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.
Meritage Homes's Sloan Ratio for the quarter that ended in Dec. 2023 was 6.72%.
As of Dec. 2023, Meritage Homes has a Sloan Ratio of 6.72%, indicating the company is in the safe zone and there is no funny business with accruals.
Meritage Homes Sloan Ratio % Historical Data
The historical data trend for Meritage Homes'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 Meritage Homes's Sloan Ratio %
For the Residential Construction subindustry, Meritage Homes'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.
Meritage Homes's Sloan Ratio % Distribution in the Homebuilding & Construction Industry
For the Homebuilding & Construction industry and Consumer Cyclical sector, Meritage Homes's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Meritage Homes's Sloan Ratio % falls into.
Meritage Homes 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.
Meritage Homes's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Meritage Homes's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 131.301 (Mar. 2023 ) + 186.836 (Jun. 2023 ) + 221.76 (Sep. 2023 ) + 198.851 (Dec. 2023 ) = $739 Mil.
Meritage Homes's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was 124.472 (Mar. 2023 ) + 231.413 (Jun. 2023 ) + 104.207 (Sep. 2023 ) + -104.52 (Dec. 2023 ) = $356 Mil.
Meritage Homes's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -8.728 (Mar. 2023 ) + -13.412 (Jun. 2023 ) + -12.563 (Sep. 2023 ) + -8.92 (Dec. 2023 ) = $-44 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.
Meritage Homes (NYSE:MTH) 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 Dec. 2023, Meritage Homes has a Sloan Ratio of 6.72%, indicating the company is in the safe zone and there is no funny business with accruals.
Meritage Homes Sloan Ratio % Related Terms
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Meritage Homes (Meritage Homes) Business Description
Meritage Homes Corp is engaged as a designer and builder of single-family attached and detached homes. It has operations in three regions: West, Central, and East, which are comprised of ten states: Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Utah. The company operates with two principal business segments; homebuilding and financial services. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services and the financial services segment offer title and escrow, mortgage, and insurance services. The company generates key revenue from the homebuilding segment.
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