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.
ARM Holdings's Sloan Ratio for the quarter that ended in Mar. 2026 was -2.76%.
As of Mar. 2026, ARM Holdings has a Sloan Ratio of -2.76%, indicating the company is in the safe zone and there is no funny business with accruals.
ARM Holdings (NAS:ARM) 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. 2026, ARM Holdings has a Sloan Ratio of -2.76%, indicating the company is in the safe zone and there is no funny business with accruals.
ARM Holdings Sloan Ratio % Related Terms
ARM Holdings Sloan Ratio % Historical Data
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The historical data trend for ARM Holdings'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 Semiconductors subindustry, ARM Holdings'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.
ARM Holdings Sloan Ratio % vs Semiconductors Industry
For the Semiconductors industry and Technology sector, ARM Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where ARM Holdings's Sloan Ratio % falls into.
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.
ARM Holdings's Sloan Ratio for the fiscal year that ended in Mar. 2026 is calculated as
ARM Holdings's Net Income for the trailing twelve months (TTM) ended in Mar. 2026 was 130 (Jun. 2025 ) + 238 (Sep. 2025 ) + 223 (Dec. 2025 ) + 313 (Mar. 2026 ) = $904 Mil.
ARM Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2026 was 332 (Jun. 2025 ) + 567 (Sep. 2025 ) + 365 (Dec. 2025 ) + 260 (Mar. 2026 ) = $1,524 Mil.
ARM Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2026 was -372 (Jun. 2025 ) + 196 (Sep. 2025 ) + 52 (Dec. 2025 ) + -201 (Mar. 2026 ) = $-325 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.
ARM Holdings (ARM) has a Sloan Ratio % of -2.76% as of Mar. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on ARM Holdings and its competitors.
Is ARM Holdings' Sloan Ratio % too high?
ARM Holdings' current Sloan Ratio % is -2.76%. Overall, ARM Holdings has a GF Score™ of 69/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does ARM Holdings' Sloan Ratio % compare to TXN and MRVL?
ARM Holdings' Sloan Ratio % of -2.76% can be compared against companies in the Semiconductors industry. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Sloan Ratio % for a Semiconductors company?
A good Sloan Ratio % depends on the Semiconductors industry context. However, Sloan Ratio % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Sloan Ratio % mean?
A high Sloan Ratio % can signal that a stock is expensive relative to its fundamentals. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on ARM Holdings and its competitors. ARM Holdings's current Sloan Ratio % is -2.76%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is ARM Holdings stock overvalued right now?
Based on GuruFocus' analysis, ARM Holdings (ARM) is currently considered Significantly Overvalued. The stock's GF Value™ is $178.97, compared to a current price of $327.87 — trading 83.2% above its estimated fair value. The current Sloan Ratio % is -2.76%. ARM Holdings' overall GF Score™ is 69/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Sloan Ratio % calculated?
Sloan Ratio % is calculated from a company's financial statements. For ARM Holdings (ARM), the current Sloan Ratio % is -2.76% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is ARM Holdings (ARM) Overvalued in 2026?
Based on GuruFocus' analysis, ARM Holdings stock appears to be overvalued.
The current stock price of $327.87 is trading 83.2% above its estimated GF Value™ of $178.97.
GuruFocus considers ARM Holdings to be Significantly Overvalued.
Key valuation signals for ARM:
Sloan Ratio %: -2.76%
GF Value™: $178.97 vs. price of $327.87 (83.2% above fair value)
No single metric tells the full story. See the ARM stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Arm Holdings is the IP owner and developer of the Arm architecture, which is used in 99% of the world's smartphone CPU cores. It also has high market share in other battery-powered devices like wearables, tablets, and sensors. Arm licenses its architecture for a fee, offering different types of licenses depending on the flexibility the customer needs. Customers like Apple or Qualcomm buy architectural licenses, which allow them to modify the architecture and add or delete instructions to tailor the chips to their specific needs. Other clients directly buy off-the-shelf designs from Arm. Both off-the-shelf and architectural customers pay a royalty fee per chip shipped. In 2026, Arm announced the launch of its own CPU products on top of its existing royalty business.
69GF Score
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