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.
Treehouse Foods's Sloan Ratio for the quarter that ended in Dec. 2023 was -8.06%.
As of Dec. 2023, Treehouse Foods has a Sloan Ratio of -8.06%, indicating the company is in the safe zone and there is no funny business with accruals.
Treehouse Foods Sloan Ratio % Historical Data
The historical data trend for Treehouse Foods'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 Treehouse Foods's Sloan Ratio %
For the Packaged Foods subindustry, Treehouse Foods'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.
Treehouse Foods's Sloan Ratio % Distribution in the Consumer Packaged Goods Industry
For the Consumer Packaged Goods industry and Consumer Defensive sector, Treehouse Foods's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Treehouse Foods's Sloan Ratio % falls into.
Treehouse Foods 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.
Treehouse Foods's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Treehouse Foods's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 15.2 (Mar. 2023 ) + 23.3 (Jun. 2023 ) + 7.1 (Sep. 2023 ) + 7.5 (Dec. 2023 ) = $53 Mil.
Treehouse Foods's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was -30.9 (Mar. 2023 ) + -18.9 (Jun. 2023 ) + 60.1 (Sep. 2023 ) + 147 (Dec. 2023 ) = $157 Mil.
Treehouse Foods's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -32 (Mar. 2023 ) + -140.1 (Jun. 2023 ) + 38.3 (Sep. 2023 ) + 360.5 (Dec. 2023 ) = $227 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.
Treehouse Foods (NYSE:THS) 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, Treehouse Foods has a Sloan Ratio of -8.06%, indicating the company is in the safe zone and there is no funny business with accruals.
Treehouse Foods Sloan Ratio % Related Terms
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Treehouse Foods (Treehouse Foods) Business Description
TreeHouse Foods, the largest private label manufacturer in the U.S., is the product of a slew of acquisitions, the most significant being the 2016 acquisition of Ralcorp, Conagra's former private brands business. The firm plays in over 25 categories, including snacks like pretzels and cookies, meals like pasta and dry dinners, and single-serve beverages like pods and ready-to-drink coffee. Retailers represent its most significant end-market, where it sells products for resale under retailer brands, but it also serves foodservice customers (providing a similar service as its retail business), industrial (selling bulk food for repackaging and repurposing), and branded consumer goods firms (under co-packing arrangements). Over 90% of its revenue comes from the U.S.
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