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.
AutoNation's Sloan Ratio for the quarter that ended in Sep. 2024 was 5.43%.
As of Sep. 2024, AutoNation has a Sloan Ratio of 5.43%, indicating the company is in the safe zone and there is no funny business with accruals.
AutoNation Sloan Ratio % Historical Data
The historical data trend for AutoNation'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 AutoNation's Sloan Ratio %
For the Auto & Truck Dealerships subindustry, AutoNation'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.
AutoNation's Sloan Ratio % Distribution in the Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, AutoNation's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where AutoNation's Sloan Ratio % falls into.
AutoNation 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.
AutoNation's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
AutoNation's Net Income for the trailing twelve months (TTM) ended in Sep. 2024 was 216.2 (Dec. 2023 ) + 190.1 (Mar. 2024 ) + 130.2 (Jun. 2024 ) + 185.8 (Sep. 2024 ) = $722 Mil.
AutoNation's Cash Flow from Operations for the trailing twelve months (TTM) ended in Sep. 2024 was -38.6 (Dec. 2023 ) + 294.5 (Mar. 2024 ) + -59.6 (Jun. 2024 ) + -70 (Sep. 2024 ) = $126 Mil.
AutoNation's Cash Flow from Investing for the trailing twelve months (TTM) ended in Sep. 2024 was -72.9 (Dec. 2023 ) + -69.3 (Mar. 2024 ) + -67.1 (Jun. 2024 ) + 104.4 (Sep. 2024 ) = $-105 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.
AutoNation (NYSE:AN) 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 Sep. 2024, AutoNation has a Sloan Ratio of 5.43%, indicating the company is in the safe zone and there is no funny business with accruals.
AutoNation Sloan Ratio % Related Terms
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AutoNation is the second largest automotive dealer in the United States, with 2023 revenue of about $27 billion and over 250 dealerships, plus 53 collision centers. The firm also has 23 AutoNation USA used-vehicle stores, a captive lender, four auction sites, and three parts distributors all across 21 states primarily in Sunbelt metropolitan areas. New-vehicle sales account for nearly half of revenue; the company also sells used vehicles, parts, and repair services as well as auto financing. The company (formerly Republic Industries) spun off its waste management unit (Republic Services) in 1999 and its car rental businesses (ANC Rental) in 2000. Wayne Huizenga founded the company in the 1990s to bring the rollup acquisition strategy to auto retailing, which has proved to be a smart move.
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