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.
NewStar Financial's Sloan Ratio for the quarter that ended in Sep. 2017 was -8.62%.
As of Sep. 2017, NewStar Financial has a Sloan Ratio of -8.62%, indicating the company is in the safe zone and there is no funny business with accruals.
NewStar Financial Sloan Ratio % Historical Data
The historical data trend for NewStar Financial'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 NewStar Financial's Sloan Ratio %
For the Credit Services subindustry, NewStar Financial'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.
NewStar Financial's Sloan Ratio % Distribution in the Credit Services Industry
For the Credit Services industry and Financial Services sector, NewStar Financial's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where NewStar Financial's Sloan Ratio % falls into.
NewStar Financial 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.
NewStar Financial's Sloan Ratio for the fiscal year that ended in Dec. 2016 is calculated as
NewStar Financial's Net Income for the trailing twelve months (TTM) ended in Sep. 2017 was 10.33 (Dec. 2016 ) + 1.382 (Mar. 2017 ) + 4.152 (Jun. 2017 ) + 4.585 (Sep. 2017 ) = $20.4 Mil.
NewStar Financial's Cash Flow from Operations for the trailing twelve months (TTM) ended in Sep. 2017 was 290.43 (Dec. 2016 ) + -135.646 (Mar. 2017 ) + -84.675 (Jun. 2017 ) + 15.947 (Sep. 2017 ) = $86.1 Mil.
NewStar Financial's Cash Flow from Investing for the trailing twelve months (TTM) ended in Sep. 2017 was 72.865 (Dec. 2016 ) + 129.622 (Mar. 2017 ) + 128.934 (Jun. 2017 ) + -51.816 (Sep. 2017 ) = $279.6 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.
NewStar Financial (NAS:NEWS) 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. 2017, NewStar Financial has a Sloan Ratio of -8.62%, indicating the company is in the safe zone and there is no funny business with accruals.
NewStar Financial Sloan Ratio % Related Terms
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NewStar Financial (NewStar Financial) Business Description
NewStar Financial Inc is a finance company which develops specialized platforms for complex financing needs of companies and private investors for the middle market. The company and its subsidiary provides asset management services to institutional customers and also manages private credit funds, sponsored funds, series of funds structured as CLOs and managed accounts. Through specialized lending platforms the company provides senior secured debt financing options to mid-sized companies to fund working capital growth strategies, acquisitions, recapitalizations, purchases of equipment and other capital assets. The company derives its revenues from leveraged finance, business credit, real estate, equipment finance and asset management segments.
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