The quality factor refers to the capability of high-quality stocks to earn excess returns over low-quality stocks. Quality companies tend to have high profit margins, high turnover, low earnings volatility and minimal debt. These characteristics can be assessed with the following ratios: return on equity, return on assets, return on capital invested, net and gross profit margins.
Strategy
Value
Technical
Quality
Dividend
Health
Persona
Quality
Definition
The quality factor refers to the capability of high-quality stocks to earn excess returns over low-quality stocks. Quality companies tend to have high profit margins, high turnover, low earnings volatility and minimal debt. These characteristics can be assessed with the following ratios: return on equity, return on assets, return on capital invested, net and gross profit margins.
Further Reading
Strategy
Value
Technical
Quality
Dividend
Health
Persona