Earnings trend fit (EPS stability)
How closely the last five years of earnings per share sit on a straight line, from 0 to 1.
Smooth earnings are usually a sign of a stable business, and occasionally of a managed one.
How it is computed here
R-squared of a straight-line fit to earnings per share over the last five filed years
Computed across several filed fiscal years. Filed under growth. Higher is the stronger reading, other things equal.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- Straightness, not direction: steady decline scores highly.
- Suspiciously smooth earnings in a volatile industry are a reason to read the Beneish score.
- Needs at least three filed years.
Questions
How is earnings trend fit calculated?
R-squared of a straight-line fit to earnings per share over the last five filed years. Computed across several filed fiscal years.
What does earnings trend fit tell a value investor?
Smooth earnings are usually a sign of a stable business, and occasionally of a managed one.
When does earnings trend fit mislead?
Straightness, not direction: steady decline scores highly. Suspiciously smooth earnings in a volatile industry are a reason to read the Beneish score. Needs at least three filed years.