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.
The Honest Co's Sloan Ratio for the quarter that ended in Mar. 2024 was -22.97%.
Warning Sign:
When sloan ratio (-30.96)% higher than 25% or lower than -25%, earnings are more likely to be made up of accruals.
As of Mar. 2024, The Honest Co has a Sloan Ratio of -22.97%, indicating earnings are more likely to be made up of accruals.
The Honest Co Sloan Ratio % Historical Data
The historical data trend for The Honest Co'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 The Honest Co's Sloan Ratio %
For the Household & Personal Products subindustry, The Honest Co'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.
The Honest Co's Sloan Ratio % Distribution in the Consumer Packaged Goods Industry
For the Consumer Packaged Goods industry and Consumer Defensive sector, The Honest Co's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where The Honest Co's Sloan Ratio % falls into.
The Honest Co 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.
The Honest Co's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
The Honest Co's Net Income for the trailing twelve months (TTM) ended in Mar. 2024 was -13.416 (Jun. 2023 ) + -8.098 (Sep. 2023 ) + 1.143 (Dec. 2023 ) + -1.403 (Mar. 2024 ) = $-21.8 Mil.
The Honest Co's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2024 was 6.519 (Jun. 2023 ) + 5.673 (Sep. 2023 ) + 9.922 (Dec. 2023 ) + 0.336 (Mar. 2024 ) = $22.5 Mil.
The Honest Co's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2024 was 2.017 (Jun. 2023 ) + -0.402 (Sep. 2023 ) + -0.26 (Dec. 2023 ) + -0.076 (Mar. 2024 ) = $1.3 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.
The Honest Co (NAS:HNST) 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, The Honest Co has a Sloan Ratio of -22.97%, indicating earnings are more likely to be made up of accruals.
The Honest Co Sloan Ratio % Related Terms
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The Honest Co (The Honest Co) Business Description
The Honest Co Inc is a digitally-native consumer products company to make purpose-driven consumer products designed for all people. It is an omnichannel brand, ensuring its products are available wherever its consumers shop through company's Retail and Digital channels. It has three product categories namely; Diapers and Wipes, Skin and Personal Care, and Household and Wellness, out of which the majority of its revenue is generated from the sale of diapers and wipes. The company operates only in the United States.
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