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Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.
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 -2.99 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
The historical rank and industry rank for Stewart Information Services's Beneish M-Score or its related term are showing as below:
During the past 13 years, the highest Beneish M-Score of Stewart Information Services was -2.32. The lowest was -6.66. And the median was -3.08.
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 Stewart Information Services 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 * 1.3058 | + | 0.528 * 1 | + | 0.404 * 1.0349 | + | 0.892 * 0.8346 | + | 0.115 * 0.7063 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 1.1156 | + | 4.679 * -0.130784 | - | 0.327 * 0.9857 | |||||||
= | -2.99 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
This Year (Mar24) TTM: | Last Year (Mar23) TTM: |
Total Receivables was $143 Mil. Revenue was 554.315 + 582.169 + 601.714 + 549.154 = $2,287 Mil. Gross Profit was 554.315 + 582.169 + 601.714 + 549.154 = $2,287 Mil. Total Current Assets was $0 Mil. Total Assets was $2,651 Mil. Property, Plant and Equipment(Net PPE) was $197 Mil. Depreciation, Depletion and Amortization(DDA) was $63 Mil. Selling, General, & Admin. Expense(SGA) was $715 Mil. Total Current Liabilities was $0 Mil. Long-Term Debt & Capital Lease Obligation was $578 Mil. Net Income was 3.13 + 8.815 + 13.999 + 15.815 = $42 Mil. Non Operating Income was 83.016 + 61.408 + 68.19 + 71.387 = $284 Mil. Cash Flow from Operations was -29.588 + 39.464 + 59.533 + 35.107 = $105 Mil. |
Total Receivables was $131 Mil. Revenue was 524.305 + 655.909 + 716.399 + 844.073 = $2,741 Mil. Gross Profit was 524.305 + 655.909 + 716.399 + 844.073 = $2,741 Mil. Total Current Assets was $0 Mil. Total Assets was $2,679 Mil. Property, Plant and Equipment(Net PPE) was $282 Mil. Depreciation, Depletion and Amortization(DDA) was $58 Mil. Selling, General, & Admin. Expense(SGA) was $768 Mil. Total Current Liabilities was $0 Mil. Long-Term Debt & Capital Lease Obligation was $593 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Total 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) |
= | (142.62 / 2287.352) | / | (130.867 / 2740.686) | |
= | 0.062352 | / | 0.04775 | |
= | 1.3058 |
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) | |
= | (2740.686 / 2740.686) | / | (2287.352 / 2287.352) | |
= | 1 | / | 1 | |
= | 1 |
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 - (0 + 196.544) / 2651.389) | / | (1 - (0 + 282.23) / 2679.06) | |
= | 0.925871 | / | 0.894653 | |
= | 1.0349 |
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 | |
= | 2287.352 | / | 2740.686 | |
= | 0.8346 |
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)) |
= | (58.336 / (58.336 + 282.23)) | / | (62.925 / (62.925 + 196.544)) | |
= | 0.171291 | / | 0.242515 | |
= | 0.7063 |
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) |
= | (714.66 / 2287.352) | / | (767.569 / 2740.686) | |
= | 0.31244 | / | 0.280065 | |
= | 1.1156 |
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) |
= | ((578.156 + 0) / 2651.389) | / | ((592.661 + 0) / 2679.06) | |
= | 0.218058 | / | 0.22122 | |
= | 0.9857 |
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 | |
= | (41.759 - 284.001 | - | 104.516) | / | 2651.389 | |
= | -0.130784 |
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.
Stewart Information Services has a M-score of -2.99 suggests that the company is unlikely to be a manipulator.
Thank you for viewing the detailed overview of Stewart Information Services's Beneish M-Score provided by GuruFocus.com. Please click on the following links to see related term pages.
Helen Vaid | director | 600 WEST CHICAGO AVE., STE 400, CHICAGO IL 60654 |
Frederick H Eppinger | director | THE HANOVER INSURANCE GROUP, INC., 440 LINCOLN ST, WORCESTER MA 01653 |
Bradley C Allen Jr | director | AMERISAFE INC, 2301 HIGHWAY 190 WEST, DERIDDER LA 70634 |
Elizabeth Giddens | officer: Chief Legal Officer; Secretary | 10000 WEHRLE DRIVE, CLARENCE NY 14031 |
Hamm John Earl Jr. | officer: EVP, Chief Information Officer | 1360 POST OAK BLVD., SUITE 100, HOUSTON TX 77056 |
Steven Mark Lessack | officer: Group President | 1980 POST OAK BLVD., #800, HOUSTON TX 77056 |
Matthew Morris | director, officer: Chief Executive Officer | 1905 SHARP PL, HOUSTON TX 77019 |
Corey William S. Jr. | director | C/O STEWART INFORMATION SERVICES CORP., 1360 POST OAK BLVD., SUITE 100 MC-14-1, HOUSTON TX 77056 |
Deborah Jane Matz | director | C/O STEWART INFORMATION SERVICES CORP., 1360 POST OAK BLVD., SUITE 100 MC-14-1, HOUSTON TX 77056 |
Emily Kain | officer: Chief Human Resource Officer | C/O STEWART INFORMATION SERVICES CORP., 1360 POST OAK BLVD., SUITE 100, MC-14-1, HOUSTON TX 77056 |
Glenn C Christenson | director | 2411 W SAHARA AVENUE, LAS VEGAS NV 89102 |
James M Chadwick | director | C/O IMPERIAL HOLDINGS, INC., 701 PARK OF COMMERCE BLVD., #301, BOCA RATON FL 33487 |
Tara Smith | officer: Group President | STEWART INFORMATION SERVICES CORP., 1980 POST OAK BLVD., SUITE 710, HOUSTON TX 77056 |
Clifford Press | director | 152 WEST 57TH STREET, NEW YORK NY 10019 |
Robert Clarke | director | 711 LOUISIANA STREET, SUITE 2900, HOUSTON TX 77002-2781 |
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