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.
Lamb Weston Holdings's Sloan Ratio for the quarter that ended in Feb. 2024 was 25.07%.
As of Feb. 2024, Lamb Weston Holdings has a Sloan Ratio of 25.07%, indicating there is a warning stage of accrual build up.
Lamb Weston Holdings Sloan Ratio % Historical Data
The historical data trend for Lamb Weston 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 Lamb Weston Holdings's Sloan Ratio %
For the Packaged Foods subindustry, Lamb Weston 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.
Lamb Weston Holdings's Sloan Ratio % Distribution in the Consumer Packaged Goods Industry
For the Consumer Packaged Goods industry and Consumer Defensive sector, Lamb Weston Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Lamb Weston Holdings's Sloan Ratio % falls into.
Lamb Weston 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.
Lamb Weston Holdings's Sloan Ratio for the fiscal year that ended in May. 2023 is calculated as
Lamb Weston Holdings's Net Income for the trailing twelve months (TTM) ended in Feb. 2024 was 498.8 (May. 2023 ) + 234.8 (Aug. 2023 ) + 215 (Nov. 2023 ) + 146.1 (Feb. 2024 ) = $1,095 Mil.
Lamb Weston Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Feb. 2024 was 426.6 (May. 2023 ) + 334.6 (Aug. 2023 ) + 120.6 (Nov. 2023 ) + 26.3 (Feb. 2024 ) = $908 Mil.
Lamb Weston Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Feb. 2024 was -805.2 (May. 2023 ) + -304.8 (Aug. 2023 ) + -266 (Nov. 2023 ) + -254 (Feb. 2024 ) = $-1,630 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.
Lamb Weston Holdings (NYSE:LW) 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, Lamb Weston Holdings has a Sloan Ratio of 25.07%, indicating there is a warning stage of accrual build up.
Lamb Weston Holdings Sloan Ratio % Related Terms
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Lamb Weston Holdings (Lamb Weston Holdings) Business Description
Lamb Weston is North America's largest and the world's second-largest producer of branded and private-label frozen potato products, both by volume and value. The company's portfolio is anchored by French fries, but it also sells sweet potato fries, tater tots, diced potatoes, mashed potatoes, hash browns, and chips. Nearly 70% of revenue comes from its home market of North America, with none of the other 100 countries the company sells into representing a significant share. McDonald's is Lamb Weston's single largest customer at 13% of fiscal 2023 sales, with no other company representing more than 10%. Lamb Weston became an independent company in 2016 when it was spun off from Conagra.
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