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.
Darden Restaurants's Sloan Ratio for the quarter that ended in Feb. 2024 was 6.80%.
As of Feb. 2024, Darden Restaurants has a Sloan Ratio of 6.80%, indicating the company is in the safe zone and there is no funny business with accruals.
Darden Restaurants Sloan Ratio % Historical Data
The historical data trend for Darden Restaurants'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 Darden Restaurants's Sloan Ratio %
For the Restaurants subindustry, Darden Restaurants'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.
Darden Restaurants's Sloan Ratio % Distribution in the Restaurants Industry
For the Restaurants industry and Consumer Cyclical sector, Darden Restaurants's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Darden Restaurants's Sloan Ratio % falls into.
Darden Restaurants 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.
Darden Restaurants's Sloan Ratio for the fiscal year that ended in May. 2023 is calculated as
Darden Restaurants's Net Income for the trailing twelve months (TTM) ended in Feb. 2024 was 315.1 (May. 2023 ) + 194.5 (Aug. 2023 ) + 212.1 (Nov. 2023 ) + 312.9 (Feb. 2024 ) = $1,035 Mil.
Darden Restaurants's Cash Flow from Operations for the trailing twelve months (TTM) ended in Feb. 2024 was 410.6 (May. 2023 ) + 269.1 (Aug. 2023 ) + 340.8 (Nov. 2023 ) + 576.5 (Feb. 2024 ) = $1,597 Mil.
Darden Restaurants's Cash Flow from Investing for the trailing twelve months (TTM) ended in Feb. 2024 was -158.9 (May. 2023 ) + -854.2 (Aug. 2023 ) + -168.7 (Nov. 2023 ) + -153.1 (Feb. 2024 ) = $-1,335 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.
Darden Restaurants (NYSE:DRI) 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. 2024, Darden Restaurants has a Sloan Ratio of 6.80%, indicating the company is in the safe zone and there is no funny business with accruals.
Darden Restaurants Sloan Ratio % Related Terms
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Darden Restaurants (Darden Restaurants) Business Description
Darden Restaurants is the largest restaurant operator in the U.S. full-service space, with consolidated revenue of $10.5 billion in fiscal 2023 resulting in 3%-4% full-service market share (per NRA data and our calculations). The company maintains a portfolio of 10 restaurant brands: Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Ruth's Chris, Yard House, The Capital Grille, Seasons 52, Eddie V's, Bahama Breeze, and The Capital Burger. Darden generates revenue almost exclusively from company-owned restaurants, though a small network of franchised restaurants and consumer-packaged goods sales through the traditional grocery channel contribute modestly. As of the end of its fiscal 2023, the company operated 1,914 restaurants in the U.S.
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