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Pentair PLC (NYSE:PNR)
Beneish M-Score
-2.89 (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.

Pentair PLC has a M-score of -2.89 suggests that the company is not a manipulator.

PNR' s 10-Year Beneish M-Score Range
Min: -3.17   Max: -1.26
Current: -2.89

-3.17
-1.26

During the past 13 years, the highest Beneish M-Score of Pentair PLC was -1.26. The lowest was -3.17. And the median was -2.52.


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 Pentair PLC 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 * 0.9426+0.528 * 1.0055+0.404 * 1.0173+0.892 * 0.9537+0.115 * 0.825
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0009+4.679 * -0.0552-0.327 * 1.1495
=-2.89

* 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 $1,171 Mil.
Revenue was 1661.2 + 1475 + 1802.5 + 1758.4 = $6,697 Mil.
Gross Profit was 566.2 + 510.2 + 627.9 + 624.7 = $2,329 Mil.
Total Current Assets was $2,903 Mil.
Total Assets was $10,565 Mil.
Property, Plant and Equipment(Net PPE) was $909 Mil.
Depreciation, Depletion and Amortization(DDA) was $248 Mil.
Selling, General & Admin. Expense(SGA) was $1,380 Mil.
Total Current Liabilities was $1,460 Mil.
Long-Term Debt was $3,261 Mil.
Net Income was 147.8 + 113.9 + 120.8 + -186 = $197 Mil.
Non Operating Income was -0.6 + 0.5 + 0.3 + 0.3 = $1 Mil.
Cash Flow from Operations was 318.7 + -133.2 + 325 + 268.9 = $779 Mil.
Accounts Receivable was $1,302 Mil.
Revenue was 1834.1 + 1644 + 1831 + 1713.3 = $7,022 Mil.
Gross Profit was 646.3 + 564.1 + 630.5 + 614.7 = $2,456 Mil.
Total Current Assets was $3,166 Mil.
Total Assets was $11,617 Mil.
Property, Plant and Equipment(Net PPE) was $1,152 Mil.
Depreciation, Depletion and Amortization(DDA) was $248 Mil.
Selling, General & Admin. Expense(SGA) was $1,446 Mil.
Total Current Liabilities was $1,777 Mil.
Long-Term Debt was $2,739 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)
=(1170.6 / 6697.1) / (1302.2 / 7022.4)
=0.17479207 / 0.18543518
=0.9426

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)
=(510.2 / 7022.4) / (566.2 / 6697.1)
=0.34968102 / 0.34776246
=1.0055

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 - (2902.9 + 908.5) / 10564.7) / (1 - (3165.9 + 1151.6) / 11616.8)
=0.63923254 / 0.62833999
=1.0173

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
=6697.1 / 7022.4
=0.9537

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))
=(247.8 / (247.8 + 1151.6)) / (248.3 / (248.3 + 908.5))
=0.17707589 / 0.21464385
=0.825

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)
=(1380.1 / 6697.1) / (1445.8 / 7022.4)
=0.20607427 / 0.20588403
=1.0009

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)
=((3260.9 + 1460) / 10564.7) / ((2739 + 1777.1) / 11616.8)
=0.44685604 / 0.38875594
=1.1495

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
=(196.5 - 0.5 - 779.4) / 10564.7
=-0.0552

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.

Pentair PLC has a M-score of -2.89 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 own currency.

Pentair PLC Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.82660.97091.0070.97811.22881.0090.96551.75280.6360.9332
GMI 0.99860.97080.96041.01981.0380.94970.98851.08040.84910.9677
AQI 1.0020.98121.05331.0161.01850.96320.99630.97641.00871.0053
SGI 1.29341.02581.08551.02170.80321.12561.14051.27761.5851.0056
DEPI 0.81241.03310.97740.92350.84281.18010.93291.80070.58060.9932
SGAI 0.98471.07191.00921.06461.00660.9641.10671.3050.81350.9945
LVGI 0.9760.94421.08410.89450.89190.98411.34960.8131.02641.229
TATA -0.021-0.0133-0.0316-0.0191-0.0349-0.022-0.0719-0.0086-0.0352-0.0746
M-score -2.49-2.56-2.58-2.54-2.56-2.47-2.87-1.45-2.56-2.98

Pentair PLC Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.36411.27680.48260.61130.74910.90260.92630.97090.92060.9426
GMI 1.10591.08111.05120.85960.81920.84070.87740.95610.98751.0055
AQI 0.9810.97491.11011.00871.00861.00920.96021.00531.01841.0173
SGI 1.5131.78712.03991.64921.34121.10510.98130.96660.96060.9537
DEPI 1.47091.22930.32380.58060.83011.03391.30270.99320.85070.825
SGAI 1.27881.24281.12170.79990.77990.79850.80971.01081.03041.0009
LVGI 0.80860.91751.18811.02641.09071.02511.1771.2291.20621.1495
TATA -0.0155-0.0199-0.0219-0.0324-0.0266-0.0302-0.0668-0.0745-0.0628-0.0552
M-score -1.64-1.57-2.22-2.50-2.63-2.67-2.95-2.98-2.97-2.89
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