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.
Arista Networks's Sloan Ratio for the quarter that ended in Mar. 2024 was 10.20%.
As of Mar. 2024, Arista Networks has a Sloan Ratio of 10.20%, indicating there is a warning stage of accrual build up.
Arista Networks Sloan Ratio % Historical Data
The historical data trend for Arista Networks'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 Arista Networks's Sloan Ratio %
For the Computer Hardware subindustry, Arista Networks'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.
Arista Networks's Sloan Ratio % Distribution in the Hardware Industry
For the Hardware industry and Technology sector, Arista Networks's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Arista Networks's Sloan Ratio % falls into.
Arista Networks 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.
Arista Networks's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Arista Networks's Net Income for the trailing twelve months (TTM) ended in Mar. 2024 was 491.885 (Jun. 2023 ) + 545.327 (Sep. 2023 ) + 613.636 (Dec. 2023 ) + 637.692 (Mar. 2024 ) = $2,289 Mil.
Arista Networks's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2024 was 434.09 (Jun. 2023 ) + 698.977 (Sep. 2023 ) + 526.464 (Dec. 2023 ) + 513.805 (Mar. 2024 ) = $2,173 Mil.
Arista Networks's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2024 was -102.906 (Jun. 2023 ) + -225.844 (Sep. 2023 ) + -336.957 (Dec. 2023 ) + -295.65 (Mar. 2024 ) = $-961 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.
Arista Networks (NYSE:ANET) 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, Arista Networks has a Sloan Ratio of 10.20%, indicating there is a warning stage of accrual build up.
Arista Networks Sloan Ratio % Related Terms
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Arista Networks (Arista Networks) Business Description
Arista Networks is a networking equipment provider that primarily sells Ethernet switches and software to data centers. Its marquee product is its extensible operating system, or EOS, that runs a single image across every single one of its devices. The firm operates as one reportable segment. It has steadily gained market share since its founding in 2004, with a focus on high-speed applications. Arista counts Microsoft and Meta Platforms as its largest customers and derives roughly three quarters of its sales from North America.
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