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Meritage Homes Corp (NYSE:MTH)
Beneish M-Score
-2.14 (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 -2.14 signals that the company is a manipulator.

MTH' s Beneish M-Score Range Over the Past 10 Years
Min: -8.24   Max: 15.98
Current: -2.14

-8.24
15.98

During the past 13 years, the highest Beneish M-Score of Meritage Homes Corp was 15.98. The lowest was -8.24. And the median was -1.25.


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 * 0.847+0.528 * 1.0646+0.404 * 0.9778+0.892 * 1.1609+0.115 * 0.9056
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9408+4.679 * 0.0669-0.327 * 1.0094
=-2.14

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $60 Mil.
Revenue was 597.766 + 788.656 + 676.81 + 603.299 = $2,667 Mil.
Gross Profit was 103.796 + 157.829 + 131.845 + 118.885 = $512 Mil.
Total Current Assets was $233 Mil.
Total Assets was $2,715 Mil.
Property, Plant and Equipment(Net PPE) was $35 Mil.
Depreciation, Depletion and Amortization(DDA) was $14 Mil.
Selling, General & Admin. Expense(SGA) was $306 Mil.
Total Current Liabilities was $268 Mil.
Long-Term Debt was $1,119 Mil.
Net Income was 20.969 + 52.897 + 30.308 + 29.133 = $133 Mil.
Non Operating Income was 0.126 + 2.576 + -4.119 + -0.033 = $-1 Mil.
Cash Flow from Operations was -81.817 + 49.911 + 23.702 + -38.757 = $-47 Mil.
Accounts Receivable was $62 Mil.
Revenue was 518.712 + 705.528 + 562.308 + 510.352 = $2,297 Mil.
Gross Profit was 95.641 + 145.523 + 115.055 + 113.62 = $470 Mil.
Total Current Assets was $151 Mil.
Total Assets was $2,366 Mil.
Property, Plant and Equipment(Net PPE) was $34 Mil.
Depreciation, Depletion and Amortization(DDA) was $12 Mil.
Selling, General & Admin. Expense(SGA) was $280 Mil.
Total Current Liabilities was $233 Mil.
Long-Term Debt was $966 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)
=(60.491 / 2666.531) / (61.515 / 2296.9)
=0.02268528 / 0.02678175
=0.847

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)
=(157.829 / 2296.9) / (103.796 / 2666.531)
=0.20455353 / 0.1921429
=1.0646

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 - (232.666 + 34.544) / 2714.513) / (1 - (150.76 + 33.826) / 2366.458)
=0.90156245 / 0.92199904
=0.9778

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
=2666.531 / 2296.9
=1.1609

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))
=(12.312 / (12.312 + 33.826)) / (14.432 / (14.432 + 34.544))
=0.26685162 / 0.29467494
=0.9056

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)
=(305.8 / 2666.531) / (279.997 / 2296.9)
=0.11468083 / 0.12190213
=0.9408

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)
=((1119.393 + 268.172) / 2714.513) / ((965.75 + 232.649) / 2366.458)
=0.51116535 / 0.50641042
=1.0094

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
=(133.307 - -1.45 - -46.961) / 2714.513
=0.0669

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 -2.14 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 0.98091.20520.85195.83670.1860.78360.98041.25061.2190.8529
GMI 1.144236.9851-0.2297-5.80540.02341.08690.89630.81291.05081.0922
AQI 0.99660.96490.80250.051817.29891.10991.12170.99791.16360.9474
SGI 1.15330.67710.64990.63710.97050.91461.3861.53631.19451.1835
DEPI 0.87431.00830.894132.29310.03581.01711.01331.10521.17530.8932
SGAI 1.15821.17371.04281.08550.99231.11350.84560.87131.00250.9741
LVGI 0.99281.10251.04381.00320.98511.01190.93091.03150.89021.0241
TATA 0.0991-0.0618-0.363-0.2141-0.02490.03690.2080.10590.150.0496
M-score -1.8616.06-5.390.252.59-2.51-1.14-1.35-1.25-2.21

Meritage Homes Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.26231.59291.28971.28911.2190.94251.0470.85880.85460.847
GMI 0.84320.83990.87270.96461.05081.12681.16361.13381.09821.0646
AQI 0.99791.11281.07481.14291.16361.14821.05640.95270.94740.9778
SGI 1.5221.42361.29961.22041.19451.20491.21821.23561.18121.1609
DEPI 1.10521.24571.32221.31951.17531.04170.94870.89120.89320.9056
SGAI 0.87950.90440.9460.99041.00251.03171.03240.99440.9760.9408
LVGI 1.03150.89660.92750.92250.89020.96031.02541.02941.02411.0094
TATA 0.10170.16230.16790.17610.150.10450.09380.06140.04960.0669
M-score -1.36-0.76-1.13-1.09-1.25-1.72-1.71-2.08-2.21-2.14
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