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GuruFocus has detected 2 Warning Signs with Lee Enterprises Inc $LEE.
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Lee Enterprises Inc (NYSE:LEE)
Beneish M-Score
-2.88 (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.

Lee Enterprises Inc has a M-score of -2.88 suggests that the company is not a manipulator.

LEE' s Beneish M-Score Range Over the Past 10 Years
Min: -5.98   Max: -1.17
Current: -2.88

-5.98
-1.17

During the past 13 years, the highest Beneish M-Score of Lee Enterprises Inc was -1.17. The lowest was -5.98. And the median was -2.84.


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 Lee Enterprises 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 * 0.9702+0.528 * 1.0032+0.404 * 0.9961+0.892 * 0.9309+0.115 * 0.9529
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0113+4.679 * -0.0673-0.327 * 0.966
=-2.88

* 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 $47.1 Mil.
Revenue was 133.387 + 153.989 + 148.178 + 150.946 = $586.5 Mil.
Gross Profit was 127.187 + 147.096 + 141.411 + 144.342 = $560.0 Mil.
Total Current Assets was $71.6 Mil.
Total Assets was $639.0 Mil.
Property, Plant and Equipment(Net PPE) was $121.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.3 Mil.
Selling, General & Admin. Expense(SGA) was $219.7 Mil.
Total Current Liabilities was $96.0 Mil.
Long-Term Debt was $531.0 Mil.
Net Income was 6.128 + 12.173 + 0.404 + 4.092 = $22.8 Mil.
Non Operating Income was 3.243 + 2.144 + -8.972 + -1.609 = $-5.2 Mil.
Cash Flow from Operations was 10.497 + 22.888 + 13.363 + 24.276 = $71.0 Mil.
Accounts Receivable was $52.1 Mil.
Revenue was 146.835 + 168.405 + 156.099 + 158.678 = $630.0 Mil.
Gross Profit was 140.782 + 161.72 + 149.764 + 151.257 = $603.5 Mil.
Total Current Assets was $78.8 Mil.
Total Assets was $717.9 Mil.
Property, Plant and Equipment(Net PPE) was $136.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.4 Mil.
Selling, General & Admin. Expense(SGA) was $233.4 Mil.
Total Current Liabilities was $104.1 Mil.
Long-Term Debt was $625.1 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)
=(47.089 / 586.5) / (52.139 / 630.017)
=0.08028815 / 0.08275808
=0.9702

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)
=(603.523 / 630.017) / (560.036 / 586.5)
=0.95794717 / 0.95487809
=1.0032

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 - (71.597 + 121.561) / 639.048) / (1 - (78.849 + 136.203) / 717.926)
=0.69774101 / 0.70045381
=0.9961

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
=586.5 / 630.017
=0.9309

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))
=(44.386 / (44.386 + 136.203)) / (42.255 / (42.255 + 121.561))
=0.24578463 / 0.25794184
=0.9529

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)
=(219.707 / 586.5) / (233.37 / 630.017)
=0.37460699 / 0.37041858
=1.0113

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)
=((530.997 + 96) / 639.048) / ((625.098 + 104.085) / 717.926)
=0.98114226 / 1.01567989
=0.966

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
=(22.797 - -5.194 - 71.024) / 639.048
=-0.0673

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.

Lee Enterprises Inc has a M-score of -2.88 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.

Lee Enterprises Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.03310.91160.97051.09440.92481.00130.9721.01140.96430.9186
GMI 0.87130.8460.90090.98551.00910.99590.99250.99090.98870.9956
AQI 1.00350.91670.96151.00470.94191.00370.94221.02631.01411.0059
SGI 0.99590.91540.81840.88890.96630.97880.95750.97510.97980.9488
DEPI 0.95450.94321.0210.99280.91440.98031.05371.05150.97910.9528
SGAI 1.26540.9030.99070.98780.98360.98360.9630.98121.00581.0131
LVGI 0.95581.51971.13250.97671.14451.0221.16020.98160.98040.9303
TATA -0.0815-0.4991-0.1198-0.0357-0.205-0.054-0.2122-0.0683-0.0692-0.0903
M-score -2.94-5.25-3.34-2.66-3.61-2.76-3.60-2.79-2.85-3.01

Lee Enterprises Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.95020.97390.94070.96430.95710.92020.97930.91860.90940.9702
GMI 0.99120.99080.98990.98870.98860.98930.9910.99560.99991.0032
AQI 1.01551.02241.00011.01411.01811.01051.00381.00590.98590.9961
SGI 0.98540.99720.99640.97980.96670.95150.94620.94880.93930.9309
DEPI 1.0240.99370.95180.97910.97090.95960.96990.95280.94870.9529
SGAI 0.98491.00261.00441.00581.00631.00311.0131.01311.02121.0113
LVGI 0.97360.97490.98180.98040.97970.93950.93520.93030.92850.966
TATA -0.081-0.0777-0.0798-0.0692-0.0682-0.0906-0.0857-0.0903-0.0994-0.0673
M-score -2.90-2.86-2.92-2.85-2.86-3.01-2.94-3.01-3.07-2.88
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