Price & Market BehaviorCore researchlive in production

Gross Profitability

Updated dailyData needs: mediumlong onlyshort onlylong short

In plain terms

Companies with high gross profit / total assets keep beating peers — it's the cleanest measure of 'is this business actually good'.

How it works

(Revenue − COGS) / total_assets — gross profitability — predicts cross-sectional returns as strongly as book-to-market, and has been the mainstream "profitability" leg of the FF5 model since 2015. Distinct from QMJ which composites profitability+growth+safety; standalone GP is the high-beta version that explains more of the cross-section. Status: alive. Decay debate is whether the spread has narrowed (yes: 30-50%) but the sign is intact and replicable across vendors.

Live results

6 times picked on its own · 9 times inside a blend (8 beat the stock) · updated 2026-06-06

This strategy is a frequent ingredient in blends that combine a few strategies on one stock. It has contributed to 9 such blended picks (8 of which beat simply holding the stock). Picking it on its own is only one of the ways it shows up.

How its picks scored vs. buy & hold

Each pick is graded on a recent year it was never tuned on, against simply owning the same stock

Where its edge concentrates

Share of picks in each company-size group that beat buy & hold

How often it trades

Active vs. patient. Bars on the left mean it waits for rare setups; bars on the right mean it trades often

Return vs. buy & hold

How much each pick beat or trailed simply owning the stock over the test year (extreme microcap moves trimmed)

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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: spread narrowed 30-50% but sign intact
Tested over: 1963-2010

Decay debate is whether the spread has narrowed (yes: 30-50%) but the sign is intact and replicable across vendors.

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