Richard Sloan from the University of Michigan was first to document what is referred to as the "accrual anomaly". His 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones.
Donaldson Co's Sloan Ratio for the quarter that ended in Jan. 2024 was 5.01%.
As of Jan. 2024, Donaldson Co has a Sloan Ratio of 5.01%, indicating the company is in the safe zone and there is no funny business with accruals.
Donaldson Co Sloan Ratio % Historical Data
The historical data trend for Donaldson Co's Sloan Ratio % can be seen below:
* 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.
Competitive Comparison of Donaldson Co's Sloan Ratio %
For the Specialty Industrial Machinery subindustry, Donaldson Co's Sloan Ratio %, along with its competitors' market caps and Sloan Ratio % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Donaldson Co's Sloan Ratio % Distribution in the Industrial Products Industry
For the Industrial Products industry and Industrials sector, Donaldson Co's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Donaldson Co's Sloan Ratio % falls into.
Donaldson Co Sloan Ratio % Calculation
Earnings contain a lot of non cash earnings which is called accruals. The Sloan ratio is a way to identify firms with low non-cash or accrual-derived earnings relative to their cash flow.
Donaldson Co's Sloan Ratio for the fiscal year that ended in Jul. 2023 is calculated as
Donaldson Co's Net Income for the trailing twelve months (TTM) ended in Jan. 2024 was 85.454 (Apr. 2023 ) + 83.078 (Jul. 2023 ) + 87.219 (Oct. 2023 ) + 90.607 (Jan. 2024 ) = €346 Mil.
Donaldson Co's Cash Flow from Operations for the trailing twelve months (TTM) ended in Jan. 2024 was 121.478 (Apr. 2023 ) + 172.483 (Jul. 2023 ) + 130.686 (Oct. 2023 ) + 79.866 (Jan. 2024 ) = €505 Mil.
Donaldson Co's Cash Flow from Investing for the trailing twelve months (TTM) ended in Jan. 2024 was -88.92 (Apr. 2023 ) + -155.669 (Jul. 2023 ) + -21.97 (Oct. 2023 ) + -19.553 (Jan. 2024 ) = €-286 Mil.
* 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.
Donaldson Co (FRA:DNZ) Sloan Ratio % Explanation
A former University of Michigan researcher, Richard Sloan's 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones. In fact, for the 40-year period between 1962 and 2001, buying the lowest accrual companies and shorting the highest accrual companies resulted in an average annual compounded return of 18%, more than double the S&P 500's 7.4% annual return over the same period.
If the Sloan Ratio is between -10% and 10%, the company is in the safe zone and there is no funny business with accruals.
If the Sloan Ratio is less than between -25% and -10% on the negative side, and between 10% and 25% on the positive side, this is a warning stage of accrual build up.
If the Sloan Ratio is less than -25% or greater than 25%, and this ratio is consistent over several quarters or even years, be careful. Earnings are highly likely to be made up of accruals.
As of Jan. 2024, Donaldson Co has a Sloan Ratio of 5.01%, indicating the company is in the safe zone and there is no funny business with accruals.
Donaldson Co Sloan Ratio % Related Terms
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Donaldson is a leading manufacturer of filtration systems and replacement parts (including air filtration systems, liquid filtration systems, and dust, fume, and mist collectors). The company serves a diverse range of end markets, including construction, mining, agriculture, truck, and industrial. Its business is organized into three segments: mobile solutions, industrial solutions, and life sciences. Donaldson generated approximately $3.4 billion in revenue and $480 million in operating income in its fiscal 2023.
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