IMPORTANT DISCLAIMER: Blank Capital Research ("BCR") is a technology platform, not a registered investment advisor or broker-dealer. The algorithmically generated signals, scores, and rankings provided on this site ("God Mode" Signals) are for informational and research purposes only and do not constitute financial advice, investment recommendations, or an offer to sell or solicit an offer to buy any securities.
HYPOTHETICAL PERFORMANCE RESULTS: The "timing scores" and "regime signals" displayed are based on quantitative models. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity.
RISK OF LOSS: Trading in financial markets involves a high degree of risk and may result in the loss of your entire investment. Data provided by third-party sources (Intrinio, Snowflake) is believed to be reliable but is not guaranteed for accuracy or completeness. Past performance is not indicative of future results.
© 2026 Blank Capital Research. All rights reserved. System Version: Aegis V8 (God Mode).
Companies with strong fundamentals and consistent profitability tend to outperform.
Quality investing is built on a simple insight: companies with strong, consistent profitability tend to deliver superior risk-adjusted returns over time. This factor captures the "quality" of a business through metrics that measure operational excellence and financial health.
The academic foundation for quality investing was formalized by Robert Novy-Marx in 2013, who showed that gross profitability (gross profit / assets) is the most powerful predictor of future stock returns among quality metrics. AQR's "Quality Minus Junk" paper by Asness, Frazzini, and Pedersen further demonstrated that a comprehensive quality measure — combining profitability, growth, safety, and payout — delivers large, positive risk-adjusted returns globally.
Quality stocks tend to outperform during market downturns, providing a natural hedge. During the 2008 financial crisis and the 2020 COVID crash, high-quality stocks experienced significantly smaller drawdowns than low-quality peers.
We calculate quality using five sub-metrics, each percentile-ranked within sector peers:
• Gross Profitability (30% weight) — Gross Profit / Total Assets, the strongest single predictor of future returns among quality metrics (Novy-Marx 2013)
• ROIC (25% weight) — Operating Income / Invested Capital, measuring returns on all deployed capital
• Operating Profit / Equity (25% weight) — Operating Income / Shareholders' Equity, capturing operating efficiency
• Accruals Quality (10% weight) — Lower accruals = higher score (inverted), penalizing earnings manipulation
• Financial Leverage (10% weight) — Lower Debt / Total Assets = higher score (inverted), rewarding balance sheet strength
Sub-scores are winsorized at the 1st/99th percentile to limit outlier impact, then weighted into a composite quality score from 0-100. Quality receives a 30% weight in our overall composite — the highest of any factor — reflecting its strong academic evidence.
Novy-Marx, R. (2013)
“The Other Side of Value: The Gross Profitability Premium”
Journal of Financial Economics
Asness, C., Frazzini, A., & Pedersen, L. (2019)
“Quality Minus Junk”
Review of Accounting Studies
Fama, E. & French, K. (2015)
“A Five-Factor Asset Pricing Model”
Journal of Financial Economics
The quality factor is an investment strategy that systematically selects stocks with strong fundamental characteristics — high profitability, consistent earnings, low debt, and efficient capital allocation. Academic research shows high-quality stocks deliver superior risk-adjusted returns over time.
We calculate quality using five sub-metrics: Gross Profitability (GP/Assets, 30%), ROIC (25%), Operating Profit/Equity (25%), Accruals Quality (10%, inverted), and Financial Leverage (10%, inverted). Each metric is percentile-ranked within sector peers and winsorized at the 1st/99th percentile.
Quality receives 30% weight because the academic evidence for its return premium is extremely robust. The "Quality Minus Junk" research by AQR shows it works across markets, time periods, and asset classes. Quality also provides natural downside protection during bear markets.
A high-quality stock has a quality score above 70/100, indicating it ranks in the top 30% of its sector for profitability metrics. These companies typically have wide profit margins, high returns on capital, consistent earnings, and manageable debt levels.
Quality stocks historically experience smaller drawdowns during market downturns. During the 2008 crisis and 2020 COVID crash, high-quality stocks fell significantly less than low-quality peers, making quality a natural defensive factor.