Reports of the death of the rising eps screener have been exaggerated

The problem

The rising income and EPS growth screener used to operate, at least in part, based on the buzz score, and on estimates. Unfortunately, we lost the following data fields:

  1. All estimates fields
  2. Insider ownership
  3. Institutional ownership
  4. Large block trades

This happened because we had to make tradeoffs when we switched to the new data source. So, I present the new, reconstituted screener for your enjoyment.

The solution

We decided to focus this screener on being simple, and ranking based on what we know works, with the filter that all stocks that passed had to match the rising EPS and rising income criteria.

We ask there that the company be in the top 3rd, that the free cash flow is going up at least 5%, and that the profit margin is also going up by 5% yearly. The rising EPS and rising EBITDA[1], along with these constraints ensure that we’re getting growth stocks. The ranking criteria ensure that we have stocks that will go up. We show the panels below:

Rising EPS
Rising ebitda
Order by

The results

The results, seen from 1995, paint a mixed picture: underperformance until 2000, and market crushing thereafter, marred only by a miserable 2011 and a mediocre 2006 and 2007.

  1. http://www.investopedia.com/terms/e/ebitda.asp
About henry

Henry Crutcher is an avid family guy, board gamer (think Settlers of Catan, Puerto Rico, etc), computer nut, and all around geek. Hailing from Louisville, KY, he has noticed that the weather in Louisville is remarkably similar to the weather in Atlanta, GA despite the 407 miles that separate them. He has two daughters, one cat, and lots of trees. He loves the Miles Vorkosigan series from Lois McMaster Bujold, for its mix of SF, comedy and insight into how people work. He also comsumes more than his fair share of cheesy business/economics books, such as The Ascent of Money by Niall Ferguson, or Farewell to Alms, by Gregory Clark.

More Stories

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.