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What is EPS Forecast 3m Revision (%), how is it calculated?

EPS Forecast 3m Revision (%) displayed under Golden Rule 3 is a momentum factor, that measures the 3 month rolling percentage change in forecast earnings per share (EPS) revisions. Changes to forecast revision provide a good gauge of changes to investor sentiment.mceclip0.png

Our extensive research and back-testing processes have demonstrated that including earnings revisions in our application of Golden Rule 3 can generate attractive risk-adjusted returns over time.

Forecast upgrades imply positive sentiment, whereas downgrades indicate negative expectations and are more likely to disappoint. 

We apply the earnings revision over a period of three months because we believe this represents a good balance in capturing more recent earnings changes without the short-term gyrations that can create unnecessary portfolio churn. 

Members can use earning revisions to compare stocks by reviewing Star Growth Stocks or Borderline Star Growth Stocks watchlist and sorting by 'EPS Fcst yr1 3M Rev' column.

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As earnings revision alone can lead to high portfolio turnover, it's important to implement this factor in combination with the other golden rules. 

 

 

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