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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.
Praxis Precision Medicines (NAS:PRAX) 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, Praxis Precision Medicines has a Sloan Ratio of 38.35%, indicating earnings are more likely to be made up of accruals.
Praxis Precision Medicines Sloan Ratio % Related Terms
Praxis Precision Medicines 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.
PRAX vs KYMR, SYRE, CRNX: Sloan Ratio % Comparison
For the Biotechnology subindustry, Praxis Precision Medicines'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.
Praxis Precision Medicines Sloan Ratio % vs Biotechnology Industry
For the Biotechnology industry and Healthcare sector, Praxis Precision Medicines's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Praxis Precision Medicines's Sloan Ratio % falls into.
Praxis Precision Medicines 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.
Praxis Precision Medicines's Net Income for the trailing twelve months (TTM) ended in Mar. 2026 was -71.127 (Jun. 2025 ) + -73.934 (Sep. 2025 ) + -88.911 (Dec. 2025 ) + -92.561 (Mar. 2026 ) = $-326.53 Mil.
Praxis Precision Medicines's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2026 was -54.676 (Jun. 2025 ) + -65.057 (Sep. 2025 ) + -76.325 (Dec. 2025 ) + -86.152 (Mar. 2026 ) = $-282.21 Mil.
Praxis Precision Medicines's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2026 was 17.894 (Jun. 2025 ) + 50.413 (Sep. 2025 ) + -328.391 (Dec. 2025 ) + -344.275 (Mar. 2026 ) = $-604.36 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.
Praxis Precision Medicines (PRAX) has a Sloan Ratio % of 38.35% as of Mar. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Praxis Precision Medicines and its competitors.
Is Praxis Precision Medicines' Sloan Ratio % too high?
Praxis Precision Medicines' current Sloan Ratio % is 38.35%. Overall, Praxis Precision Medicines has a GF Score™ of 39/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Praxis Precision Medicines' Sloan Ratio % compare to KYMR and SYRE?
Praxis Precision Medicines' Sloan Ratio % of 38.35% can be compared against companies in the Biotechnology 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 Biotechnology company?
A good Sloan Ratio % depends on the Biotechnology 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 Praxis Precision Medicines and its competitors. Praxis Precision Medicines's current Sloan Ratio % is 38.35%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Praxis Precision Medicines stock overvalued right now?
Based on GuruFocus' analysis, Praxis Precision Medicines (PRAX) is currently considered Significantly Overvalued. The stock's GF Value™ is $23.61, compared to a current price of $369.91 — trading 1466.8% above its estimated fair value. The current Sloan Ratio % is 38.35%. Praxis Precision Medicines' overall GF Score™ is 39/100 with 3 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 Praxis Precision Medicines (PRAX), the current Sloan Ratio % is 38.35% 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 Praxis Precision Medicines (PRAX) Overvalued in 2026?
Based on GuruFocus' analysis, Praxis Precision Medicines stock appears to be overvalued.
The current stock price of $369.91 is trading 1466.8% above its estimated GF Value™ of $23.61.
GuruFocus considers Praxis Precision Medicines to be Significantly Overvalued.
Key valuation signals for PRAX:
Sloan Ratio %: 38.35%
GF Value™: $23.61 vs. price of $369.91 (1466.8% above fair value)
No single metric tells the full story. See the PRAX stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Praxis Precision Medicines Inc is a clinical-stage biopharmaceutical company. It is engaged in translating genetic insights into the development of therapies for patients affected by central nervous system disorders characterized by a neuronal excitation-inhibition imbalance. The company applies genetic insights to the discovery and development of therapies for neurological disorders through two proprietary platforms: Cerebrum and Solidus. It has established a diversified, multimodal CNS portfolio with four clinical-stage product candidates across movement disorders and epilepsy, which include Ulixacaltamide, Relutrigine, Vormatrigine, and Elsunersen. The firm operates in only one segment and is focused on discovering and developing therapies for CNS disorders.
39GF Score
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