The increase of earnings per share (EPS) at a faster rate. For example, a company will have earnings momentum if its reported earnings per share goes up 5%, 7%, and 10% in successive periods (quarters, years, etc). This happens because of a new technology, management policy, product, etc. A company with earnings momentum becomes hot in the stock and options markets. If the earnings growth rate is accelerating, then the stock price should also move up at an accelerating rate. When earnings per share growth is decelerating from a steady rate, earnings momentum is said to be negative, and the stock price follows suit.
Typically, earnings momentum corresponds to increasing revenues and/or expanding margins. Earnings momentum is the playground of investors, not traders.
