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.
Sonic Automotive's Sloan Ratio for the quarter that ended in Dec. 2023 was 7.77%.
As of Dec. 2023, Sonic Automotive has a Sloan Ratio of 7.77%, indicating the company is in the safe zone and there is no funny business with accruals.
Sonic Automotive Sloan Ratio % Historical Data
The historical data trend for Sonic Automotive'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 Sonic Automotive's Sloan Ratio %
For the Auto & Truck Dealerships subindustry, Sonic Automotive'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.
Sonic Automotive's Sloan Ratio % Distribution in the Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, Sonic Automotive's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Sonic Automotive's Sloan Ratio % falls into.
Sonic Automotive 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.
Sonic Automotive's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Sonic Automotive's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 44.552 (Mar. 2023 ) + 21.598 (Jun. 2023 ) + 64.091 (Sep. 2023 ) + 35.488 (Dec. 2023 ) = €166 Mil.
Sonic Automotive's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was -31.756 (Mar. 2023 ) + 13.937 (Jun. 2023 ) + 115.345 (Sep. 2023 ) + -109.948 (Dec. 2023 ) = €-12 Mil.
Sonic Automotive's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -100.405 (Mar. 2023 ) + 13.199 (Jun. 2023 ) + -73.273 (Sep. 2023 ) + -43.374 (Dec. 2023 ) = €-204 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.
Sonic Automotive (STU:SA8A) 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, Sonic Automotive has a Sloan Ratio of 7.77%, indicating the company is in the safe zone and there is no funny business with accruals.
Sonic Automotive Sloan Ratio % Related Terms
Thank you for viewing the detailed overview of Sonic Automotive's Sloan Ratio % provided by GuruFocus.com. Please click on the following links to see related term pages.
Sonic Automotive is one of the largest auto dealership groups in the United States. The company has 108 franchised stores in 18 states, primarily in metropolitan areas in California, Texas, and the Southeast, plus 18 EchoPark and 7 Northwest Motorsports used-vehicle stores, and 16 collision centers. The company derives revenue from new and used vehicles plus parts and collision repair, finance, insurance, and wholesale auctions. Luxury and import dealerships make up about 83% of franchise new-vehicle revenue, while Honda, BMW, Mercedes, and Toyota constitute about 56% of new-vehicle revenue. BMW is the largest brand at about 26%. 2022's revenue was $14 billion, with EchoPark's portion totaling $2.5 billion. Sonic bought RFJ Auto in December 2021, which added $3.2 billion in sales.
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