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GuruFocus has detected 3 Warning Signs with MasTec Inc $MTZ.
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MasTec Inc (NYSE:MTZ)
Beneish M-Score
-2.68 (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.

MasTec Inc has a M-score of -2.68 suggests that the company is not a manipulator.

MTZ' s Beneish M-Score Range Over the Past 10 Years
Min: -4.76   Max: 0.06
Current: -2.68

-4.76
0.06

During the past 13 years, the highest Beneish M-Score of MasTec Inc was 0.06. The lowest was -4.76. And the median was -2.51.


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 MasTec 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 * 0.879+0.528 * 0.7412+0.404 * 0.988+0.892 * 1.2726+0.115 * 1.0185
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8302+4.679 * -0.0527-0.327 * 0.9346
=-2.68

* 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 $1,086 Mil.
Revenue was 1158.184 + 1341.892 + 1586.181 + 1232.404 = $5,319 Mil.
Gross Profit was 187.05 + 221.338 + 217.193 + 164.222 = $790 Mil.
Total Current Assets was $1,267 Mil.
Total Assets was $3,116 Mil.
Property, Plant and Equipment(Net PPE) was $570 Mil.
Depreciation, Depletion and Amortization(DDA) was $169 Mil.
Selling, General & Admin. Expense(SGA) was $266 Mil.
Total Current Liabilities was $813 Mil.
Long-Term Debt was $893 Mil.
Net Income was 40.97 + 53.591 + 56.277 + 24.088 = $175 Mil.
Non Operating Income was 1.217 + -6.029 + 0.965 + -1.035 = $-5 Mil.
Cash Flow from Operations was 154.173 + 78.452 + 98.653 + 12.637 = $344 Mil.
Accounts Receivable was $971 Mil.
Revenue was 974.225 + 1027.424 + 1111.01 + 1066.629 = $4,179 Mil.
Gross Profit was 89.824 + 111.193 + 138.299 + 120.682 = $460 Mil.
Total Current Assets was $1,199 Mil.
Total Assets was $2,987 Mil.
Property, Plant and Equipment(Net PPE) was $548 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $252 Mil.
Total Current Liabilities was $812 Mil.
Long-Term Debt was $939 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)
=(1086.108 / 5318.661) / (970.9 / 4179.288)
=0.20420704 / 0.2323123
=0.879

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)
=(459.998 / 4179.288) / (789.803 / 5318.661)
=0.11006612 / 0.14849659
=0.7412

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 - (1267.099 + 570.479) / 3115.834) / (1 - (1198.536 + 548) / 2986.628)
=0.41024522 / 0.41521475
=0.988

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
=5318.661 / 4179.288
=1.2726

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))
=(166.072 / (166.072 + 548)) / (168.811 / (168.811 + 570.479))
=0.23257039 / 0.22834206
=1.0185

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)
=(266.166 / 5318.661) / (251.929 / 4179.288)
=0.0500438 / 0.06028036
=0.8302

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)
=((893.362 + 813.26) / 3115.834) / ((938.722 + 811.662) / 2986.628)
=0.54772558 / 0.58607366
=0.9346

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
=(174.926 - -4.882 - 343.915) / 3115.834
=-0.0527

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.

MasTec Inc has a M-score of -2.68 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.

MasTec Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.88671.53940.83781.04221.10151.03061.11431.07770.7661.0399
GMI 0.99570.97640.94961.04151.10421.01270.88081.08081.18760.858
AQI 0.971.23011.04450.96291.05230.87980.91521.02561.07410.9111
SGI 1.10351.32851.17761.321.34541.29261.16051.06640.91251.2201
DEPI 1.11371.18460.76560.82131.09161.06620.93121.12780.85281.0085
SGAI 1.42260.58640.91760.87680.91110.88621.17831.03751.22280.8058
LVGI 1.10011.09970.93660.99670.94531.03761.04461.05151.00810.9798
TATA -0.11190.0061-0.0586-0.05430.023-0.0236-0.0205-0.0591-0.1277-0.0266
M-score -3.12-1.52-2.75-2.40-1.85-2.33-2.48-2.58-3.30-2.44

MasTec Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.07770.89030.85250.7570.7660.95381.02791.08791.03990.879
GMI 1.08081.08211.09861.13131.18761.22621.11251.02430.8580.7412
AQI 1.02561.08681.09041.18481.07411.00470.96250.87950.91110.988
SGI 1.06641.06431.02580.97290.91250.89860.94191.09191.22011.2726
DEPI 1.12781.03190.88040.8710.85280.91150.95760.98681.00851.0185
SGAI 1.03751.1071.20231.28041.22281.08250.97070.83650.80580.8302
LVGI 1.05151.06041.02851.00861.00811.00231.00711.01360.97980.9346
TATA -0.0591-0.1111-0.1138-0.1481-0.1277-0.0955-0.0703-0.0568-0.0266-0.0527
M-score -2.58-3.00-3.09-3.34-3.30-2.96-2.79-2.60-2.44-2.68
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