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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 Mar. 2026, Meritage Hospitality Group has a Sloan Ratio of -3.29%, indicating the company is in the safe zone and there is no funny business with accruals.
Meritage Hospitality Group (OTCPK:MHGU) 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, Meritage Hospitality Group has a Sloan Ratio of -3.29%, indicating the company is in the safe zone and there is no funny business with accruals.
Meritage Hospitality Group Sloan Ratio % Related Terms
Meritage Hospitality Group 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.
MHGU vs NROM, GTIM, PETZ: Sloan Ratio % Comparison
For the Restaurants subindustry, Meritage Hospitality Group'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.
Meritage Hospitality Group Sloan Ratio % vs Restaurants Industry
For the Restaurants industry and Consumer Cyclical sector, Meritage Hospitality Group's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Meritage Hospitality Group's Sloan Ratio % falls into.
Meritage Hospitality Group 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.
Meritage Hospitality Group's Net Income for the trailing twelve months (TTM) ended in Mar. 2026 was 0.325 (Jun. 2025 ) + -9.329 (Sep. 2025 ) + -18.488 (Dec. 2025 ) + -9.492 (Mar. 2026 ) = $-37.0 Mil.
Meritage Hospitality Group's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2026 was 3.327 (Jun. 2025 ) + -1.735 (Sep. 2025 ) + -0.032 (Dec. 2025 ) + 0.788 (Mar. 2026 ) = $2.3 Mil.
Meritage Hospitality Group's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2026 was -5.541 (Jun. 2025 ) + -9.599 (Sep. 2025 ) + -0.655 (Dec. 2025 ) + 1.459 (Mar. 2026 ) = $-14.3 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.
Meritage Hospitality Group (MHGU) has a Sloan Ratio % of -3.29% as of Mar. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Meritage Hospitality Group and its competitors.
Is Meritage Hospitality Group's Sloan Ratio % too high?
Meritage Hospitality Group's current Sloan Ratio % is -3.29%. Overall, Meritage Hospitality Group has a GF Score™ of 56/100 and is considered Possible Value Trap, reflecting its overall financial health beyond just this single metric.
How does Meritage Hospitality Group's Sloan Ratio % compare to NROM and GTIM?
Meritage Hospitality Group's Sloan Ratio % of -3.29% can be compared against companies in the Restaurants 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 Restaurants company?
A good Sloan Ratio % depends on the Restaurants 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 Meritage Hospitality Group and its competitors. Meritage Hospitality Group's current Sloan Ratio % is -3.29%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Meritage Hospitality Group stock overvalued right now?
Based on GuruFocus' analysis, Meritage Hospitality Group (MHGU) is currently considered Possible Value Trap. The stock's GF Value™ is $17.27, compared to a current price of $2.25 — trading 87% below its estimated fair value. The current Sloan Ratio % is -3.29%. Meritage Hospitality Group's overall GF Score™ is 56/100 with 8 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 Meritage Hospitality Group (MHGU), the current Sloan Ratio % is -3.29% 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 Meritage Hospitality Group (MHGU) Overvalued in 2026?
Based on GuruFocus' analysis, Meritage Hospitality Group stock appears to be undervalued.
The current stock price of $2.25 is trading 87% below its estimated GF Value™ of $17.27.
GuruFocus considers Meritage Hospitality Group to be Possible Value Trap.
Key valuation signals for MHGU:
Sloan Ratio %: -3.29%
GF Value™: $17.27 vs. price of $2.25 (87% below fair value)
No single metric tells the full story. See the MHGU stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Meritage Hospitality Group Inc is engaged in operating quick-service and casual dining restaurants across various states in the United States. It operates Wendy's quick-service restaurants across various states under franchise agreements with its franchisor. It also operates independent restaurants under three concepts throughout Michigan, which include Morning Belle restaurants, Stan's Tacos restaurant, and Blue Porch Bar & Grill restaurant. It is focused on the future development and long-term growth of its Morning Belle brand.
56GF Score
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