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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.
VirnetX Holding's Sloan Ratio for the quarter that ended in Mar. 2026 was -42.43%.
Warning Sign:
When sloan ratio (-36.54)% higher than 25% or lower than -25%, earnings are more likely to be made up of accruals.
As of Mar. 2026, VirnetX Holding has a Sloan Ratio of -42.43%, indicating earnings are more likely to be made up of accruals.
VirnetX Holding (NAS:VHC) 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, VirnetX Holding has a Sloan Ratio of -42.43%, indicating earnings are more likely to be made up of accruals.
VirnetX Holding Sloan Ratio % Related Terms
VirnetX Holding Sloan Ratio % Historical Data
* Premium members only.
The historical data trend for VirnetX Holding'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.
For the Software - Infrastructure subindustry, VirnetX Holding'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.
VirnetX Holding Sloan Ratio % vs Software Industry
For the Software industry and Technology sector, VirnetX Holding's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where VirnetX Holding'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.
VirnetX Holding's Sloan Ratio for the fiscal year that ended in Dec. 2025 is calculated as
VirnetX Holding's Net Income for the trailing twelve months (TTM) ended in Mar. 2026 was -3.621 (Jun. 2025 ) + -4.348 (Sep. 2025 ) + -6.577 (Dec. 2025 ) + -4.354 (Mar. 2026 ) = $-18.90 Mil.
VirnetX Holding's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2026 was -2.938 (Jun. 2025 ) + -3.004 (Sep. 2025 ) + -5.808 (Dec. 2025 ) + -4.297 (Mar. 2026 ) = $-16.05 Mil.
VirnetX Holding's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2026 was -2.984 (Jun. 2025 ) + 2.852 (Sep. 2025 ) + 5.081 (Dec. 2025 ) + 3.524 (Mar. 2026 ) = $8.47 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.
VirnetX Holding (VHC) has a Sloan Ratio % of -42.43% as of Mar. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on VirnetX Holding and its competitors.
Is VirnetX Holding's Sloan Ratio % too high?
VirnetX Holding's current Sloan Ratio % is -42.43%. Overall, VirnetX Holding has a GF Score™ of 47/100 and is considered Possible Value Trap, reflecting its overall financial health beyond just this single metric.
How does VirnetX Holding's Sloan Ratio % compare to WHEN and RMXI?
VirnetX Holding's Sloan Ratio % of -42.43% can be compared against companies in the Software 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 Software company?
A good Sloan Ratio % depends on the Software 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 VirnetX Holding and its competitors. VirnetX Holding's current Sloan Ratio % is -42.43%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is VirnetX Holding stock overvalued right now?
Based on GuruFocus' analysis, VirnetX Holding (VHC) is currently considered Possible Value Trap. The stock's GF Value™ is $87.52, compared to a current price of $12.40 — trading 85.8% below its estimated fair value. The current Sloan Ratio % is -42.43%. VirnetX Holding's overall GF Score™ is 47/100 with 5 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 VirnetX Holding (VHC), the current Sloan Ratio % is -42.43% 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 VirnetX Holding (VHC) Overvalued in 2026?
Based on GuruFocus' analysis, VirnetX Holding stock appears to be undervalued.
The current stock price of $12.40 is trading 85.8% below its estimated GF Value™ of $87.52.
GuruFocus considers VirnetX Holding to be Possible Value Trap.
Key valuation signals for VHC:
Sloan Ratio %: -42.43%
GF Value™: $87.52 vs. price of $12.40 (85.8% below fair value)
No single metric tells the full story. See the VHC stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
VirnetX Holding Corp is engaged in the business of commercializing a portfolio of patents. It is an Internet security software and technology company with patented technology for secure communications. Its software and technology solutions, including its Secure Domain Name Registry and Technology, VirnetX One, War Room, VirnetX Matrix, and GABRIEL Connection Technology, are designed to be device and location-independent, and enable a secure real-time communication environment for all types of enterprise applications, services and critical infrastructures.
47GF Score
Get the complete analysis for VHC
Sloan Ratio % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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