CompanyGraph
Use to find companies where this pattern is active.
Net income is high relative to shareholders' equity; the absolute value of (pretax income − operating income) is large relative to sales; EBIT margin is above the company's historical median while recent sales growth is below baseline (industry-benchmarked).
State
High ROE co-occurs with large absolute non-operating income/expense and the margin-elevation-with-deceleration composite
Emergence
Three readings line up: net income relative to shareholders' equity is high, the absolute value of (pretax income − operating income) is large relative to sales (scaled against 10%), and the industry-benchmarked composite of margin-elevation-and-growth-deceleration is high. The middle reading uses absolute value — it fires on a large non-operating gain or a large non-operating loss, the formula does not distinguish direction.
Limits
Each observation describes a present-period accounting configuration. The ROE reading is one period. The non-operating-gap reading is direction-agnostic and does not classify items as one-time vs recurring (some businesses have recurring non-operating activity — financial-services, holding companies). The reversion-risk composite records margin-vs-history and growth-vs-baseline; the 'reversion' framing is conventional but predictive — the formula records the current setup only.
Explanation
Three readings co-occur: - ROE (ratio-cross-roe): Net income divided by total shareholders' equity for the most recent annual period. - Other Income/Expense to Sales (other-income-expense-to-sales): the absolute value of (pretax income − operating income) divided by sales, mapped against 0–10%. Direction-agnostic — fires on a large non-operating gain or a large non-operating loss. - Margins Elevated With Decelerating Growth (margins-elevated-with-decelerating-growth): industry-benchmarked composite of margin-elevation-vs-historical-median and growth-deceleration-vs-baseline. The non-operating-gap reading does not identify which items make up the gap or whether they recur. The formulas record present configuration; they do not predict whether the configuration is sustainable.
Interpretation
Co-occurrence of a high-ROE reading, a direction-agnostic large non-operating gap reading, and the margin-elevation-with-deceleration composite. The formulas describe present configuration; they do not classify item recurrence or predict normalization.
Required Observations
Margins Elevated With Decelerating Growth
EBIT margin is currently elevated above its own historical median while recent sales growth has slowed.
Other Income Expense To Sales
Non-operating income/expense as percentage of sales
Ratio Cross Roe
Specific cross-statement ratio benchmarked against industry (which ratio depends on the instance)