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GuruFocus has detected 3 Warning Signs with Quanta Services Inc $PWR.
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Quanta Services Inc (NYSE:PWR)
Beneish M-Score
-2.45 (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.

Quanta Services Inc has a M-score of -2.45 suggests that the company is not a manipulator.

PWR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.88   Max: -0.61
Current: -2.45

-3.88
-0.61

During the past 13 years, the highest Beneish M-Score of Quanta Services Inc was -0.61. The lowest was -3.88. And the median was -2.54.


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 Quanta Services 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 * 0.9737+0.528 * 0.9026+0.404 * 0.962+0.892 * 1.0931+0.115 * 0.9894
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0257+4.679 * 0.009-0.327 * 0.981
=-2.45

* 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 $1,589 Mil.
Revenue was 2178.17 + 2102.966 + 2042.186 + 1792.43 = $8,116 Mil.
Gross Profit was 266.188 + 307.688 + 302.582 + 200.217 = $1,077 Mil.
Total Current Assets was $2,475 Mil.
Total Assets was $5,543 Mil.
Property, Plant and Equipment(Net PPE) was $1,162 Mil.
Depreciation, Depletion and Amortization(DDA) was $203 Mil.
Selling, General & Admin. Expense(SGA) was $679 Mil.
Total Current Liabilities was $1,265 Mil.
Long-Term Debt was $419 Mil.
Net Income was 48.267 + 87.583 + 73.742 + 16.562 = $226 Mil.
Non Operating Income was -0.364 + -0.393 + 0.752 + -1.103 = $-1 Mil.
Cash Flow from Operations was -3.811 + 184.244 + -69.335 + 66.528 = $178 Mil.
Accounts Receivable was $1,493 Mil.
Revenue was 1713.737 + 1899.272 + 1939.438 + 1872.34 = $7,425 Mil.
Gross Profit was 203.313 + 223.039 + 235.215 + 227.505 = $889 Mil.
Total Current Assets was $2,248 Mil.
Total Assets was $5,296 Mil.
Property, Plant and Equipment(Net PPE) was $1,154 Mil.
Depreciation, Depletion and Amortization(DDA) was $199 Mil.
Selling, General & Admin. Expense(SGA) was $606 Mil.
Total Current Liabilities was $1,236 Mil.
Long-Term Debt was $404 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)
=(1589.257 / 8115.752) / (1493.255 / 7424.787)
=0.19582375 / 0.20111755
=0.9737

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)
=(889.072 / 7424.787) / (1076.675 / 8115.752)
=0.11974377 / 0.13266485
=0.9026

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 - (2474.913 + 1161.603) / 5543.053) / (1 - (2248.374 + 1153.884) / 5295.519)
=0.34395071 / 0.35752133
=0.962

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
=8115.752 / 7424.787
=1.0931

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))
=(198.667 / (198.667 + 1153.884)) / (202.515 / (202.515 + 1161.603))
=0.14688319 / 0.14845856
=0.9894

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)
=(679.366 / 8115.752) / (605.924 / 7424.787)
=0.08370956 / 0.08160827
=1.0257

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)
=((419.31 + 1264.738) / 5543.053) / ((404.058 + 1235.911) / 5295.519)
=0.30381236 / 0.30968995
=0.981

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
=(226.154 - -1.108 - 177.626) / 5543.053
=0.009

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.

Quanta Services Inc has a M-score of -2.45 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.

Quanta Services Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.0510.77640.9861.0181.08390.98011.00061.03580.92090.9158
GMI 0.91830.96120.9391.10121.21270.84561.0291.02031.23680.9206
AQI 2.01840.94380.94431.04110.99950.86741.06611.08280.82761.0041
SGI 1.2591.42330.87781.09381.15551.41171.0831.20830.97741.0104
DEPI 1.33160.83411.18470.9611.03630.98211.22460.77910.90421.0366
SGAI 1.05260.90391.15040.90090.94970.91191.02991.20360.85981.0906
LVGI 0.58280.60650.93690.76261.4421.03121.05091.04651.70860.904
TATA -0.0244-0.024-0.0523-0.0186-0.01810.0386-0.01390.0081-0.0585-0.034
M-score -1.78-2.34-2.89-2.31-2.37-2.08-2.42-2.25-3.01-2.73

Quanta Services Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.03220.91530.89960.87850.92410.96390.91620.95180.91580.9737
GMI 1.011.06011.06561.13051.24941.22051.20071.05360.92060.9026
AQI 1.08280.92071.09940.94830.82760.96590.81530.99171.00410.962
SGI 1.21251.1951.13741.03320.9740.9430.92890.96711.01041.0931
DEPI 0.76250.97820.74060.70810.92390.74690.98060.99991.03660.9894
SGAI 1.2071.04781.09220.98850.85740.9420.94651.01041.09061.0257
LVGI 1.04651.19131.38271.61621.70861.53451.33661.00420.9040.981
TATA 0.0108-0.0297-0.0503-0.0428-0.0603-0.0688-0.0668-0.0584-0.03520.009
M-score -2.25-2.60-2.78-2.95-3.01-2.98-3.00-2.81-2.73-2.45
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