679 * 0.0496-0.327 * 1.0241
=-2.21

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $57 Mil.
Revenue was 788.656 + 676.81 + 603.299 + 523.791 = $2,593 Mil.
Gross Profit was 157.829 + 131.845 + 118.885 + 99.421 = $508 Mil.
Total Current Assets was $320 Mil.
Total Assets was $2,691 Mil.
Property, Plant and Equipment(Net PPE) was $34 Mil.
Depreciation, Depletion and Amortization(DDA) was $14 Mil.
Selling, General & Admin. Expense(SGA) was $301 Mil.
Total Current Liabilities was $268 Mil.
Long-Term Debt was $1,128 Mil.
Net Income was 52.897 + 30.308 + 29.133 + 16.4 = $129 Mil.
Non Operating Income was 2.576 + -4.119 + -0.033 + 0.292 = $-1 Mil.
Cash Flow from Operations was 49.911 + 23.702 + -38.757 + -38.191 = $-3 Mil.
Accounts Receivable was $57 Mil.
Revenue was 705.528 + 562.308 + 510.352 + 412.445 = $2,191 Mil.
Gross Profit was 145.523 + 115.055 + 113.62 + 94.597 = $469 Mil.
Total Current Assets was $160 Mil.
Total Assets was $2,316 Mil.
Property, Plant and Equipment(Net PPE) was $32 Mil.
Depreciation, Depletion and Amortization(DDA) was $12 Mil.
Selling, General & Admin. Expense(SGA) was $261 Mil.
Total Current Liabilities was $238 Mil.
Long-Term Debt was $935 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)
=(57.296 / 2592.556) / (56.763 / 2190.633)
=0.0221002 / 0.02591169
=0.8529

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)
=(131.845 / 2190.633) / (157.829 / 2592.556)
=0.21399979 / 0.19593791
=1.0922

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 - (319.504 + 33.97) / 2690.522) / (1 - (160.096 + 32.403) / 2316.138)
=0.86862252 / 0.91688794
=0.9474

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
=2592.556 / 2190.633
=1.1835

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))
=(11.614 / (11.614 + 32.403)) / (14.241 / (14.241 + 33.97))
=0.2638526 / 0.29538902
=0.8932

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)
=(301.267 / 2592.556) / (261.34 / 2190.633)
=0.11620463 / 0.11929885
=0.9741

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)
=((1127.785 + 267.603) / 2690.522) / ((935.208 + 237.763) / 2316.138)
=0.51863096 / 0.50643399
=1.0241

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
=(128.738 - -1.284 - -3.335) / 2690.522
=0.0496

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 -2.21 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 1.40361.26231.59291.28971.28911.2190.94051.04480.85710.8529
GMI 0.83670.84320.83990.87270.96461.05081.12031.15681.12741.0922
AQI 1.12090.99791.11281.07481.14291.16361.14821.05640.95270.9474
SGI 1.52531.5221.42361.29961.22041.19451.20761.22081.23811.1835
DEPI 1.06191.10521.24571.32221.31951.17531.04170.94870.89120.8932
SGAI 0.84230.87950.90440.9460.99041.00251.02951.03020.99240.9741
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 -0.87-1.36-0.76-1.13-1.09-1.25-1.72-1.72-2.08-2.21
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