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.
LMI Aerospace's Sloan Ratio for the quarter that ended in Mar. 2017 was -7.12%.
As of Mar. 2017, LMI Aerospace has a Sloan Ratio of -7.12%, indicating the company is in the safe zone and there is no funny business with accruals.
LMI Aerospace Sloan Ratio % Historical Data
The historical data trend for LMI Aerospace'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 LMI Aerospace's Sloan Ratio %
For the Aerospace & Defense subindustry, LMI Aerospace'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.
LMI Aerospace's Sloan Ratio % Distribution in the Aerospace & Defense Industry
For the Aerospace & Defense industry and Industrials sector, LMI Aerospace's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where LMI Aerospace's Sloan Ratio % falls into.
LMI Aerospace 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.
LMI Aerospace's Sloan Ratio for the fiscal year that ended in Dec. 2016 is calculated as
LMI Aerospace's Net Income for the trailing twelve months (TTM) ended in Mar. 2017 was -29.9 (Jun. 2016 ) + 0.309 (Sep. 2016 ) + -3.758 (Dec. 2016 ) + -6.468 (Mar. 2017 ) = $-39.8 Mil.
LMI Aerospace's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2017 was 4.298 (Jun. 2016 ) + 2.629 (Sep. 2016 ) + 14.868 (Dec. 2016 ) + -16.37 (Mar. 2017 ) = $5.4 Mil.
LMI Aerospace's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2017 was -1.568 (Jun. 2016 ) + -3.664 (Sep. 2016 ) + -3.53 (Dec. 2016 ) + -8.101 (Mar. 2017 ) = $-16.9 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.
LMI Aerospace (NAS:LMIA) 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. 2017, LMI Aerospace has a Sloan Ratio of -7.12%, indicating the company is in the safe zone and there is no funny business with accruals.
LMI Aerospace Sloan Ratio % Related Terms
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LMI Aerospace (LMI Aerospace) Business Description
LMI Aerospace Inc was founded in 1948. The Company is a supplier of structural assemblies, kits and components, and design engineering services to the aerospace and defense markets. The Company provides a array of manufacturing capabilities, as well as engineering and value-added services to the large commercial, corporate and regional, and military aircraft markets. It also provide prototyping, testing and design capabilities to customers in support of new product development and in-service aircraft. LMI Aerospace is a preferred supplier to aircraft original equipment manufacturers (OEMs) and Tier 1 aerospace suppliers. In addition to aerospace products, the Company produces components and assemblies for laser equipment used by semiconductor equipment manufacturers, electronic and electrical wire harnesses, cable assemblies, and mechanical sub-assemblies for the air and rail traffic control, medical equipment, telecommunications, and heavy equipment industries. The Company operates in two business segments consisting of: Aerostructures segment and Engineering Services segment. Its Aerostructures segment fabricates, machines, finishes, integrates, assembles and kits machined and formed close tolerance aluminum, specialty alloy and composite components and higher level assemblies for use by the aerospace and defense industries. The Company also offers its customers value-added services related to the design, production, assembly and distribution of aerospace components and deliver kits of products directly to customer points of use. Its Engineering Services segment provides a complete range of design, engineering and program management services, supporting aircraft product lifecycles from conceptual design, analysis and certification through production support, fleet support, and service life extensions via a complete turnkey engineering solution to OEMs and Tier 1 aerospace suppliers. Its competitors in the aerospace industry consist of a large, fragmented group of companies, including certain business units or affiliates of its customers. The Companys operations are subject to extensive and frequently changing federal, state and local laws and substantial regulation by government agencies.
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