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GuruFocus has detected 2 Warning Signs with Allegiant Travel Co $ALGT.
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Allegiant Travel Co (NAS:ALGT)
Beneish M-Score
-2.20 (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.

Allegiant Travel Co has a M-score of -2.20 signals that the company is a manipulator.

ALGT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.63   Max: -1.59
Current: -2.2

-3.63
-1.59

During the past 13 years, the highest Beneish M-Score of Allegiant Travel Co was -1.59. The lowest was -3.63. And the median was -2.87.


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 Allegiant Travel Co 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 * 1.1135+0.528 * 1.0222+0.404 * 2.2036+0.892 * 1.0847+0.115 * 1.0613
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2072+4.679 * -0.0833-0.327 * 0.9363
=-2.20

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $17 Mil.
Revenue was 375.837 + 335.883 + 333.481 + 344.851 = $1,390 Mil.
Gross Profit was 229.248 + 204.727 + 205.661 + 222.257 = $862 Mil.
Total Current Assets was $426 Mil.
Total Assets was $1,750 Mil.
Property, Plant and Equipment(Net PPE) was $1,121 Mil.
Depreciation, Depletion and Amortization(DDA) was $111 Mil.
Selling, General & Admin. Expense(SGA) was $409 Mil.
Total Current Liabilities was $444 Mil.
Long-Term Debt was $715 Mil.
Net Income was 41.632 + 41.31 + 45.453 + 60.847 = $189 Mil.
Non Operating Income was 0.36 + 1.084 + 0.061 + 0.072 = $2 Mil.
Cash Flow from Operations was 146.951 + 38.768 + 51.994 + 95.66 = $333 Mil.
Accounts Receivable was $14 Mil.
Revenue was 348.615 + 310.89 + 299.956 + 322.102 = $1,282 Mil.
Gross Profit was 237.73 + 199.868 + 179.861 + 194.826 = $812 Mil.
Total Current Assets was $401 Mil.
Total Assets was $1,405 Mil.
Property, Plant and Equipment(Net PPE) was $931 Mil.
Depreciation, Depletion and Amortization(DDA) was $98 Mil.
Selling, General & Admin. Expense(SGA) was $312 Mil.
Total Current Liabilities was $423 Mil.
Long-Term Debt was $571 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)
=(17.327 / 1390.052) / (14.346 / 1281.563)
=0.012465 / 0.01119414
=1.1135

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)
=(812.285 / 1281.563) / (861.893 / 1390.052)
=0.6338237 / 0.62004371
=1.0222

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 - (426.147 + 1121.23) / 1749.744) / (1 - (400.515 + 930.55) / 1404.795)
=0.1156552 / 0.05248453
=2.2036

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
=1390.052 / 1281.563
=1.0847

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))
=(98.435 / (98.435 + 930.55)) / (111.08 / (111.08 + 1121.23))
=0.09566223 / 0.09013966
=1.0613

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)
=(409.142 / 1390.052) / (312.454 / 1281.563)
=0.29433575 / 0.24380698
=1.2072

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)
=((715.383 + 444.34) / 1749.744) / ((571.28 + 423.135) / 1404.795)
=0.66279581 / 0.70787197
=0.9363

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
=(189.242 - 1.577 - 333.373) / 1749.744
=-0.0833

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.

Allegiant Travel Co has a M-score of -2.20 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 local exchange's currency.

Allegiant Travel Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.06620.43911.21140.8831.39571.24180.82520.73881.38241.7265
GMI 1.51591.4370.73911.1541.16180.92460.90230.92360.79990.9778
AQI 1.20620.38871.16612.77431.09761.24621.31690.96951.02251.778
SGI 1.48171.39781.1071.18941.1741.16631.09621.14141.11011.0797
DEPI 0.87360.83390.80961.09410.9640.85281.0581.31091.01761.1375
SGAI 9.35331.1041.11310.85771.08920.75821.40881.01381.05241.0993
LVGI 0.90110.89570.90150.98121.25640.9811.23821.34020.97470.9411
TATA -0.1121-0.0856-0.1106-0.0644-0.1139-0.1231-0.1129-0.1483-0.1068-0.0771
M-score -3.58-3.06-2.79-1.88-2.47-2.59-3.15-3.42-2.62-1.78

Allegiant Travel Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.73880.63640.60730.84841.38240.96731.31151.64891.72651.1135
GMI 0.92360.83970.81620.79080.79990.86810.89750.93470.97781.0222
AQI 0.96950.94272.94170.58511.02251.45931.63520.94591.7782.2036
SGI 1.14141.13461.12721.12191.11011.10121.09121.08751.07971.0847
DEPI 1.31091.33460.94930.94051.01761.07971.08321.20751.13751.0613
SGAI 1.01381.13761.12641.05721.05240.94730.97381.04031.09931.2072
LVGI 1.34021.29271.07171.02250.97470.96740.95390.95350.94110.9363
TATA -0.1483-0.1602-0.1634-0.1333-0.1068-0.0967-0.1086-0.1116-0.0771-0.0833
M-score -3.42-3.63-2.86-3.44-2.62-2.73-2.39-2.35-1.78-2.20
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