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.
The Estee Lauder's Sloan Ratio for the quarter that ended in Sep. 2024 was -5.02%.
As of Sep. 2024, The Estee Lauder has a Sloan Ratio of -5.02%, indicating the company is in the safe zone and there is no funny business with accruals.
The Estee Lauder Sloan Ratio % Historical Data
The historical data trend for The Estee Lauder'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 The Estee Lauder's Sloan Ratio %
For the Household & Personal Products subindustry, The Estee Lauder'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.
The Estee Lauder's Sloan Ratio % Distribution in the Consumer Packaged Goods Industry
For the Consumer Packaged Goods industry and Consumer Defensive sector, The Estee Lauder's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where The Estee Lauder's Sloan Ratio % falls into.
The Estee Lauder 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.
The Estee Lauder's Sloan Ratio for the fiscal year that ended in Jun. 2024 is calculated as
The Estee Lauder's Net Income for the trailing twelve months (TTM) ended in Sep. 2024 was 313 (Dec. 2023 ) + 330 (Mar. 2024 ) + -284 (Jun. 2024 ) + -156 (Sep. 2024 ) = $203 Mil.
The Estee Lauder's Cash Flow from Operations for the trailing twelve months (TTM) ended in Sep. 2024 was 1345 (Dec. 2023 ) + 534 (Mar. 2024 ) + 889 (Jun. 2024 ) + -670 (Sep. 2024 ) = $2,098 Mil.
The Estee Lauder's Cash Flow from Investing for the trailing twelve months (TTM) ended in Sep. 2024 was -262 (Dec. 2023 ) + -178 (Mar. 2024 ) + -225 (Jun. 2024 ) + -160 (Sep. 2024 ) = $-825 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.
The Estee Lauder (NYSE:EL) 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, The Estee Lauder has a Sloan Ratio of -5.02%, indicating the company is in the safe zone and there is no funny business with accruals.
The Estee Lauder Sloan Ratio % Related Terms
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Estee Lauder is a leader in the global prestige beauty market, participating across skin care (51% of fiscal 2024 sales), makeup (29%), fragrance (16%), and hair care (4%) categories, with top-selling brands such as Estee Lauder, Clinique, M.A.C, La Mer, Jo Malone London, Aveda, Bobbi Brown, and Origins. The firm operates in more than 150 countries, generating 30% of revenue from the Americas, 39% from Europe, the Middle East and Africa (including travel retail), and 31% from Asia-Pacific. Estee Lauder sells its products through department stores, travel retail, specialty multibrand beauty stores, brand-dedicated freestanding stores, e-commerce, salons/spas, and perfumeries.
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