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.
El Paso Electric Co's Sloan Ratio for the quarter that ended in Mar. 2020 was 2.77%.
As of Mar. 2020, El Paso Electric Co has a Sloan Ratio of 2.77%, indicating the company is in the safe zone and there is no funny business with accruals.
El Paso Electric Co Sloan Ratio % Historical Data
The historical data trend for El Paso Electric 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 El Paso Electric Co's Sloan Ratio %
For the Utilities - Regulated Electric subindustry, El Paso Electric 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.
El Paso Electric Co's Sloan Ratio % Distribution in the Utilities - Regulated Industry
For the Utilities - Regulated industry and Utilities sector, El Paso Electric Co's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where El Paso Electric Co's Sloan Ratio % falls into.
El Paso Electric 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.
El Paso Electric Co's Sloan Ratio for the fiscal year that ended in Dec. 2019 is calculated as
El Paso Electric Co's Net Income for the trailing twelve months (TTM) ended in Mar. 2020 was 26.126 (Jun. 2019 ) + 77.88 (Sep. 2019 ) + 12.942 (Dec. 2019 ) + -35.209 (Mar. 2020 ) = $81.7 Mil.
El Paso Electric Co's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2020 was 31.16 (Jun. 2019 ) + 133.424 (Sep. 2019 ) + 84.14 (Dec. 2019 ) + -1.484 (Mar. 2020 ) = $247.2 Mil.
El Paso Electric Co's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2020 was -69.914 (Jun. 2019 ) + -53.762 (Sep. 2019 ) + -86.547 (Dec. 2019 ) + -61.997 (Mar. 2020 ) = $-272.2 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.
El Paso Electric Co (NYSE:EE) 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 Mar. 2020, El Paso Electric Co has a Sloan Ratio of 2.77%, indicating the company is in the safe zone and there is no funny business with accruals.
El Paso Electric Co Sloan Ratio % Related Terms
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El Paso Electric Co (El Paso Electric Co) Business Description
El Paso Electric Co is a Texas-based public utility company engaged in the generation, transmission, and distribution of electricity in the Southwestern U.S. The company principally serves retail customers in the El Paso, Texas and Las Cruces, New Mexico markets through its portfolio of nuclear, natural gas, coal, solar, and wind power plants. The vast majority of the total power produced by El Paso Electric is derived from its nuclear and natural gas facilities. The company generates most of its revenue from the production and sale of energy. Distribution service fees also represent a significant income stream. El Paso Electric primarily serves residential and small industrial customers, but also participates in wholesale transactions with local military installations and universities.
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