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.
Applied Digital's Sloan Ratio for the quarter that ended in Feb. 2026 was 26.34%.
Warning Sign:
When sloan ratio (29.52)% higher than 25% or lower than -25%, earnings are more likely to be made up of accruals.
As of Feb. 2026, Applied Digital has a Sloan Ratio of 26.34%, indicating earnings are more likely to be made up of accruals.
Applied Digital (XSWX:APLD) 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 Feb. 2026, Applied Digital has a Sloan Ratio of 26.34%, indicating earnings are more likely to be made up of accruals.
Applied Digital Sloan Ratio % Related Terms
Applied Digital Sloan Ratio % Historical Data
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The historical data trend for Applied Digital'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 Information Technology Services subindustry, Applied Digital'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.
Applied Digital Sloan Ratio % vs Software Industry
For the Software industry and Technology sector, Applied Digital's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Applied Digital'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.
Applied Digital's Sloan Ratio for the fiscal year that ended in May. 2025 is calculated as
Applied Digital's Net Income for the trailing twelve months (TTM) ended in Feb. 2026 was -52.537 (May. 2025 ) + -16.926 (Aug. 2025 ) + -17.511 (Nov. 2025 ) + -99.303 (Feb. 2026 ) = CHF-186.3 Mil.
Applied Digital's Cash Flow from Operations for the trailing twelve months (TTM) ended in Feb. 2026 was 6.855 (May. 2025 ) + -82.023 (Aug. 2025 ) + -15.845 (Nov. 2025 ) + 55.008 (Feb. 2026 ) = CHF-36.0 Mil.
Applied Digital's Cash Flow from Investing for the trailing twelve months (TTM) ended in Feb. 2026 was -201.976 (May. 2025 ) + -249.42 (Aug. 2025 ) + -569.07 (Nov. 2025 ) + -775.207 (Feb. 2026 ) = CHF-1,795.7 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.
Applied Digital (XSWX:APLD) has a Sloan Ratio % of 26.34% as of Feb. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Applied Digital and its competitors.
Is Applied Digital's Sloan Ratio % too high?
Applied Digital's current Sloan Ratio % is 26.34%. Overall, Applied Digital has a GF Score™ of 38/100, reflecting its overall financial health beyond just this single metric.
How does Applied Digital's Sloan Ratio % compare to ?
Applied Digital's Sloan Ratio % of 26.34% 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 Applied Digital and its competitors. Applied Digital's current Sloan Ratio % is 26.34%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Applied Digital stock overvalued right now?
Applied Digital (XSWX:APLD) has a current Sloan Ratio % of 26.34%. The stock's GF Value™ is CHF11.40, compared to a current price of CHF27.30 — trading 139.5% above its estimated fair value. The current Sloan Ratio % is 26.34%. Applied Digital's overall GF Score™ is 38/100 with 7 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 Applied Digital (XSWX:APLD), the current Sloan Ratio % is 26.34% as of Feb. 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 Applied Digital (XSWX:APLD) Overvalued in 2026?
Based on GuruFocus' analysis, Applied Digital stock appears to be overvalued.
The current stock price of CHF27.30 is trading 139.5% above its estimated GF Value™ of CHF11.40.
Key valuation signals for XSWX:APLD:
Sloan Ratio %: 26.34%
GF Value™: CHF11.40 vs. price of CHF27.30 (139.5% above fair value)
No single metric tells the full story. See the XSWX:APLD stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Applied Digital Corp is a designer, developer, and operator of next-generation digital infrastructure across North America. It provides digital infrastructure solutions and cloud services to industries like High-Performance Computing (HPC) and Artificial Intelligence (AI). The company operates in the following business segments: Data Center Hosting Business and HPC Hosting Business. The majority of its revenue is generated from the Data Center Hosting Business, which operates data centers to provide energized space to crypto mining customers.
38GF Score
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