We provide a novel framework and empirical results to understand the relation between profitability growth and returns …. By connecting a concave profit function to a standard valuation framework, we argue that if growth-rate risk carries a … positive risk premium, firms with higher current profitability growth should earn higher average returns but this effect should …

Current R&D expenditures forecast cash-based operating profitability up to three years in the future and sometimes as … profitability factor, and zero alphas. Capitalizing R&D to augment book values with intangible assets is unnecessary for asset … pricing, so long as expected profitability is explicitly recognized as a determinant of expected returns …

Accruals are the non-cash component of earnings. They represent adjustments made to cash flows to generate a profit … returns increase in profitability and decrease in accruals. We show that cash-based operating profitability (a measure that … excludes accruals) outperforms measures of profitability that include accruals. Further, cash-based operating profitability …

This study provides theory and evidence to demonstrate how relative firm profitability within an industry affects stock …, and that (2) this inverse relation between relative profitability and return sensitivity is more pronounced when there is … the two fundamental factors that contribute to profitability – cost efficiency and market share – each exhibit an effect …

of the stocks with high idiosyncratic volatility (high IVOL). An out-of-sample prediction of future profitability is … fundamental-based projected profitability and the 52-week high price ratio are important in explaining the IVOL anomaly. Whereas …

enhanced in a way that not only survives common risk adjustments but also maintains profitability after trading costs. For our …