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Emerging Markets

An Empirical Analysis: Revisiting Earnings Acceleration as a Source of Diversifying Excess Returns

By Xiaoping Zhang, CFA, CRM,Richard Adams
An artistic image of a burst of green light.

Earnings acceleration—a change in the velocity of growth—indicates something is affecting a company’s business prospects. Identifying that force has been a cornerstone of our growth investment process for more than 30 years.

Our Global Growth Equity Desk expanded the scope of analysis to determine the continued viability of earnings acceleration as a potential source of significant, durable and diversifying excess returns. Does the data still stand up? 

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Research Highlights:

  • Percent of companies with positive earnings over time

  • Distribution of accelerating companies by sector

  • Excess returns over MSCI ACWI Index

  • Excess returns by region and decile

  • Correlation of an earnings acceleration portfolio to three equity factors: momentum, value and size

Meet the Team

Our global growth equity team constructs portfolios of diverse holdings by identifying and investing in companies demonstrating an accelerating and sustainable trend in earnings growth. We believe focusing on inflection points in companies’ fundamentals allows us to identify those in the beginning stages of their growth cycle. This, combined with detailed fundamental analysis and a strict buy/sell discipline, is designed to help us achieve our goal of excess returns over time. Learn More >

Xiaoping Zhang, CFA, CRM

Xiaoping Zhang, CFA, CRM

Senior Quantitative Researcher

Richard Adams
Richard Adams

Senior Investment Director

Vice President

Revisiting Earnings Acceleration

Past performance is no guarantee of future results. Investment returns will fluctuate and it is possible to lose money.

References to specific securities are for illustrative purposes only and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

The information is not intended as a personalized recommendation or fiduciary advice and should not be relied upon for, investment, accounting, legal or tax advice.

No offer of any security is made hereby. This material is provided for informational purposes only and does not constitute a recommendation of any investment strategy or product described herein. This material is directed to professional/institutional clients only and should not be relied upon by retail investors or the public. The content of this document has not been reviewed by any regulatory authority.