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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 May. 2026, MSC Industrial Direct Co has a Sloan Ratio of 0.42%, indicating the company is in the safe zone and there is no funny business with accruals.
MSC Industrial Direct Co (NYSE:MSM) 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 May. 2026, MSC Industrial Direct Co has a Sloan Ratio of 0.42%, indicating the company is in the safe zone and there is no funny business with accruals.
MSC Industrial Direct Co Sloan Ratio % Related Terms
MSC Industrial Direct Co 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 Industrial Distribution subindustry, MSC Industrial Direct 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.
MSC Industrial Direct Co Sloan Ratio % vs Industrial Distribution Industry
For the Industrial Distribution industry and Industrials sector, MSC Industrial Direct Co's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where MSC Industrial Direct Co's Sloan Ratio % falls into.
MSC Industrial Direct 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.
MSC Industrial Direct Co's Sloan Ratio for the fiscal year that ended in Aug. 2025 is calculated as
MSC Industrial Direct Co's Net Income for the trailing twelve months (TTM) ended in May. 2026 was 56.546 (Aug. 2025 ) + 51.804 (Nov. 2025 ) + 42.484 (Feb. 2026 ) + 80.362 (May. 2026 ) = $231 Mil.
MSC Industrial Direct Co's Cash Flow from Operations for the trailing twelve months (TTM) ended in May. 2026 was 80.256 (Aug. 2025 ) + 29.411 (Nov. 2025 ) + 94.398 (Feb. 2026 ) + 101.726 (May. 2026 ) = $306 Mil.
MSC Industrial Direct Co's Cash Flow from Investing for the trailing twelve months (TTM) ended in May. 2026 was -21.731 (Aug. 2025 ) + -21.189 (Nov. 2025 ) + -21.319 (Feb. 2026 ) + -20.805 (May. 2026 ) = $-85 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.
MSC Industrial Direct Co (MSM) has a Sloan Ratio % of 0.42% as of May. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on MSC Industrial Direct Co and its competitors.
Is MSC Industrial Direct Co's Sloan Ratio % too high?
MSC Industrial Direct Co's current Sloan Ratio % is 0.42%. Overall, MSC Industrial Direct Co has a GF Score™ of 81/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does MSC Industrial Direct Co's Sloan Ratio % compare to POOL and CNM?
MSC Industrial Direct Co's Sloan Ratio % of 0.42% can be compared against companies in the Industrial Distribution 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 an Industrial Distribution company?
A good Sloan Ratio % depends on the Industrial Distribution 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 MSC Industrial Direct Co and its competitors. MSC Industrial Direct Co's current Sloan Ratio % is 0.42%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is MSC Industrial Direct Co stock overvalued right now?
Based on GuruFocus' analysis, MSC Industrial Direct Co (MSM) is currently considered Significantly Overvalued. The stock's GF Value™ is $92.83, compared to a current price of $123.82 — trading 33.4% above its estimated fair value. The current Sloan Ratio % is 0.42%. MSC Industrial Direct Co's overall GF Score™ is 81/100 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 MSC Industrial Direct Co (MSM), the current Sloan Ratio % is 0.42% as of May. 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 MSC Industrial Direct Co (MSM) Overvalued in 2026?
Based on GuruFocus' analysis, MSC Industrial Direct Co stock appears to be overvalued.
The current stock price of $123.82 is trading 33.4% above its estimated GF Value™ of $92.83.
GuruFocus considers MSC Industrial Direct Co to be Significantly Overvalued.
Key valuation signals for MSM:
Sloan Ratio %: 0.42%
GF Value™: $92.83 vs. price of $123.82 (33.4% above fair value)
No single metric tells the full story. See the MSM stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Founded in 1941, MSC Industrial Direct originally manufactured and sold cutting tools to metalworking shops in New York. Through a series of acquisitions and organic expansions, MSC has grown into an industrial distribution powerhouse with a focus on specialized metalworking products and services. The firm also distributes a wide breadth of maintenance, repair, and operations supplies. MSC primarily operates in North America, where it derives over 95% of its revenue.
81GF Score
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