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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.
Clearwater Analytics Holdings (NYSE:CWAN) 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, Clearwater Analytics Holdings has a Sloan Ratio of 28.96%, indicating earnings are more likely to be made up of accruals.
Clearwater Analytics Holdings Sloan Ratio % Related Terms
Clearwater Analytics Holdings Sloan Ratio % Historical Data
* 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.
CWAN vs IDCC, CHYM, TTAN: Sloan Ratio % Comparison
For the Software - Application subindustry, Clearwater Analytics 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.
Clearwater Analytics Holdings Sloan Ratio % vs Software Industry
For the Software industry and Technology sector, Clearwater Analytics Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Clearwater Analytics Holdings's Sloan Ratio % falls into.
Clearwater Analytics Holdings 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.
Clearwater Analytics Holdings's Net Income for the trailing twelve months (TTM) ended in Mar. 2026 was -23.225 (Jun. 2025 ) + -10.335 (Sep. 2025 ) + -12.066 (Dec. 2025 ) + -2.776 (Mar. 2026 ) = $-48.4 Mil.
Clearwater Analytics Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2026 was 47.081 (Jun. 2025 ) + 48.984 (Sep. 2025 ) + 55.331 (Dec. 2025 ) + 17.675 (Mar. 2026 ) = $169.1 Mil.
Clearwater Analytics Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2026 was -1083.868 (Jun. 2025 ) + -4.112 (Sep. 2025 ) + 0.328 (Dec. 2025 ) + -6.44 (Mar. 2026 ) = $-1,094.1 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.
Clearwater Analytics Holdings (CWAN) has a Sloan Ratio % of 28.96% as of Mar. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Clearwater Analytics Holdings and its competitors.
Is Clearwater Analytics Holdings' Sloan Ratio % too high?
Clearwater Analytics Holdings' current Sloan Ratio % is 28.96%. Overall, Clearwater Analytics Holdings has a GF Score™ of 62/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Clearwater Analytics Holdings' Sloan Ratio % compare to IDCC and CHYM?
Clearwater Analytics Holdings' Sloan Ratio % of 28.96% can be compared against companies in the Software 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 Software company?
A good Sloan Ratio % depends on the Software 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 Clearwater Analytics Holdings and its competitors. Clearwater Analytics Holdings's current Sloan Ratio % is 28.96%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Clearwater Analytics Holdings stock overvalued right now?
Based on GuruFocus' analysis, Clearwater Analytics Holdings (CWAN) is currently considered Modestly Undervalued. The stock's GF Value™ is $32.56, compared to a current price of $24.56 — trading 24.6% below its estimated fair value. The current Sloan Ratio % is 28.96%. Clearwater Analytics Holdings' overall GF Score™ is 62/100 with 7 warning signs 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 Clearwater Analytics Holdings (CWAN), the current Sloan Ratio % is 28.96% 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 Clearwater Analytics Holdings (CWAN) Overvalued in 2026?
Based on GuruFocus' analysis, Clearwater Analytics Holdings stock appears to be undervalued.
The current stock price of $24.56 is trading 24.6% below its estimated GF Value™ of $32.56.
GuruFocus considers Clearwater Analytics Holdings to be Modestly Undervalued.
Key valuation signals for CWAN:
Sloan Ratio %: 28.96%
GF Value™: $32.56 vs. price of $24.56 (24.6% below fair value)
No single metric tells the full story. See the CWAN stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Clearwater Analytics describes its mission as aiming to be the world's most trusted and comprehensive technology platform for the entire investment cycle. Clearwater has historically focused on back-office functions such as investment accounting, but with acquisitions such Enfusion, Beacon, and Bistro, the firm has broadened its focus with front-office and middle-office capabilities. Clearwater primarily serves insurance companies, asset managers, hedge funds, and corporate treasuries. Pro forma for Enfusion, about 76% of Clearwater's revenue is generated in the US.
62GF Score
Get the complete analysis for CWAN
Sloan Ratio % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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