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.
Stepan Co's Sloan Ratio for the quarter that ended in Dec. 2023 was 5.25%.
As of Dec. 2023, Stepan Co has a Sloan Ratio of 5.25%, indicating the company is in the safe zone and there is no funny business with accruals.
Stepan Co Sloan Ratio % Historical Data
The historical data trend for Stepan 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 Stepan Co's Sloan Ratio %
For the Specialty Chemicals subindustry, Stepan 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.
Stepan Co's Sloan Ratio % Distribution in the Chemicals Industry
For the Chemicals industry and Basic Materials sector, Stepan Co's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Stepan Co's Sloan Ratio % falls into.
Stepan 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.
Stepan Co's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Stepan Co's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 16.142 (Mar. 2023 ) + 12.684 (Jun. 2023 ) + 12.571 (Sep. 2023 ) + -1.193 (Dec. 2023 ) = $40 Mil.
Stepan Co's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was -72.058 (Mar. 2023 ) + 107.86 (Jun. 2023 ) + 70.097 (Sep. 2023 ) + 68.977 (Dec. 2023 ) = $175 Mil.
Stepan Co's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -90.341 (Mar. 2023 ) + -67.89 (Jun. 2023 ) + -53.697 (Sep. 2023 ) + -46.738 (Dec. 2023 ) = $-259 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.
Stepan Co (NYSE:SCL) 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. 2023, Stepan Co has a Sloan Ratio of 5.25%, indicating the company is in the safe zone and there is no funny business with accruals.
Stepan Co Sloan Ratio % Related Terms
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Stepan Co manufactures and sells a variety of chemicals and chemical-based products. The company organizes itself into three segments based on product type. The surfactants segment, which generates the majority of revenue, sells cleaning agents used in detergents, shampoos, body wash, fabric softeners, toothpastes, and other personal-care products. Surfactants are chemical agents that affect the interaction between two surfaces. The polymers segment sells polyurethane used to manufacture rigid foam for thermal insulation, as well as phthalic anhydride used to make plastic components for the construction, automotive, and boating industries. The specialty products segment sells chemicals used in food and flavoring. Most of Stepan's revenue comes from the United States.
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