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.
Omnova Solutions's Sloan Ratio for the quarter that ended in Feb. 2020 was -4.15%.
As of Feb. 2020, Omnova Solutions has a Sloan Ratio of -4.15%, indicating the company is in the safe zone and there is no funny business with accruals.
Omnova Solutions Sloan Ratio % Historical Data
The historical data trend for Omnova Solutions'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 Omnova Solutions's Sloan Ratio %
For the Specialty Chemicals subindustry, Omnova Solutions'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.
Omnova Solutions's Sloan Ratio % Distribution in the Chemicals Industry
For the Chemicals industry and Basic Materials sector, Omnova Solutions's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Omnova Solutions's Sloan Ratio % falls into.
Omnova Solutions 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.
Omnova Solutions's Sloan Ratio for the fiscal year that ended in Nov. 2019 is calculated as
Omnova Solutions's Net Income for the trailing twelve months (TTM) ended in Feb. 2020 was 5.6 (May. 2019 ) + 0.3 (Aug. 2019 ) + -23.7 (Nov. 2019 ) + -3.9 (Feb. 2020 ) = $-21.7 Mil.
Omnova Solutions's Cash Flow from Operations for the trailing twelve months (TTM) ended in Feb. 2020 was 3.5 (May. 2019 ) + 8.3 (Aug. 2019 ) + 20.9 (Nov. 2019 ) + -7.3 (Feb. 2020 ) = $25.4 Mil.
Omnova Solutions's Cash Flow from Investing for the trailing twelve months (TTM) ended in Feb. 2020 was -5.8 (May. 2019 ) + -7.2 (Aug. 2019 ) + -7.1 (Nov. 2019 ) + -4 (Feb. 2020 ) = $-24.1 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.
Omnova Solutions (NYSE:OMN) 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 Feb. 2020, Omnova Solutions has a Sloan Ratio of -4.15%, indicating the company is in the safe zone and there is no funny business with accruals.
Omnova Solutions Sloan Ratio % Related Terms
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Omnova Solutions (Omnova Solutions) Business Description
Omnova Solutions Inc manufactures and sells a variety of chemicals and chemical-based products. The firm organizes itself into two segments based on the product type. Its performance materials segment, which sells latex, lubricants, plastics, and powders used in the production of paper and packaging materials, carpets, tires, cords, synthetic latex gloves, and rubber products. The specialty chemical segment sells vinyl acrylics, styrene, plastic pigments, and polyethylene resins used in the production of textiles, oil and gas, coatings, construction materials, and personal care products. It generates a majority of revenue from the Specialty Solutions segment. Geographically, the company's majority of revenue comes from the United States.
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