SALES GROWTH – LOWER IS BETTER
The “sales growth lower is better” signal aims to invest in the lowest growing companies in sales. Slower growth is usually observable for value companies in the later stage of the business in which they create the most operating cash flows.
It was previously found in academic research that value companies tend on average to outperform growth companies over the long term.
SALES GROWTH – LOWER IS BETTER SIGNAL
This signal ranks stock according to their sales growth. This allows to identify and purchase stocks that are ranked with the lowest sales growth and (if applicable) short-sell stocks that are ranked with the highest sales growth.
Each day we calculate the sales growth by taking the company’s total revenues during the last four quarters (from the Income Statement) and dividing it by the previous four quarter before that (also from the Income statement). If the denominator is zero or negative, then this signal is NULL.
Later stocks are ranked with the score of 10 to 0, with 10 having the lowest sales growth to 0 having the highest sales growth.
DATA SCOPE & RANGE
Sales growth is calculated daily for over 6,000 stocks in the historical database.
TipRanks calculates sales growth as of January 2011 to present day.