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.
Sonic's Sloan Ratio for the quarter that ended in Aug. 2018 was -1.18%.
As of Aug. 2018, Sonic has a Sloan Ratio of -1.18%, indicating the company is in the safe zone and there is no funny business with accruals.
Sonic Sloan Ratio % Historical Data
The historical data trend for Sonic'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.
For the Restaurants subindustry, Sonic'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.
Sonic's Sloan Ratio % Distribution in the Restaurants Industry
For the Restaurants industry and Consumer Cyclical sector, Sonic's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Sonic's Sloan Ratio % falls into.
Sonic 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.
Sonic's Sloan Ratio for the fiscal year that ended in Aug. 2018 is calculated as
Sonic's Net Income for the trailing twelve months (TTM) ended in Aug. 2018 was 11.43 (Nov. 2017 ) + 19.607 (Feb. 2018 ) + 21.576 (May. 2018 ) + 18.592 (Aug. 2018 ) = $71.2 Mil.
Sonic's Cash Flow from Operations for the trailing twelve months (TTM) ended in Aug. 2018 was 23.076 (Nov. 2017 ) + 16.54 (Feb. 2018 ) + 25.216 (May. 2018 ) + 26.714 (Aug. 2018 ) = $91.5 Mil.
Sonic's Cash Flow from Investing for the trailing twelve months (TTM) ended in Aug. 2018 was -9.453 (Nov. 2017 ) + -10.134 (Feb. 2018 ) + 4.075 (May. 2018 ) + 1.451 (Aug. 2018 ) = $-14.1 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.
Sonic (NAS:SONC) 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 Aug. 2018, Sonic has a Sloan Ratio of -1.18%, indicating the company is in the safe zone and there is no funny business with accruals.
Sonic Sloan Ratio % Related Terms
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Sonic Corp operates and franchises drive-in restaurants throughout the United States. The restaurants typically consist of a building that houses only a kitchen to go along with 16 to 24 parking spaces that have their own payment terminals, intercom speakers, and menu boards. Carhops serve customers in their cars. Many locations also have a drive-thru lane and patio seating as alternatives. Sonic franchises roughly 90% of its restaurants, and the royalty revenue the company earns on franchise sales contributes roughly a quarter of total company revenue. Company-operated stores provide the balance of total revenue. Sonic owns the property on which hundreds of its restaurants are located. For those properties that house franchised stores, franchisees lease from the company.
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