Fundamental Inflection Gp Accruals
In plain terms
Companies where gross profit is rising while accruals are falling signal improving earnings quality that the market is slow to price.
How it works
Gross profitability improvement combined with declining accruals (Sloan 1996 accrual anomaly) identifies companies whose cash earnings quality is inflecting up. Both signals have independent explanatory power; the intersection is a high-confidence quality-improvement screen.
Data dependencies
- Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
- Fundamentals
Quarterly fundamentals (income, balance, cash-flow) from FMP + SEC.
Expected edge
- Reported return
- ~3% ann. (GP leg); ~5-10% (accrual short leg)
- Tested over
- 1963-2010 (Novy-Marx); 1962-1991 (Sloan)
GP + falling accruals intersection delivers ~3-5% annual alpha in the long leg.
Related families
Companies with high gross profit / total assets keep beating peers β it's the cleanest measure of 'is this business actually good'.
Cash operating profit (backs out accrual fudges) over book equity is a sharper quality predictor than gross profit. Long the cash-rich.
Companies where ROE improvement is driven by margin gains (not leverage) outperform peers over the next year.
Explore Fundamental Inflection Gp Accruals on alphactor.ai
See which tickers this family is currently firing on, with live signals and rankings.