Market Cap : 4.7 B | Enterprise Value : 5.87 B | PE Ratio : 66.30 | PB Ratio : 2.37 |
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The zones of discrimination for M-Score is as such:
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Good Sign:
Beneish M-Score -2.86 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
During the past 13 years, the highest Beneish M-Score of Ormat Technologies was -1.28. The lowest was -3.38. And the median was -2.55.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
* The bar in red indicates where Ormat Technologies's Beneish M-Score falls into.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Ormat Technologies 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 * 1.0211 | + | 0.528 * 0.9217 | + | 0.404 * 0.9243 | + | 0.892 * 0.9454 | + | 0.115 * 1.038 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 1.1136 | + | 4.679 * -0.0587 | - | 0.327 * 0.9743 | |||||||
= | -2.86 |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
This Year (Dec20) TTM: | Last Year (Dec19) TTM: |
Accounts Receivable was $149.2 Mil. Revenue was 179.382 + 158.947 + 174.9 + 192.113 = $705.3 Mil. Gross Profit was 75.041 + 54.03 + 65.386 + 81.818 = $276.3 Mil. Total Current Assets was $779.2 Mil. Total Assets was $3,889.0 Mil. Property, Plant and Equipment(Net PPE) was $2,606.3 Mil. Depreciation, Depletion and Amortization(DDA) was $156.6 Mil. Selling, General, & Admin. Expense(SGA) was $74.6 Mil. Total Current Liabilities was $248.6 Mil. Long-Term Debt & Capital Lease Obligation was $1,399.2 Mil. Net Income was 20.698 + 15.679 + 23.046 + 26.033 = $85.5 Mil. Non Operating Income was 10.668 + 26.783 + 6.647 + 4.603 = $48.7 Mil. Cash Flow from Operations was 26.115 + 84.536 + 74.598 + 79.756 = $265.0 Mil. |
Accounts Receivable was $154.5 Mil. Revenue was 192.442 + 170.499 + 184.065 + 199.038 = $746.0 Mil. Gross Profit was 74.502 + 55.495 + 65.147 + 74.179 = $269.3 Mil. Total Current Assets was $415.7 Mil. Total Assets was $3,250.5 Mil. Property, Plant and Equipment(Net PPE) was $2,379.5 Mil. Depreciation, Depletion and Amortization(DDA) was $148.8 Mil. Selling, General, & Admin. Expense(SGA) was $70.9 Mil. Total Current Liabilities was $376.5 Mil. Long-Term Debt & Capital Lease Obligation was $1,037.1 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
= | (149.17 / 705.342) | / | (154.525 / 746.044) | |
= | 0.21148606 | / | 0.20712585 | |
= | 1.0211 |
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) | |
= | (269.323 / 746.044) | / | (276.275 / 705.342) | |
= | 0.3610015 | / | 0.39168942 | |
= | 0.9217 |
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 Property, Plant and Equipment to Total Assets.
AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
= | (1 - (779.154 + 2606.342) / 3888.987) | / | (1 - (415.664 + 2379.536) / 3250.494) | |
= | 0.12946585 | / | 0.14006917 | |
= | 0.9243 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 | |
= | 705.342 | / | 746.044 | |
= | 0.9454 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
= | (148.761 / (148.761 + 2379.536)) | / | (156.612 / (156.612 + 2606.342)) | |
= | 0.05883842 | / | 0.05668281 | |
= | 1.038 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
= | (74.628 / 705.342) | / | (70.88 / 746.044) | |
= | 0.10580399 | / | 0.0950078 | |
= | 1.1136 |
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 in leverage
LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
= | ((1399.214 + 248.647) / 3888.987) | / | ((1037.148 + 376.476) / 3250.494) | |
= | 0.423725 | / | 0.43489513 | |
= | 0.9743 |
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 | |
= | (85.456 - 48.701 | - | 265.005) | / | 3888.987 | |
= | -0.0587 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Ormat Technologies has a M-score of -2.86 suggests that the company is unlikely to be a manipulator.
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