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.
* 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 Houston Wire & Cable Co's Sloan Ratio %
For the Industrial Distribution subindustry, Houston Wire & Cable Co'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.
Houston Wire & Cable Co's Sloan Ratio % Distribution in the Industrial Distribution Industry
For the Industrial Distribution industry and Industrials sector, Houston Wire & Cable Co's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Houston Wire & Cable Co's Sloan Ratio % falls into.
Houston Wire & Cable Co 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.
Houston Wire & Cable Co's Sloan Ratio for the fiscal year that ended in Dec. 2020 is calculated as
Houston Wire & Cable Co's Net Income for the trailing twelve months (TTM) ended in Mar. 2021 was -2.163 (Jun. 2020 ) + -0.735 (Sep. 2020 ) + -10.229 (Dec. 2020 ) + 0.159 (Mar. 2021 ) = $-13.0 Mil.
Houston Wire & Cable Co's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2021 was 8.339 (Jun. 2020 ) + 14.551 (Sep. 2020 ) + 15.95 (Dec. 2020 ) + 4.317 (Mar. 2021 ) = $43.2 Mil.
Houston Wire & Cable Co's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2021 was -0.769 (Jun. 2020 ) + -0.722 (Sep. 2020 ) + 17.015 (Dec. 2020 ) + 3.246 (Mar. 2021 ) = $18.8 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.
Houston Wire & Cable Co (NAS:HWCC) 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. 2021, Houston Wire & Cable Co has a Sloan Ratio of -48.64%, indicating earnings are more likely to be made up of accruals.
Houston Wire & Cable Co Sloan Ratio % Related Terms
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Houston Wire & Cable Co (Houston Wire & Cable Co) Business Description
Houston Wire & Cable Co is a distributor of electrical and mechanical wire and cable in the U.S. industrial market. The company offers products in most categories of wire and cable, including continuous and interlocked armor cable; electronic wire and cable; flexible and portable cord; instrumentation and thermocouple cable; primary and secondary aluminum distribution cable, hardware and corrosion-resistant products including inch and metric bolts, screws, nuts, washers, rivets, and hose clamps. It has three target markets: utility market, industrial market, and infrastructure market.
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