O'Neil Earnings Stability

O'Neil Earnings Stability Indicator

This indicator implements William O'Neil's earnings stability analysis, a key factor in identifying high-quality growth stocks. It measures both earnings stability (1-99 scale) and growth rate.

Scale Interpretation:
• 1-25: Highly stable earnings (ideal)
• 26-30: Moderately stable
• >30: More cyclical/less dependable

The stability score is calculated by measuring deviations from the earnings trend line, with lower scores indicating more consistent growth. Combined with the annual growth rate (target ≥25%), this helps identify stocks with both steady and strong earnings growth.

Optimal Criteria:
✓ Stability Score < 25
✓ Annual Growth > 25%

This tool helps filter out stocks with erratic earnings patterns and identify those with proven, sustainable growth records. Green label indicates both criteria are met; red indicates one or both criteria failed."

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The key concepts in these calculations:

Stability Score (1-99 scale):

Lower score = more stable
Takes average deviation from mean earnings
Uses logarithmic scaling to emphasize smaller deviations
Multiplies by 20 to get into 1-99 range
Score ≤ 25 meets O'Neil's criteria


Growth Rate:

Year-over-year comparison (current quarter vs same quarter last year)
Calculated as percentage change
Growth ≥ 25% meets O'Neil's criteria


O'Neil's Combined Criteria:

Stability Score should be ≤ 25 (indicating stable earnings)
Growth Rate should be ≥ 25% (indicating strong growth)
Both must be met for ideal conditions