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GuruFocus has detected 4 Warning Signs with Stantec Inc $STN.
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Stantec Inc (NYSE:STN)
Beneish M-Score
-2.37 (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.

Stantec Inc has a M-score of -2.35 suggests that the company is not a manipulator.

STN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.01   Max: -0.18
Current: -2.37

-3.01
-0.18

During the past 13 years, the highest Beneish M-Score of Stantec Inc was -0.18. The lowest was -3.01. And the median was -2.51.


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 Stantec Inc 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 * 0.9864+0.528 * 1.0795+0.404 * 1.1035+0.892 * 1.3813+0.115 * 0.9547
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9651+4.679 * -0.0415-0.327 * 1.2656
=-2.35

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $555 Mil.
Revenue was 930.198665567 + 959.195148001 + 602.858693966 + 571.134885831 = $3,063 Mil.
Gross Profit was 335.244770972 + 360.904028074 + 323.333333333 + 256.418418267 = $1,276 Mil.
Total Current Assets was $1,186 Mil.
Total Assets was $3,212 Mil.
Property, Plant and Equipment(Net PPE) was $160 Mil.
Depreciation, Depletion and Amortization(DDA) was $97 Mil.
Selling, General & Admin. Expense(SGA) was $1,016 Mil.
Total Current Liabilities was $804 Mil.
Long-Term Debt was $696 Mil.
Net Income was 22.106604693 + 37.5869697894 + 16.4192647743 + 23.1521246031 = $99 Mil.
Non Operating Income was 31.8442162081 + -12.9760451633 + -1.18504730883 + -0.744745198851 = $17 Mil.
Cash Flow from Operations was 153.836119649 + 45.1502898993 + 24.0088413215 + -7.29925903523 = $216 Mil.
Accounts Receivable was $408 Mil.
Revenue was 518.09159192 + 565.964872607 + 574.406793368 + 559.298621018 = $2,218 Mil.
Gross Profit was 223.805877634 + 254.605005277 + 259.425798625 + 259.273260422 = $997 Mil.
Total Current Assets was $694 Mil.
Total Assets was $1,708 Mil.
Property, Plant and Equipment(Net PPE) was $115 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $762 Mil.
Total Current Liabilities was $461 Mil.
Long-Term Debt was $169 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)
=(555.262763326 / 3063.38739337) / (407.528622475 / 2217.76187891)
=0.18125777 / 0.18375671
=0.9864

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)
=(997.109941958 / 2217.76187891) / (1275.90055065 / 3063.38739337)
=0.44960189 / 0.4164999
=1.0795

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 - (1186.38578604 + 160.380088462) / 3212.13584227) / (1 - (693.788375994 + 115.281120105) / 1707.78020856)
=0.58072574 / 0.52624495
=1.1035

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
=3063.38739337 / 2217.76187891
=1.3813

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))
=(64.5075148495 / (64.5075148495 + 115.281120105)) / (96.5605831792 / (96.5605831792 + 160.380088462))
=0.3587964 / 0.37580887
=0.9547

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)
=(1016.2103666 / 3063.38739337) / (762.286824116 / 2217.76187891)
=0.33172767 / 0.34371897
=0.9651

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)
=((696.143638953 + 804.271684534) / 3212.13584227) / ((169.402027273 + 460.915919201) / 1707.78020856)
=0.4671083 / 0.36908611
=1.2656

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
=(99.2649638598 - 16.9383785372 - 215.695991835) / 3212.13584227
=-0.0415

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.

Stantec Inc has a M-score of -2.35 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 local exchange's currency.

Stantec Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.12460.69750.84091.1521.15220.83650.90930.9881.16880.8868
GMI 1.00191.05941.01171.01140.82151.21881.01370.99621.00161.1524
AQI 1.02860.97141.12330.98750.97641.00070.93111.04011.04411.1035
SGI 1.34611.15041.31621.04060.89741.41241.1051.04360.95641.5364
DEPI 1.2220.85520.82481.07970.48221.90021.02550.98160.8430.9303
SGAI 1.02850.93690.99060.98861.21410.82020.99211.00251.02730.9037
LVGI 1.39511.19140.95461.05660.93650.96380.88970.99791.01491.2656
TATA -0.0273-0.1173-0.0209-0.0227-0.0749-0.0397-0.0784-0.0225-0.0219-0.0351
M-score -2.28-3.22-2.39-2.42-2.96-2.19-2.82-2.55-2.48-2.23

Stantec Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.81221.05241.27291.21341.22681.14730.93071.27751.15370.9864
GMI 1.17290.92320.92320.9320.88831.0011.01360.96131.0311.0795
AQI 1.05071.04011.06041.0711.03831.04411.03671.08841.09371.1035
SGI 1.25430.97980.99140.97190.89780.97430.96150.97841.17251.3813
DEPI 1.03190.97410.89790.82450.79120.83410.93531.06531.02610.9547
SGAI 0.86371.08151.08261.08771.13981.0281.02411.09051.02030.9651
LVGI 0.97460.99791.00630.91770.95381.01491.04461.34621.36451.2656
TATA -0.0375-0.02560.0148-0.0095-0.0012-0.0164-0.0571-0.0277-0.0177-0.0415
M-score -2.45-2.61-2.21-2.37-2.44-2.45-2.85-2.48-2.33-2.35
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