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.
Pepco Holdings's Sloan Ratio for the quarter that ended in Dec. 2015 was 3.36%.
As of Dec. 2015, Pepco Holdings has a Sloan Ratio of 3.36%, indicating the company is in the safe zone and there is no funny business with accruals.
Pepco Holdings Sloan Ratio % Historical Data
The historical data trend for Pepco 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 Pepco Holdings's Sloan Ratio %
For the Utilities - Regulated Electric subindustry, Pepco 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.
Pepco Holdings's Sloan Ratio % Distribution in the Utilities - Regulated Industry
For the Utilities - Regulated industry and Utilities sector, Pepco Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Pepco Holdings's Sloan Ratio % falls into.
Pepco 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.
Pepco Holdings's Sloan Ratio for the fiscal year that ended in Dec. 2015 is calculated as
Pepco Holdings's Net Income for the trailing twelve months (TTM) ended in Dec. 2015 was 53 (Mar. 2015 ) + 53 (Jun. 2015 ) + 91 (Sep. 2015 ) + 130 (Dec. 2015 ) = $327 Mil.
Pepco Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2015 was 157 (Mar. 2015 ) + 182 (Jun. 2015 ) + 262 (Sep. 2015 ) + 338 (Dec. 2015 ) = $939 Mil.
Pepco Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2015 was -235 (Mar. 2015 ) + -317 (Jun. 2015 ) + -283 (Sep. 2015 ) + -326 (Dec. 2015 ) = $-1,161 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.
Pepco Holdings (NYSE:POM) 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 Dec. 2015, Pepco Holdings has a Sloan Ratio of 3.36%, indicating the company is in the safe zone and there is no funny business with accruals.
Pepco Holdings Sloan Ratio % Related Terms
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Pepco Holdings (Pepco Holdings) Business Description
Pepco Holdings Inc was incorporated in Delaware in 2001, for the purpose of effecting the acquisition of Conectiv by Potomac Electric Power Company. Pepco Holdings, Inc. is a public utility holding Company that, through its operating subsidiaries, is engaged in two principal business operations: electricity and natural gas delivery, and competitive energy generation, marketing and supply. Pepco is engaged in the transmission and distribution of electricity in Washington, D.C. and portions of Prince George's and Montgomery Counties in suburban Maryland. Pepco was incorporated in Washington, D.C. in 1896 and became a domestic Virginia corporation in 1949. PHI, through its subsidiaries, is subject to regulation by various federal, regional, state, and local authorities with respect to the environmental effects of its operations, including air and water quality control, solid and hazardous waste disposal, and limitations on land use. Pepco Energy Services sells retail electricity and natural gas and provides integrated energy management services in the mid-Atlantic region, and its subsidiaries own and operate generation plants located in PJM. Pepco Energy Services also provides high voltage construction and maintenance services to utilities and other customers throughout the United States and low voltage electric and telecommunication construction and maintenance services in the Washington, D.C. area. PHI's business is to remain a regional diversified energy delivery utility and competitive energy services Company focused on value creation and operational excellence.
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