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.
NRG Energy's Sloan Ratio for the quarter that ended in Dec. 2023 was 3.57%.
As of Dec. 2023, NRG Energy has a Sloan Ratio of 3.57%, indicating the company is in the safe zone and there is no funny business with accruals.
NRG Energy Sloan Ratio % Historical Data
The historical data trend for NRG Energy'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 NRG Energy's Sloan Ratio %
For the Utilities - Independent Power Producers subindustry, NRG Energy'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.
NRG Energy's Sloan Ratio % Distribution in the Utilities - Independent Power Producers Industry
For the Utilities - Independent Power Producers industry and Utilities sector, NRG Energy's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where NRG Energy's Sloan Ratio % falls into.
NRG Energy 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.
NRG Energy's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
NRG Energy's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was -1335 (Mar. 2023 ) + 308 (Jun. 2023 ) + 343 (Sep. 2023 ) + 482 (Dec. 2023 ) = $-202 Mil.
NRG Energy's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was -1598 (Mar. 2023 ) + 570 (Jun. 2023 ) + 566 (Sep. 2023 ) + 241 (Dec. 2023 ) = $-221 Mil.
NRG Energy's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -2350 (Mar. 2023 ) + -152 (Jun. 2023 ) + -129 (Sep. 2023 ) + 1721 (Dec. 2023 ) = $-910 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.
NRG Energy (NYSE:NRG) 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, NRG Energy has a Sloan Ratio of 3.57%, indicating the company is in the safe zone and there is no funny business with accruals.
NRG Energy Sloan Ratio % Related Terms
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NRG Energy is one of the largest retail energy providers in the U.S., with 5.5 million customers. Its 2023 acquisition of Vivint Smart Home adds 1.9 million home services customers. NRG also is one of the largest U.S. independent power producers, with 13 gigawatts of coal, gas, and oil power generation capacity primarily in Texas. NRG exited Chapter 11 bankruptcy as a stand-alone entity in December 2003.
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