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GuruFocus has detected 3 Warning Signs with NewMarket Corp $NEU.
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NewMarket Corp (NYSE:NEU)
Beneish M-Score
-2.78 (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.

NewMarket Corp has a M-score of -2.78 suggests that the company is not a manipulator.

NEU' s Beneish M-Score Range Over the Past 10 Years
Min: -5.09   Max: -1.93
Current: -2.78

-5.09
-1.93

During the past 13 years, the highest Beneish M-Score of NewMarket Corp was -1.93. The lowest was -5.09. And the median was -2.66.


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 NewMarket 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 * 1.0599+0.528 * 0.9926+0.404 * 0.5794+0.892 * 0.9958+0.115 * 1.1345
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9851+4.679 * -0.0434-0.327 * 0.9678
=-2.78

* 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 $332 Mil.
Revenue was 542.818 + 501.627 + 516.09 + 521.807 = $2,082 Mil.
Gross Profit was 170.245 + 149.41 + 177.401 + 178.4 = $675 Mil.
Total Current Assets was $942 Mil.
Total Assets was $1,558 Mil.
Property, Plant and Equipment(Net PPE) was $539 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $160 Mil.
Total Current Liabilities was $293 Mil.
Long-Term Debt was $601 Mil.
Net Income was 63.937 + 45.672 + 71.449 + 64.389 = $245 Mil.
Non Operating Income was 0.194 + 0.131 + 0.698 + -1.266 = $-0 Mil.
Cash Flow from Operations was 34.208 + 93.944 + 71.509 + 113.714 = $313 Mil.
Accounts Receivable was $314 Mil.
Revenue was 509.927 + 479.622 + 540.933 + 560.709 = $2,091 Mil.
Gross Profit was 175.55 + 153.305 + 174.771 + 169.708 = $673 Mil.
Total Current Assets was $774 Mil.
Total Assets was $1,317 Mil.
Property, Plant and Equipment(Net PPE) was $432 Mil.
Depreciation, Depletion and Amortization(DDA) was $43 Mil.
Selling, General & Admin. Expense(SGA) was $163 Mil.
Total Current Liabilities was $240 Mil.
Long-Term Debt was $541 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)
=(331.577 / 2082.342) / (314.171 / 2091.191)
=0.15923273 / 0.15023544
=1.0599

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)
=(673.334 / 2091.191) / (675.456 / 2082.342)
=0.32198589 / 0.32437323
=0.9926

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 - (941.94 + 539.227) / 1557.785) / (1 - (773.791 + 431.813) / 1317.44)
=0.04918394 / 0.08488888
=0.5794

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
=2082.342 / 2091.191
=0.9958

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))
=(42.759 / (42.759 + 431.813)) / (46.519 / (46.519 + 539.227))
=0.09010013 / 0.07941838
=1.1345

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)
=(160.101 / 2082.342) / (163.213 / 2091.191)
=0.07688506 / 0.07804787
=0.9851

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)
=((601.413 + 292.603) / 1557.785) / ((541.124 + 240.105) / 1317.44)
=0.57390205 / 0.59299019
=0.9678

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
=(245.447 - -0.243 - 313.375) / 1557.785
=-0.0434

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.

NewMarket Corp has a M-score of -2.78 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.

NewMarket Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.02380.88651.07690.96150.91320.99341.06360.93711.00181.0995
GMI 0.96911.10940.64221.05571.11090.90570.9951.00550.89830.9549
AQI 0.73891.27120.76651.01591.12521.01030.81020.94330.87120.5965
SGI 1.08831.17640.9461.17471.18961.03451.0311.02410.91670.9573
DEPI 1.1911.32061.09690.90130.95891.01290.77511.1721.25091.1615
SGAI 0.9350.89031.04361.01480.93040.98331.03710.96841.09461.0257
LVGI 1.03341.05670.88070.98720.94381.34690.88711.12451.15970.965
TATA -0.04170.0635-0.04970.02180.0339-0.0164-0.01540.0043-0.0205-0.0758
M-score -2.67-1.93-2.93-2.23-2.10-2.69-2.54-2.53-2.79-2.94

NewMarket Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.93710.88280.92851.00651.00181.14831.07061.06151.09951.0599
GMI 1.00550.95340.94550.91050.89830.91730.89750.91550.95490.9926
AQI 0.94330.90740.83020.780.87120.83570.8790.63780.59650.5794
SGI 1.02411.00940.96790.94330.91670.90190.90860.91740.95730.9958
DEPI 1.1721.17221.16411.20981.25091.27831.21271.20151.16151.1345
SGAI 0.96841.00461.03971.04391.09461.09151.08351.09711.02570.9851
LVGI 1.12451.09711.01051.20441.15971.18251.20480.95950.9650.9678
TATA 0.0043-0.032-0.03-0.0138-0.0205-0.035-0.0623-0.061-0.0758-0.0434
M-score -2.53-2.80-2.80-2.78-2.79-2.75-2.95-2.95-2.94-2.78
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