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.
Validus Holdings's Sloan Ratio for the quarter that ended in Jun. 2018 was 1.75%.
As of Jun. 2018, Validus Holdings has a Sloan Ratio of 1.75%, indicating the company is in the safe zone and there is no funny business with accruals.
Validus Holdings Sloan Ratio % Historical Data
The historical data trend for Validus Holdings'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 Validus Holdings's Sloan Ratio %
For the Insurance - Reinsurance subindustry, Validus 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.
Validus Holdings's Sloan Ratio % Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, Validus Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Validus Holdings's Sloan Ratio % falls into.
Validus Holdings 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.
Validus Holdings's Sloan Ratio for the fiscal year that ended in Dec. 2017 is calculated as
Validus Holdings's Net Income for the trailing twelve months (TTM) ended in Jun. 2018 was -244.819 (Sep. 2017 ) + -2.865 (Dec. 2017 ) + 1.75 (Mar. 2018 ) + -47.07 (Jun. 2018 ) = $-293.00 Mil.
Validus Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Jun. 2018 was 251.197 (Sep. 2017 ) + 85.852 (Dec. 2017 ) + 45.942 (Mar. 2018 ) + 117.206 (Jun. 2018 ) = $500.20 Mil.
Validus Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Jun. 2018 was -180.112 (Sep. 2017 ) + -701.025 (Dec. 2017 ) + -271.787 (Mar. 2018 ) + 88.904 (Jun. 2018 ) = $-1,064.02 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.
Validus Holdings (NYSE:VRpBCL.PFD) 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 Jun. 2018, Validus Holdings has a Sloan Ratio of 1.75%, indicating the company is in the safe zone and there is no funny business with accruals.
Validus Holdings Sloan Ratio % Related Terms
Thank you for viewing the detailed overview of Validus Holdings's Sloan Ratio % provided by GuruFocus.com. Please click on the following links to see related term pages.
Validus Holdings Ltd is a holding company for reinsurance and insurance operating companies and investment advisors. The company includes Validus Reinsurance, Talbot Underwriting, Western World Insurance Group, and AlphaCat Managers. Validus Reinsurance is a Bermuda-based reinsurer focused on treaty reinsurance. Talbot is a specialty insurance group that mainly operates in the Lloyd's insurance market. Western World Insurance Group is a U.S. specialty lines insurance company that specialises in excess and surplus lines. AlphaCat Managers provides investment and capital-management advice for third parties and Validus insurance-linked securities, as well as other property-catastrophe and specialty reinsurance investments.
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