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.
Lithia Motors's Sloan Ratio for the quarter that ended in Mar. 2024 was 14.37%.
As of Mar. 2024, Lithia Motors has a Sloan Ratio of 14.37%, indicating there is a warning stage of accrual build up.
Lithia Motors Sloan Ratio % Historical Data
The historical data trend for Lithia Motors'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 Lithia Motors's Sloan Ratio %
For the Auto & Truck Dealerships subindustry, Lithia Motors'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.
Lithia Motors's Sloan Ratio % Distribution in the Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, Lithia Motors's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Lithia Motors's Sloan Ratio % falls into.
Lithia Motors 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.
Lithia Motors's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Lithia Motors's Net Income for the trailing twelve months (TTM) ended in Mar. 2024 was 297.2 (Jun. 2023 ) + 261.5 (Sep. 2023 ) + 213.5 (Dec. 2023 ) + 162.6 (Mar. 2024 ) = $935 Mil.
Lithia Motors's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2024 was -249.7 (Jun. 2023 ) + 121.5 (Sep. 2023 ) + -295.2 (Dec. 2023 ) + 292.4 (Mar. 2024 ) = $-131 Mil.
Lithia Motors's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2024 was -586.3 (Jun. 2023 ) + -240.1 (Sep. 2023 ) + -30 (Dec. 2023 ) + -1265.9 (Mar. 2024 ) = $-2,122 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.
Lithia Motors (NYSE:LAD) 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, Lithia Motors has a Sloan Ratio of 14.37%, indicating there is a warning stage of accrual build up.
Lithia Motors Sloan Ratio % Related Terms
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Lithia Motors (Lithia Motors) Business Description
Lithia Motors is a retailer of new and used vehicles and related services. The company offers over 45 brands of vehicles at about 350 stores globally including 28 U.S. states at year-end 2022 and entered Canada in mid-2021 with the purchase of Pfaff Automotive and bought Jardine and soon Pendragon in the U.K. in 2023. The company has expanded largely through the acquisition of dealerships in smaller regional markets but now seeks to grow in any part of the U.S. and we expect more deals over time in the U.S. and abroad. Annual revenue in 2022 was $28.2 billion and we see over $50 billion possible in 2025. In 2022, new-car sales were about 46% of total revenue. Lithia was founded in 1946, went public in 1996, and is now the largest U.S. auto dealer. It is based in Medford, Oregon.
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