EME
CyclicalsValuation Breakdown
Cyclical companies (chemicals, oil & gas, basic resources) have earnings that swing dramatically with commodity prices and economic cycles. Valuing them on a single year's earnings is misleading: they look cheap at peaks and expensive at troughs. This model uses 7-year median EBITDA ("mid-cycle" earnings) and a 7-year median EV/EBITDA multiple to estimate what the firm is worth at a normal point in the cycle.
Valuation Track Record
Retroactive intrinsic value vs actual close price — EME
Earnings Quality
Fiscal year 2024
Financial Forensics
Beneish M-Score · 2024
EME shows signs of potential earnings manipulation with a Beneish M-Score of 0.045, which is above the manipulation threshold of -1.78. While the earnings quality score is relatively high at 79.4/100, the significant DSRI of 3.6135 and a GMI of 1.4787 indicate potential issues with revenue recognition and inventory management.
- Beneish M-Score of 0.045 indicates potential earnings manipulation risk.
- DSRI of 3.6135 suggests a significant increase in receivables relative to sales, which could indicate aggressive revenue recognition.
- GMI of 1.4787 indicates a decline in gross margin, potentially signaling pricing pressures or cost management issues.
- Earnings Quality Score of 79.4/100 reflects strong cash conversion and receivables management, with scores of 100.0/100 in cash conversion and receivables.
- Low SGAI of 0.5303 suggests effective management of selling, general, and administrative expenses.
The ownership structure shows significant institutional control, with the top shareholder holding 28.3% of shares, which may lead to potential conflicts of interest or governance issues. However, the presence of multiple institutional investors may provide some level of oversight.
Investors should closely monitor EME's revenue recognition practices and consider conducting further due diligence on the company's financial reporting. Given the elevated risk, it may be prudent to adopt a cautious approach before making investment decisions.
Generated by AI based on quantitative data. Not financial advice.
Quantitative Scores
Key Ratios
Company Overview
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