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GuruFocus has detected 7 Warning Signs with Lamar Advertising Co $LAMR.
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Lamar Advertising Co (NAS:LAMR)
Beneish M-Score
-2.70 (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.

Lamar Advertising Co has a M-score of -2.70 suggests that the company is not a manipulator.

LAMR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.4   Max: -1.16
Current: -2.7

-3.4
-1.16

During the past 13 years, the highest Beneish M-Score of Lamar Advertising Co was -1.16. The lowest was -3.40. And the median was -2.81.


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 Lamar Advertising 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 * 0.9642+0.528 * 0.9976+0.404 * 0.9919+0.892 * 1.0854+0.115 * 0.9587
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0056+4.679 * -0.0549-0.327 * 0.9902
=-2.70

* 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 $190 Mil.
Revenue was 346.362 + 386.717 + 387.516 + 387.528 = $1,508 Mil.
Gross Profit was 214.518 + 254.348 + 255.738 + 254.803 = $979 Mil.
Total Current Assets was $350 Mil.
Total Assets was $3,925 Mil.
Property, Plant and Equipment(Net PPE) was $1,175 Mil.
Depreciation, Depletion and Amortization(DDA) was $205 Mil.
Selling, General & Admin. Expense(SGA) was $352 Mil.
Total Current Liabilities was $246 Mil.
Long-Term Debt was $2,385 Mil.
Net Income was 41.787 + 80.525 + 85.061 + 81.909 = $289 Mil.
Non Operating Income was 0 + 0 + 0 + -0.056 = $-0 Mil.
Cash Flow from Operations was 34.496 + 183.997 + 126.801 + 159.488 = $505 Mil.
Accounts Receivable was $181 Mil.
Revenue was 338.533 + 355.969 + 350.701 + 344.249 = $1,389 Mil.
Gross Profit was 209.808 + 233.068 + 229.025 + 228.298 = $900 Mil.
Total Current Assets was $327 Mil.
Total Assets was $3,895 Mil.
Property, Plant and Equipment(Net PPE) was $1,167 Mil.
Depreciation, Depletion and Amortization(DDA) was $194 Mil.
Selling, General & Admin. Expense(SGA) was $322 Mil.
Total Current Liabilities was $217 Mil.
Long-Term Debt was $2,420 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)
=(189.515 / 1508.123) / (181.08 / 1389.452)
=0.12566283 / 0.13032476
=0.9642

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)
=(900.199 / 1389.452) / (979.407 / 1508.123)
=0.6478806 / 0.64942117
=0.9976

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 - (350.344 + 1175.037) / 3924.595) / (1 - (327.257 + 1167.048) / 3894.512)
=0.61132779 / 0.61630494
=0.9919

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
=1508.123 / 1389.452
=1.0854

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))
=(193.692 / (193.692 + 1167.048)) / (204.894 / (204.894 + 1175.037))
=0.14234314 / 0.14848134
=0.9587

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)
=(351.637 / 1508.123) / (322.16 / 1389.452)
=0.23316202 / 0.23186119
=1.0056

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)
=((2385.411 + 246.12) / 3924.595) / ((2420.294 + 217.009) / 3894.512)
=0.67052295 / 0.67718446
=0.9902

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
=(289.282 - -0.056 - 504.782) / 3924.595
=-0.0549

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.

Lamar Advertising Co has a M-score of -2.70 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.

Lamar Advertising Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.06941.06231.04310.95771.00891.0390.95831.01510.97780.9825
GMI 0.98331.04341.01830.98140.99520.98920.99361.00240.99671.0004
AQI 0.94650.99541.00141.03761.0111.00261.01541.00670.99911.0425
SGI 1.07990.99080.88121.03431.03521.04341.0561.03311.05151.1085
DEPI 1.06370.97750.89140.96970.99251.00060.94911.09731.29421.0074
SGAI 1.00580.96161.01061.03890.97561.01791.03431.00520.99560.9936
LVGI 1.311.02151.0010.98090.95870.99410.93681.0160.98771.0588
TATA -0.0793-0.0841-0.0904-0.0947-0.0908-0.0929-0.1-0.0509-0.0639-0.0564
M-score -2.84-2.81-2.97-2.93-2.85-2.85-2.92-2.67-2.72-2.66

Lamar Advertising Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.01510.99850.94760.990.97781.00891.04131.00360.98250.9642
GMI 1.00240.99460.98780.99480.99671.00521.01051.0031.00040.9976
AQI 1.00671.01391.01161.01010.99911.0531.03681.03291.04250.9919
SGI 1.03311.04021.0491.04991.05151.0651.08671.10151.10851.0854
DEPI 1.09731.17111.27881.33051.29421.26761.16021.06951.00740.9587
SGAI 1.00521.02061.03271.02650.99561.00320.9780.99170.99361.0056
LVGI 1.0161.01891.0051.00060.98771.05991.05491.04761.05880.9902
TATA -0.0509-0.0372-0.0369-0.0202-0.0639-0.0509-0.0515-0.0523-0.0564-0.0549
M-score -2.67-2.61-2.63-2.50-2.72-2.62-2.58-2.62-2.66-2.70
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