Price & Market BehaviorExtended setlive in productionNew

profitability trend

Updated quarterlyData needs: mediumlong onlyshort onlylong short

2017

Akbas, F., Jiang, C., & Koch, P. D. (2017). The Trend in Firm Profitability and the Cross-Section of Stock Returns. The Accounting Review, 92(5), 1-32.

Read the paper →

In plain terms

Buy companies whose profitability has been steadily climbing quarter after quarter, and short those where it is steadily falling.

How it works

The recent multi-quarter TRAJECTORY (slope) of operating profitability predicts future profitability and returns with information not subsumed by the LEVEL of profitability, earnings momentum, or accruals. A rising profit trend is a clean read on innovations to true economic profitability; investors underreact, so the trend forecasts next-quarter surprise and subsequent returns. Operating profitability is operating_income/total_assets; the trend is the OLS slope of the trailing window of quarterly OP, run per-ticker on its own history.

Live results

5 times picked on its own · 6 times inside a blend (6 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 6 such blended picks (6 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)

Loading substrate evidence…

Data dependencies

Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
Key metrics
A data feed this strategy reads, refreshed on its normal schedule.

Expected edge

An accelerating profitability trajectory forecasts higher returns because investors underreact to the slope of underlying profitability, separate from its level.

Related families

expected investment growth (q5)Price & Market Behavior

Buy companies whose capital spending looks set to accelerate next year and avoid those where it is set to shrink.

Explore profitability trend on alphactor.ai

See which tickers this family is currently firing on, with live signals and rankings.

Open universe with this filter →Browse all 571 families