Generally, I look back one to two years to see if there has been some form of earnings and sales acceleration. Life is not perfect, and so if one quarter here or there doesn’t accelerate, it may not be a big deal. You can smooth out quarterly results by using a two-quarter rolling average over the past four, six, or eight quarters. Ideally, you want to see a steadily improving trend. In contrast, a trend of a material deceleration, with results trending sharply lower for several quarters or longer, should raise suspicion.
