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.
ITC Holdings's Sloan Ratio for the quarter that ended in Jun. 2016 was 4.79%.
As of Jun. 2016, ITC Holdings has a Sloan Ratio of 4.79%, indicating the company is in the safe zone and there is no funny business with accruals.
ITC Holdings Sloan Ratio % Historical Data
The historical data trend for ITC Holdings'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 ITC Holdings's Sloan Ratio %
For the Utilities - Regulated Electric subindustry, ITC Holdings'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.
ITC Holdings's Sloan Ratio % Distribution in the Utilities - Regulated Industry
For the Utilities - Regulated industry and Utilities sector, ITC Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where ITC Holdings's Sloan Ratio % falls into.
ITC Holdings 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.
ITC Holdings's Sloan Ratio for the fiscal year that ended in Dec. 2015 is calculated as
ITC Holdings's Net Income for the trailing twelve months (TTM) ended in Jun. 2016 was 65.573 (Sep. 2015 ) + 37.365 (Dec. 2015 ) + 64.237 (Mar. 2016 ) + 70.726 (Jun. 2016 ) = $238 Mil.
ITC Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Jun. 2016 was 188.889 (Sep. 2015 ) + 169.457 (Dec. 2015 ) + 87.816 (Mar. 2016 ) + 169.266 (Jun. 2016 ) = $615 Mil.
ITC Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Jun. 2016 was -151.35 (Sep. 2015 ) + -224.266 (Dec. 2015 ) + -195.242 (Mar. 2016 ) + -193.098 (Jun. 2016 ) = $-764 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.
ITC Holdings (NYSE:ITC) 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 Jun. 2016, ITC Holdings has a Sloan Ratio of 4.79%, indicating the company is in the safe zone and there is no funny business with accruals.
ITC Holdings Sloan Ratio % Related Terms
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ITC Holdings Corp was incorporated in 2002 in the State of Michigan for the purpose of acquiring ITC Transmission. The Company, along with its subsidiaries, is engaged in transmission of electricity in the United States. Through its operating subsidiaries, ITCTransmission, METC, ITC Midwest and ITC Great Plains, it operates high-voltage systems in Michigan's Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma that transmit electricity from generating stations to local distribution facilities connected to its systems. The Company operates, maintains and invests in transmission infrastructure in order to enhance system integrity and reliability, reduces transmission constraints and allows new generating resources to interconnect to its transmission systems. Its Regulated Operating Subsidiaries are independent electric transmission utilities, with rates regulated by the FERC and established on a cost-of-service model. The Company's Regulated Operating Subsidiaries earns revenues through tariff rates charged for the use of their electric transmission systems by its customers, which include investor-owned utilities, municipalities, cooperatives, power marketers and alternative energy suppliers. The Company's operations are subject to federal, state and local environmental laws and regulations, which impose limitations on the discharge of pollutants into the environment, establish standards for the management, treatment, storage, transportation and disposal of hazardous materials and of solid and hazardous wastes, and impose obligations to investigate and remediate contamination in certain circumstances.
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