Screening for High Five-Year ROE and Minimum Listing Age

Summary

This note outlines a Chinese equity screen that combines a minimum listing age, an amplitude condition, and return on equity above a threshold across five consecutive years. It explains ROE as a measure of profitability and capital use, and includes an example workflow for obtaining listing information and financial indicators from a data service. A separate formula reference is mentioned for checking historical ROE.

The rationale is that sustained high ROE may identify firms with a strong profitability record, but the document offers no backtest or evidence that the screen predicts future returns. It cautions that ROE describes past results, may deteriorate when industries or business conditions change, and is not directly comparable across sectors. Suggested refinements include adding valuation measures such as price-to-earnings or PEG and researching each company. The code example’s date handling and indicator query do not clearly establish that exactly five annual observations are checked, so implementation details would need verification before use.

Key ideas

• The proposed screen combines stock amplitude, listing age, and five consecutive years of elevated ROE.
• ROE summarizes historical profitability and how efficiently a company uses capital.
• Past ROE does not guarantee future profitability, especially when industry conditions change.
• ROE comparisons across industries require care.
• The note suggests adding valuation measures and company-level research, but reports no performance tests.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.