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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.
As of Dec. 2014, Environmental Solutions Worldwide has a Sloan Ratio of 26.15%, indicating earnings are more likely to be made up of accruals.
Environmental Solutions Worldwide (OTCPK:ESWW) 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 Dec. 2014, Environmental Solutions Worldwide has a Sloan Ratio of 26.15%, indicating earnings are more likely to be made up of accruals.
Environmental Solutions Worldwide Sloan Ratio % Related Terms
Environmental Solutions Worldwide 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.
Environmental Solutions Worldwide Sloan Ratio % Chart
ESWW vs STCC, FNHI, PFTI: Sloan Ratio % Comparison
For the Auto Parts subindustry, Environmental Solutions Worldwide'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.
Environmental Solutions Worldwide Sloan Ratio % vs Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, Environmental Solutions Worldwide's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Environmental Solutions Worldwide's Sloan Ratio % falls into.
Environmental Solutions Worldwide 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.
Environmental Solutions Worldwide's Net Income for the trailing twelve months (TTM) ended in Dec. 2014 was 0.421 (Mar. 2014 ) + 1.331 (Jun. 2014 ) + -0.973 (Sep. 2014 ) + 10.683 (Dec. 2014 ) = $11.46 Mil.
Environmental Solutions Worldwide's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2014 was 1.835 (Mar. 2014 ) + 0.903 (Jun. 2014 ) + 2.28 (Sep. 2014 ) + 0.223 (Dec. 2014 ) = $5.24 Mil.
Environmental Solutions Worldwide's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2014 was -0.176 (Mar. 2014 ) + -0.162 (Jun. 2014 ) + -0.213 (Sep. 2014 ) + -0.247 (Dec. 2014 ) = $-0.80 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.
Environmental Solutions Worldwide (ESWW) has a Sloan Ratio % of 26.15% as of Dec. 2014. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Environmental Solutions Worldwide and its competitors.
Is Environmental Solutions Worldwide's Sloan Ratio % too high?
Environmental Solutions Worldwide's current Sloan Ratio % is 26.15%.
How does Environmental Solutions Worldwide's Sloan Ratio % compare to STCC and FNHI?
Environmental Solutions Worldwide's Sloan Ratio % of 26.15% can be compared against companies in the Vehicles & Parts 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 Vehicles & Parts company?
A good Sloan Ratio % depends on the Vehicles & Parts 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 Environmental Solutions Worldwide and its competitors. Environmental Solutions Worldwide's current Sloan Ratio % is 26.15%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Environmental Solutions Worldwide stock overvalued right now?
Environmental Solutions Worldwide (ESWW) has a current Sloan Ratio % of 26.15%. The current Sloan Ratio % is 26.15%. 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 Environmental Solutions Worldwide (ESWW), the current Sloan Ratio % is 26.15% as of Dec. 2014. 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.
Environmental Solutions Worldwide Business Description
Environmental Solutions Worldwide Inc through its subsidiaries is involved in the designing, development, manufacturing, and sales of emissions control technologies. It also provides emissions testing and environmental certification services. The firm's products include horizondpf, longview dpf, and vista dpf. It has Air testing services and MHDD diesel emission control manufacturing and sales operating segments. The company derives the majority of its revenues from MHDD diesel control segment.
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