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.
As of Mar. 2024, Lincoln Electric Holdings has a Sloan Ratio of -1.35%, indicating the company is in the safe zone and there is no funny business with accruals.
Lincoln Electric Holdings 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.
Competitive Comparison of Lincoln Electric Holdings's Sloan Ratio %
For the Tools & Accessories subindustry, Lincoln Electric 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.
Lincoln Electric Holdings's Sloan Ratio % Distribution in the Industrial Products Industry
For the Industrial Products industry and Industrials sector, Lincoln Electric Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Lincoln Electric Holdings's Sloan Ratio % falls into.
Lincoln Electric 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.
Lincoln Electric Holdings's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Lincoln Electric Holdings's Net Income for the trailing twelve months (TTM) ended in Mar. 2024 was 137.331 (Jun. 2023 ) + 129.343 (Sep. 2023 ) + 156.643 (Dec. 2023 ) + 123.415 (Mar. 2024 ) = $547 Mil.
Lincoln Electric Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2024 was 198.845 (Jun. 2023 ) + 223.104 (Sep. 2023 ) + 121.662 (Dec. 2023 ) + 133.294 (Mar. 2024 ) = $677 Mil.
Lincoln Electric Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2024 was -60.297 (Jun. 2023 ) + -24.763 (Sep. 2023 ) + 26.38 (Dec. 2023 ) + -25.94 (Mar. 2024 ) = $-85 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.
Lincoln Electric Holdings (NAS:LECO) 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. 2024, Lincoln Electric Holdings has a Sloan Ratio of -1.35%, indicating the company is in the safe zone and there is no funny business with accruals.
Lincoln Electric Holdings Sloan Ratio % Related Terms
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Lincoln Electric Holdings (Lincoln Electric Holdings) Business Description
Lincoln Electric is a leading manufacturer of welding, cutting, and brazing products. The firm's portfolio of products includes arc-welding solutions, plasma and oxy-fuel cutting systems, and brazing and soldering alloys, as well as automation solutions. Lincoln Electric serves clients in the general fabrication, heavy industries, automotive, construction, shipbuilding, energy and process industries, among other end markets. Based in Cleveland, Ohio, Lincoln Electric has operations in 19 countries and has 11,000 employees worldwide. The company generated roughly $3.8 billion in sales in 2022.
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