Earnings Revision Portfolio

Earnings Revision Portfolio 2018-06-21T16:46:38+00:00

The Earnings Revision Portfolio is a quantitative model with an emphasis on earnings momentum. This strategy is a more growth-oriented strategy than our other portfolios. The value metrics applied in the initial ranking system are not as stringent as the ones in the VQM portfolio allowing for more growth-oriented companies to clear the screen. Emphasizing changes in expectations for current-year and next-year earnings produces a more momentum-focused portfolio.

The Earnings Revision portfolio starts with our Value Ratios ranking system which ranks stocks based on three criteria:

  1. P/E/Recent Growth rate
  2. Earnings Yield
  3. P/E/LT Growth Rate

These ranked stocks are then further winnowed with our Earnings Revision ranking system, cash flow, and a check to make sure at least two analysts are following the stock.

Another screen is employed:

  • Market Cap > $1.5 billion
  • No industry > 40% of the portfolio
  • Rank in the top 20% of our Earnings Revision Model ranking system
  • Positive earnings and free cash flow

Stocks that pass the screen are ranked using our Value Ratios ranking system and the top stocks chosen for the portfolio. Like the VQM portfolio, we can run this portfolio with 20-25 stocks or 10. The portfolio is checked monthly for sell criteria:

  • Rank < the 80th percentile of the Value Ratios ranking system
  • 20% down from purchase price

All the Archer Portfolios work well over time, but it should be noted that they are unlikely to all work well at the same time. There are times when market participant prefer growth strategies and at such times the ER portfolio will tend to outperform. The other two Archer Portfolios – Dividend Growth and VQM – are more likely to work well when Value is in favor.

VQM Portfolio
Dividend Growth Portfolio
Earnings Revision Portfolio
Archer Portfolios

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