A profitability trend is the evolution of profit within a business. An upward trend means that profit has generally increased over time in the short or long run. A downward profitability trend means profits are declining. Recognizing problems early in profitability trends gives you a better chance to address revenue and cost issues in play.
Profitability refers to a company's relative ability to generate a profit currently and into the future. However, a new business may not have yielded a quarterly profit, but it could have increasing profitability if its profit trend is improving.
On the contrary, an established business may have generated profit in a recent period, while its recent profitability trends call its future viability into question. In the long run, net profitability is vital to achieving for-profit business objectives. However, profit trends are often a strong sign as to big-picture profitability.
The demonstration of Profitability Trend performance shows the comparison of different quantile portfolios. Portfolios were rebalanced monthly using a market-cap weighted method, with 20 bps deducted as costs per transaction.
| Annual Return |
| Cumulative Return |
| Volatility |
| Sharpe ratio |
| Calmar ratio |
| Max Drawdown |
| Omega ratio |
| Sortino ratio |
| Skew |
| Kurtosis |
| Tail ratio |
| Monthly value at risk |
| Alpha |
| Beta |
| SPY |
| 8.94% |
| 548.48 |
| 14.59% |
| 0.66 |
| 0.17 |
| -52.56% |
| 1.65 |
| 0.99 |
| -0.60 |
| 1.40 |
| 0.98 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 11.28% | 8.00% | 8.93% | 9.93% | 8.92% | 9.47% | 10.56% | 10.63% | 10.61% | 9.45% |
| 931.38 | 436.28 | 546.80 | 690.19 | 546.15 | 620.78 | 794.47 | 808.01 | 803.80 | 618.62 |
| 20.36% | 18.23% | 19.51% | 18.73% | 17.57% | 17.24% | 16.92% | 16.99% | 16.52% | 17.68% |
| 0.63 | 0.52 | 0.54 | 0.60 | 0.58 | 0.61 | 0.68 | 0.68 | 0.69 | 0.60 |
| 0.21 | 0.15 | 0.18 | 0.18 | 0.19 | 0.19 | 0.22 | 0.21 | 0.23 | 0.23 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.71 | 1.54 | 1.58 | 1.65 | 1.58 | 1.62 | 1.69 | 1.70 | 1.73 | 1.59 |
| 1.03 | 0.78 | 0.82 | 0.93 | 0.89 | 0.95 | 1.09 | 1.08 | 1.10 | 0.95 |
| 0.19 | -0.40 | -0.30 | -0.12 | -0.24 | -0.19 | -0.07 | -0.19 | -0.12 | 0.01 |
| 4.99 | 4.86 | 6.74 | 4.31 | 3.06 | 2.49 | 1.94 | 2.72 | 1.89 | 2.35 |
| 1.28 | 1.22 | 1.05 | 1.09 | 1.05 | 1.25 | 1.17 | 1.14 | 1.18 | 1.19 |
| -0.09 | -0.08 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 |
| 4.19% | 1.16% | 1.57% | 2.55% | 1.82% | 2.38% | 3.42% | 3.55% | 3.64% | 2.48% |
| 1.12 | 1.07 | 1.17 | 1.14 | 1.08 | 1.07 | 1.05 | 1.05 | 1.02 | 1.06 |