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GuruFocus has detected 2 Warning Signs with Constellation Brands Inc $STZ.
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Constellation Brands Inc (NYSE:STZ)
Beneish M-Score
-2.46 (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.

Constellation Brands Inc has a M-score of -2.46 suggests that the company is not a manipulator.

STZ' s Beneish M-Score Range Over the Past 10 Years
Min: -3.58   Max: -1.45
Current: -2.46

-3.58
-1.45

During the past 13 years, the highest Beneish M-Score of Constellation Brands Inc was -1.45. The lowest was -3.58. And the median was -2.49.


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 Constellation Brands 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 * 1.0514+0.528 * 0.9423+0.404 * 1.0104+0.892 * 1.1392+0.115 * 1.0855
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.027+4.679 * -0.0252-0.327 * 1.0453
=-2.46

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

This Year (Nov16) TTM:Last Year (Nov15) TTM:
Accounts Receivable was $856 Mil.
Revenue was 1810.5 + 2021.2 + 1871.8 + 1543.2 = $7,247 Mil.
Gross Profit was 891.4 + 969 + 881.3 + 696.1 = $3,438 Mil.
Total Current Assets was $3,445 Mil.
Total Assets was $18,320 Mil.
Property, Plant and Equipment(Net PPE) was $3,708 Mil.
Depreciation, Depletion and Amortization(DDA) was $242 Mil.
Selling, General & Admin. Expense(SGA) was $1,329 Mil.
Total Current Liabilities was $2,637 Mil.
Long-Term Debt was $7,363 Mil.
Net Income was 405.9 + 358.9 + 318.3 + 243.4 = $1,327 Mil.
Non Operating Income was 27.5 + 0 + 0.7 + 22.6 = $51 Mil.
Cash Flow from Operations was 370.8 + 699 + 345.9 + 322.1 = $1,738 Mil.
Accounts Receivable was $715 Mil.
Revenue was 1640.5 + 1733.4 + 1631.3 + 1356.2 = $6,361 Mil.
Gross Profit was 733.5 + 775.6 + 737.1 + 597.6 = $2,844 Mil.
Total Current Assets was $3,461 Mil.
Total Assets was $16,157 Mil.
Property, Plant and Equipment(Net PPE) was $2,949 Mil.
Depreciation, Depletion and Amortization(DDA) was $210 Mil.
Selling, General & Admin. Expense(SGA) was $1,136 Mil.
Total Current Liabilities was $1,921 Mil.
Long-Term Debt was $6,515 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)
=(856 / 7246.7) / (714.7 / 6361.4)
=0.11812273 / 0.11234948
=1.0514

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)
=(2843.8 / 6361.4) / (3437.8 / 7246.7)
=0.44703996 / 0.47439524
=0.9423

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 - (3444.8 + 3708) / 18320.1) / (1 - (3460.9 + 2949) / 16156.6)
=0.60956545 / 0.6032643
=1.0104

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
=7246.7 / 6361.4
=1.1392

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))
=(210.1 / (210.1 + 2949)) / (242 / (242 + 3708))
=0.06650628 / 0.06126582
=1.0855

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)
=(1329.1 / 7246.7) / (1136.1 / 6361.4)
=0.18340762 / 0.17859276
=1.027

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)
=((7362.5 + 2636.6) / 18320.1) / ((6515 + 1920.8) / 16156.6)
=0.54579942 / 0.52212718
=1.0453

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
=(1326.5 - 50.8 - 1737.8) / 18320.1
=-0.0252

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.

Constellation Brands Inc has a M-score of -2.46 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.

Constellation Brands Inc Annual Data

Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16
DSRI 1.00721.14810.74031.06560.81891.31611.02370.76220.77231.1259
GMI 0.98490.86011.00920.98920.95260.89261.00950.96870.95650.952
AQI 1.1170.96991.02650.98871.10840.99630.95961.29390.94360.9977
SGI 1.13310.72330.96860.92070.99030.79661.05341.74091.23841.0863
DEPI 1.11860.9780.81841.0180.91521.29490.88941.19921.02181.1267
SGAI 1.10791.44011.07260.8910.94831.05281.03390.87830.97291.0049
LVGI 1.09091.12661.04080.87140.92280.96071.01691.13390.9270.984
TATA -0.0091-0.1384-0.1238-0.0638-0.0424-0.0798-0.05090.072-0.0171-0.0241
M-score -2.39-3.44-3.36-2.74-2.81-2.76-2.68-1.60-2.57-2.41

Constellation Brands Inc Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
DSRI 0.61410.75130.77230.9971.03140.95531.12591.00351.01661.0514
GMI 0.91670.94040.95650.9750.97130.94910.9520.94880.94720.9423
AQI 0.95720.95050.94360.97120.95970.94820.99770.990.98851.0104
SGI 1.63091.39571.23841.07221.06791.06681.08631.10691.131.1392
DEPI 0.86760.931.02181.07261.06691.13011.12671.15911.18511.0855
SGAI 0.88760.93230.97291.04871.00561.01041.00490.973211.027
LVGI 0.90570.92140.9270.92340.96380.9390.9840.99530.96531.0453
TATA -0.0169-0.0121-0.0171-0.0132-0.0166-0.0263-0.0241-0.0266-0.0291-0.0252
M-score -2.38-2.43-2.57-2.48-2.48-2.60-2.41-2.51-2.48-2.46
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