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GuruFocus has detected 7 Warning Signs with The Spectranetics Corp $SPNC.
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The Spectranetics Corp (NAS:SPNC)
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.

The Spectranetics Corp has a M-score of -2.88 suggests that the company is not a manipulator.

SPNC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.93   Max: 4.71
Current: -2.88

-3.93
4.71

During the past 13 years, the highest Beneish M-Score of The Spectranetics Corp was 4.71. The lowest was -3.93. And the median was -2.28.


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 The Spectranetics 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 * 0.8988+0.528 * 0.9973+0.404 * 1.0221+0.892 * 1.1042+0.115 * 1.0094
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0407+4.679 * -0.0789-0.327 * 1.1132
=-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 $43.9 Mil.
Revenue was 69.68 + 71.926 + 68.265 + 67.748 = $277.6 Mil.
Gross Profit was 51.629 + 53.549 + 51.381 + 50.765 = $207.3 Mil.
Total Current Assets was $123.3 Mil.
Total Assets was $415.7 Mil.
Property, Plant and Equipment(Net PPE) was $45.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.4 Mil.
Selling, General & Admin. Expense(SGA) was $169.2 Mil.
Total Current Liabilities was $66.1 Mil.
Long-Term Debt was $285.0 Mil.
Net Income was -18.524 + -12.611 + -13.312 + -14.906 = $-59.4 Mil.
Non Operating Income was 0.117 + -0.424 + 0.004 + -0.158 = $-0.5 Mil.
Cash Flow from Operations was -14.086 + -4.238 + -5.878 + -1.873 = $-26.1 Mil.
Accounts Receivable was $44.2 Mil.
Revenue was 62.884 + 65.197 + 61.66 + 61.677 = $251.4 Mil.
Gross Profit was 46.802 + 48.839 + 45.851 + 45.763 = $187.3 Mil.
Total Current Assets was $144.0 Mil.
Total Assets was $450.5 Mil.
Property, Plant and Equipment(Net PPE) was $44.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.3 Mil.
Selling, General & Admin. Expense(SGA) was $147.2 Mil.
Total Current Liabilities was $57.9 Mil.
Long-Term Debt was $283.9 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)
=(43.869 / 277.619) / (44.204 / 251.418)
=0.15801872 / 0.17581876
=0.8988

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)
=(187.255 / 251.418) / (207.324 / 277.619)
=0.74479552 / 0.74679327
=0.9973

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 - (123.333 + 45.461) / 415.735) / (1 - (143.964 + 44.761) / 450.547)
=0.59398655 / 0.58112028
=1.0221

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
=277.619 / 251.418
=1.1042

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))
=(27.347 / (27.347 + 44.761)) / (27.36 / (27.36 + 45.461))
=0.37925057 / 0.3757158
=1.0094

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)
=(169.156 / 277.619) / (147.202 / 251.418)
=0.60930988 / 0.58548712
=1.0407

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)
=((285.037 + 66.067) / 415.735) / ((283.939 + 57.88) / 450.547)
=0.84453799 / 0.75867557
=1.1132

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
=(-59.353 - -0.461 - -26.075) / 415.735
=-0.0789

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.

The Spectranetics Corp 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.

The Spectranetics Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.98880.85850.95070.93431.07180.99861.18541.18980.87910.9125
GMI 0.99711.02461.008510.98890.98590.98661.00060.99440.9941
AQI 0.73123.22480.84990.30141.80911.10160.77035.72181.02111.0254
SGI 1.30531.2551.10411.02681.07951.10211.13211.29031.20031.1011
DEPI 0.97540.85160.77840.92580.96330.99930.9820.82160.89060.9824
SGAI 0.96281.01251.08770.85010.97971.05860.98531.08230.93211.0408
LVGI 1.02560.98991.02791.31821.29180.71090.58675.40031.28511.1018
TATA 0.0696-0.0262-0.0626-0.2237-0.0535-0.0265-0.0212-0.04420.0008-0.0774
M-score -2.01-1.61-2.83-3.93-2.37-2.40-2.26-1.82-2.50-2.87

The Spectranetics Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.18981.01350.71880.83550.87911.00841.01250.95940.91250.8988
GMI 1.00061.00521.01871.00850.99440.99190.98570.98630.99410.9973
AQI 5.72186.48091.10231.12411.02110.90810.93040.93411.02541.0221
SGI 1.29031.38551.4611.32551.20031.12881.06911.08361.10111.1042
DEPI 0.82160.77490.70310.8180.89060.91550.96020.95140.98241.0094
SGAI 1.08231.02510.96860.93580.93210.94950.98611.0251.04081.0407
LVGI 5.40036.49081.18761.2291.28511.25071.19791.15871.10181.1132
TATA -0.0442-0.0622-0.0456-0.03280.0008-0-0.036-0.044-0.0774-0.0789
M-score -1.82-2.02-2.58-2.52-2.50-2.48-2.68-2.74-2.87-2.88
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