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GuruFocus has detected 3 Warning Signs with Seagate Technology PLC $STX.
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Seagate Technology PLC (NAS:STX)
Beneish M-Score
-3.31 (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.

Seagate Technology PLC has a M-score of -3.31 suggests that the company is not a manipulator.

STX' s Beneish M-Score Range Over the Past 10 Years
Min: -5.75   Max: 0.3
Current: -3.31

-5.75
0.3

During the past 13 years, the highest Beneish M-Score of Seagate Technology PLC was 0.30. The lowest was -5.75. And the median was -2.76.


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 Seagate Technology PLC 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 * 0.9596+0.528 * 0.8299+0.404 * 0.7804+0.892 * 0.9637+0.115 * 0.9597
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9018+4.679 * -0.1238-0.327 * 1.0581
=-3.31

* 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 $1,156 Mil.
Revenue was 2674 + 2894 + 2797 + 2654 = $11,019 Mil.
Gross Profit was 816 + 891 + 801 + 662 = $3,170 Mil.
Total Current Assets was $5,460 Mil.
Total Assets was $9,739 Mil.
Property, Plant and Equipment(Net PPE) was $1,911 Mil.
Depreciation, Depletion and Amortization(DDA) was $773 Mil.
Selling, General & Admin. Expense(SGA) was $604 Mil.
Total Current Liabilities was $2,789 Mil.
Long-Term Debt was $5,073 Mil.
Net Income was 194 + 297 + 167 + 70 = $728 Mil.
Non Operating Income was 1 + -11 + 1 + 1 = $-8 Mil.
Cash Flow from Operations was 426 + 655 + 592 + 269 = $1,942 Mil.
Accounts Receivable was $1,250 Mil.
Revenue was 2595 + 2986 + 2925 + 2928 = $11,434 Mil.
Gross Profit was 524 + 741 + 689 + 776 = $2,730 Mil.
Total Current Assets was $3,600 Mil.
Total Assets was $8,374 Mil.
Property, Plant and Equipment(Net PPE) was $2,165 Mil.
Depreciation, Depletion and Amortization(DDA) was $827 Mil.
Selling, General & Admin. Expense(SGA) was $695 Mil.
Total Current Liabilities was $2,259 Mil.
Long-Term Debt was $4,130 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)
=(1156 / 11019) / (1250 / 11434)
=0.1049097 / 0.10932307
=0.9596

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)
=(2730 / 11434) / (3170 / 11019)
=0.23876159 / 0.28768491
=0.8299

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 - (5460 + 1911) / 9739) / (1 - (3600 + 2165) / 8374)
=0.24314611 / 0.31155959
=0.7804

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
=11019 / 11434
=0.9637

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))
=(827 / (827 + 2165)) / (773 / (773 + 1911))
=0.27640374 / 0.28800298
=0.9597

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)
=(604 / 11019) / (695 / 11434)
=0.05481441 / 0.06078363
=0.9018

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)
=((5073 + 2789) / 9739) / ((4130 + 2259) / 8374)
=0.80726974 / 0.76295677
=1.0581

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
=(728 - -8 - 1942) / 9739
=-0.1238

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.

Seagate Technology PLC has a M-score of -3.31 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.

Seagate Technology PLC Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 0.77560.91140.94951.16621.10911.13920.74961.08261.00240.9352
GMI 1.20690.76261.75380.51141.43750.62391.1420.97971.01081.1832
AQI 1.10110.93350.2380.86240.87662.48681.12950.98441.22061.5273
SGI 1.2341.11870.77161.16220.96281.36170.96060.95631.00110.8123
DEPI 0.82791.0660.8661.14941.01950.95690.94570.9531.08120.9843
SGAI 1.06781.00021.05610.70021.05770.87141.25191.1891.18570.9122
LVGI 1.11021.05881.47490.86771.10930.89060.94071.14250.99161.1712
TATA -0.0048-0.1283-0.5538-0.0388-0.0795-0.0403-0.125-0.1006-0.1034-0.1758
M-score -2.42-3.22-5.41-2.57-2.65-1.76-3.23-3.02-2.89-3.26

Seagate Technology PLC Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.11491.06291.00240.86790.89120.87210.93521.00250.96360.9596
GMI 0.98690.99391.01081.04521.0751.17471.18271.08240.98740.8299
AQI 1.13131.20961.22061.03521.59821.54561.52731.35590.93930.7804
SGI 1.01581.01911.00110.91860.85770.81020.81230.85660.8990.9637
DEPI 1.05261.08351.08121.0641.03931.00560.98430.97020.96460.9597
SGAI 1.07781.08081.18431.18211.13471.05380.91470.86490.87940.9018
LVGI 0.92050.9880.99161.15161.21631.1781.17121.04411.04211.0581
TATA -0.0987-0.1109-0.1035-0.1751-0.1334-0.1595-0.1757-0.1289-0.1433-0.1238
M-score -2.76-2.84-2.89-3.53-3.14-3.27-3.26-3.02-3.30-3.31
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