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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.
When sloan ratio (-49.37)% higher than 25% or lower than -25%, earnings are more likely to be made up of accruals.
As of Mar. 2026, Direct Digital Holdings has a Sloan Ratio of 0.00%, indicating the company is in the safe zone and there is no funny business with accruals.
Direct Digital Holdings (NAS:DRCT) 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, Direct Digital Holdings has a Sloan Ratio of 0.00%, indicating the company is in the safe zone and there is no funny business with accruals.
Direct Digital Holdings Sloan Ratio % Related Terms
Direct Digital 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.
For the Advertising Agencies subindustry, Direct Digital 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.
Direct Digital Holdings Sloan Ratio % vs Media - Diversified Industry
For the Media - Diversified industry and Communication Services sector, Direct Digital Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Direct Digital Holdings's Sloan Ratio % falls into.
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.
Direct Digital Holdings's Sloan Ratio for the fiscal year that ended in Dec. 2025 is calculated as
Direct Digital Holdings's Net Income for the trailing twelve months (TTM) ended in Mar. 2026 was -2.249 (Jun. 2025 ) + -2.68 (Sep. 2025 ) + -11.662 (Dec. 2025 ) + -5.25 (Mar. 2026 ) = $-21.84 Mil.
Direct Digital Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2026 was -2.69 (Jun. 2025 ) + -1.638 (Sep. 2025 ) + -1.871 (Dec. 2025 ) + -1.05 (Mar. 2026 ) = $-7.25 Mil.
Direct Digital Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2026 was -0.023 (Jun. 2025 ) + 0 (Sep. 2025 ) + -0.049 (Dec. 2025 ) + 0 (Mar. 2026 ) = $-0.07 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.
Direct Digital Holdings (DRCT) has a Sloan Ratio % of 0.00% as of Mar. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Direct Digital Holdings and its competitors.
Is Direct Digital Holdings' Sloan Ratio % too high?
Direct Digital Holdings' current Sloan Ratio % is 0.00%. Overall, Direct Digital Holdings has a GF Score™ of 43/100 and is considered Possible Value Trap, reflecting its overall financial health beyond just this single metric.
How does Direct Digital Holdings' Sloan Ratio % compare to HAO and DBMM?
Direct Digital Holdings' Sloan Ratio % of 0.00% can be compared against companies in the Media - Diversified 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 Media - Diversified company?
A good Sloan Ratio % depends on the Media - Diversified 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 Direct Digital Holdings and its competitors. Direct Digital Holdings's current Sloan Ratio % is 0.00%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Direct Digital Holdings stock overvalued right now?
Based on GuruFocus' analysis, Direct Digital Holdings (DRCT) is currently considered Possible Value Trap. The stock's GF Value™ is $20.21, compared to a current price of $2.58 — trading 87.2% below its estimated fair value. The current Sloan Ratio % is 0.00%. Direct Digital Holdings' overall GF Score™ is 43/100 with 6 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 Direct Digital Holdings (DRCT), the current Sloan Ratio % is 0.00% 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 Direct Digital Holdings (DRCT) Overvalued in 2026?
Based on GuruFocus' analysis, Direct Digital Holdings stock appears to be undervalued.
The current stock price of $2.58 is trading 87.2% below its estimated GF Value™ of $20.21.
GuruFocus considers Direct Digital Holdings to be Possible Value Trap.
Key valuation signals for DRCT:
Sloan Ratio %: 0.00%
GF Value™: $20.21 vs. price of $2.58 (87.2% below fair value)
No single metric tells the full story. See the DRCT stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Direct Digital Holdings Inc is an end-to-end, full-service programmatic advertising platform focused on providing advertising technology, data-driven campaign optimization, and other solutions to underserved and less efficient markets on both the buy-side and sell-side of the digital advertising ecosystem. The company operates two reportable segments: sell-side advertising, which includes the results of Colossus Media, and buy-side advertising, which includes the results of Orange 142 and Huddled Masses. All of the company's revenues are attributed to the United States.
43GF Score
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