What Is Profitability Rating?

Prospero.ai's Profitability Ratings is a short-term signal that ranks stocks or ETFs by their potential for strong financial performance. A higher number here indicates a strong potential to yield profits over the next one to two years, suggesting a good long-term bet.

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How to use Profitability.

Profitability Rating ranges from 0 to 100 and can be examined for a certain stock or for an aggregation of stocks such as ETFs.

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A high Profitability Rating (80 and above) indicates a strong financial base and a forecast of consistent profit generation capabilities.  

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A low Profitability Rating (20 and below) indicates a weak financial base and a forecast of inconsistent or low-profit generation capabilities. As with all of the signals, Profitability is a ranking. Though low numbers don’t necessarily mean a loss, as the rating approaches zero, large losses are increasingly likely. 

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A Profitability Rating of 50 indicates a company is in the middle of the rankings, meaning unless other signals are positive, there are probably better options. 

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High-profit companies are generally more stable investments and can provide resilience/support in Bear Markets (periods of poor market performance including loss of stock value.).

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Some high-profit companies may offer attractive Dividends and downside protection through classic stock valuation metrics like P/E Ratio. 

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Update Frequency and Usage for Profitability Rating

Profitability Rating can update as much as a few times per day, depending on analyst behavior.  A large, sudden increase in this number can be great. Conversely, a large decrease could be a very bad sign. Typically, this number can move slowly, so it is always good to keep an eye on it.