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GuruFocus has detected 3 Warning Signs with Hess Corp $HES.
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Hess Corp (NYSE:HES)
Beneish M-Score
-3.64 (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.

Hess Corp has a M-score of -3.64 suggests that the company is not a manipulator.

HES' s Beneish M-Score Range Over the Past 10 Years
Min: -3.64   Max: 11.7
Current: -3.64

-3.64
11.7

During the past 13 years, the highest Beneish M-Score of Hess Corp was 11.70. The lowest was -3.64. And the median was -2.79.


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 Hess 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 * 1.4832+0.528 * 1.0933+0.404 * 0.249+0.892 * 0.8538+0.115 * 1.0857
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9522+4.679 * -0.2468-0.327 * 1.2535
=-3.64

* 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 $775 Mil.
Revenue was 1275 + 1386 + 1196 + 1269 = $5,126 Mil.
Gross Profit was 666 + 416 + 526 + 509 = $2,117 Mil.
Total Current Assets was $4,171 Mil.
Total Assets was $28,100 Mil.
Property, Plant and Equipment(Net PPE) was $23,201 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,113 Mil.
Selling, General & Admin. Expense(SGA) was $413 Mil.
Total Current Liabilities was $2,126 Mil.
Long-Term Debt was $6,669 Mil.
Net Income was -324 + -4892 + -339 + -392 = $-5,947 Mil.
Non Operating Income was 0 + -135 + -80 + 0 = $-215 Mil.
Cash Flow from Operations was 349 + 326 + 332 + 197 = $1,204 Mil.
Accounts Receivable was $612 Mil.
Revenue was 993 + 1387 + 1689 + 1935 = $6,004 Mil.
Gross Profit was 349 + 535 + 796 + 1031 = $2,711 Mil.
Total Current Assets was $4,945 Mil.
Total Assets was $34,808 Mil.
Property, Plant and Equipment(Net PPE) was $26,241 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,867 Mil.
Selling, General & Admin. Expense(SGA) was $508 Mil.
Total Current Liabilities was $2,193 Mil.
Long-Term Debt was $6,498 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)
=(775 / 5126) / (612 / 6004)
=0.15119001 / 0.10193205
=1.4832

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)
=(2711 / 6004) / (2117 / 5126)
=0.45153231 / 0.41299259
=1.0933

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 - (4171 + 23201) / 28100) / (1 - (4945 + 26241) / 34808)
=0.02590747 / 0.10405654
=0.249

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
=5126 / 6004
=0.8538

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))
=(3867 / (3867 + 26241)) / (3113 / (3113 + 23201))
=0.12843762 / 0.11830204
=1.0857

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)
=(413 / 5126) / (508 / 6004)
=0.08056964 / 0.08461026
=0.9522

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)
=((6669 + 2126) / 28100) / ((6498 + 2193) / 34808)
=0.31298932 / 0.24968398
=1.2535

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
=(-5947 - -215 - 1204) / 28100
=-0.2468

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.

Hess Corp has a M-score of -3.64 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.

Hess Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.14110.66331.2491.07291.67831.49280.78420.69750.71241.5032
GMI 1.11580.93551.01920.91790.63050.59961.04880.98071.37471.2682
AQI 0.91590.9970.9440.94191.00260.92490.87570.94630.83550.2632
SGI 1.12761.29980.71991.14340.63350.57080.97220.96090.57360.7383
DEPI 0.93030.88860.93631.18241.1280.96821.05940.81440.80371.0797
SGAI 1.08050.75951.35460.88931.33850.70711.20180.90931.65161.0092
LVGI 0.97830.88340.93890.98010.97011.00320.77491.00090.95361.1687
TATA -0.0747-0.0779-0.0749-0.0741-0.0595-0.0996-0.044-0.0557-0.1002-0.2345
M-score -2.57-2.86-2.91-2.65-2.69-3.07-2.89-3.09-3.58-3.55

Hess Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.85210.46970.63880.5090.71370.74760.9961.10661.50041.4832
GMI 0.83531.05571.10891.18791.35541.37061.45721.42231.26561.0933
AQI 0.94631.00650.98781.00580.83550.8220.91881.07210.26320.249
SGI 0.78660.92750.86570.77770.57250.58270.56730.57530.73970.8538
DEPI 0.81440.75830.8080.7960.80370.87710.96461.04941.07971.0857
SGAI 0.85431.00851.19491.38091.65461.47021.35811.34621.00730.9522
LVGI 1.00090.94270.96660.93440.95360.96120.9511.081.16871.2535
TATA -0.0557-0.0633-0.067-0.0705-0.1005-0.0875-0.0821-0.0825-0.2345-0.2468
M-score -3.17-3.31-3.24-3.43-3.59-3.45-3.09-2.97-3.55-3.64
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