Scores · Reference
Plain definitions for every input in the company profile. Weights are v1 methodology, subject to change.
Return on invested capital. Profit after tax from operations, divided by the capital used to run the business.
NOPAT / average invested capital. NOPAT = EBIT × (1 − tax rate). Invested capital = debt + equity − cash.
A higher figure means more profit for each dollar of capital in the business.
Weight inside Profitability: 30%. Better when the reading is higher.
Operating profit as a share of revenue over the last twelve months.
EBIT / revenue
It shows how much of each sales dollar remains after operating costs.
Weight inside Profitability: 25%. Better when the reading is higher.
Revenue minus the direct cost of goods, as a share of revenue.
(revenue − COGS) / revenue
It describes pricing power and the cost of producing what the company sells.
Weight inside Profitability: 15%. Better when the reading is higher.
Net income as a share of revenue over the last twelve months.
Net income / revenue
It is the share of revenue left after all costs, interest and tax.
Weight inside Profitability: 10%. Better when the reading is higher.
How much quarterly operating margin has bounced around over the last 20 quarters.
Standard deviation of quarterly operating margin
A smaller figure means the profit rate has been steadier.
Weight inside Profitability: 20%. Better when the reading is lower.
The compound annual growth rate of revenue over three years.
(revenue now / revenue 3 years ago) ^ (1/3) − 1
It summarises how fast sales have compounded.
Weight inside Growth: 20%. Better when the reading is higher.
The compound annual growth rate of diluted earnings per share over three years.
Diluted EPS CAGR. If the starting EPS is not positive, a sign rule is used instead of a CAGR.
It describes how per-share earnings have changed, including a move between loss and profit.
Weight inside Growth: 15%. Better when the reading is higher.
The compound annual growth rate of free cash flow per diluted share over three years.
Free cash flow per share CAGR, with the same sign rule as EPS when the start value is not positive.
It tracks cash generation per share rather than accounting earnings alone.
Weight inside Growth: 15%. Better when the reading is higher.
Analyst consensus for the compound growth rate of revenue over the next two years.
Consensus revenue CAGR
It records the growth rate outside analysts have published. It is their figure, not ours.
Weight inside Growth: 20%. Better when the reading is higher.
Analyst consensus for the compound growth rate of earnings per share over the next two years.
Consensus EPS CAGR
It records the earnings path outside analysts have published.
Weight inside Growth: 20%. Better when the reading is higher.
The share of the last eight quarters with revenue above the same quarter a year earlier.
Quarters with positive year-on-year revenue growth / 8
A higher share means sales growth has been more consistent.
Weight inside Growth: 10%. Better when the reading is higher.
Net debt compared with cash operating profit. Net cash sits at the top of the scale.
(total debt − cash) / EBITDA
A lower figure means less debt relative to cash profit.
Weight inside Balance sheet: 25%. Better when the reading is lower.
How many times operating profit covers interest expense.
EBIT / interest expense
A higher multiple means operating profit covers interest more comfortably.
Weight inside Balance sheet: 20%. Better when the reading is higher.
Short-term assets divided by short-term liabilities. Values above 3 are capped.
Current assets / current liabilities, capped at 3
It is a simple look at whether near-term assets cover near-term bills.
Weight inside Balance sheet: 10%. Better when the reading is higher.
A published distress screen for non-manufacturers. Readings under 1.1 are in the distress zone.
6.56×X1 + 3.26×X2 + 6.72×X3 + 1.05×X4
It combines working capital, retained earnings, operating profit and book equity into one screen.
Weight inside Balance sheet: 20%. Better when the reading is higher.
Months of cash on hand if free cash flow is negative. Companies with non-negative free cash flow receive the top of the scale (120 months).
Cash / monthly free-cash-flow burn, or 120 months when free cash flow is not negative
It asks how long cash would last at the recent burn rate.
Weight inside Balance sheet: 10%. Better when the reading is higher.
The annualised change in diluted shares over three years.
(shares now / shares 3 years ago) ^ (1/3) − 1
A higher figure means more new shares, which spreads ownership more thinly.
Weight inside Balance sheet: 15%. Better when the reading is lower.
Free cash flow as a share of revenue over the last twelve months.
(operating cash flow − capex) / revenue
It shows how much cash revenue turns into after investment spending.
Weight inside Cash flow: 25%. Better when the reading is higher.
Free cash flow divided by net income. The ratio is capped at 150%.
FCF / net income, capped at 150%
It compares cash generated with accounting profit. Skipped when net income is not positive.
Weight inside Cash flow: 20%. Better when the reading is higher.
The gap between net income and operating cash flow, scaled by assets.
(net income − operating cash flow) / average total assets
A lower (more negative) figure means more of the profit showed up as cash.
Weight inside Cash flow: 15%. Better when the reading is lower.
How many of the last five years had positive free cash flow.
Count of the last 5 years with free cash flow above zero
More positive years means cash generation has been repeated, not a one-off.
Weight inside Cash flow: 20%. Better when the reading is higher.
The slope of free-cash-flow margin over the last few years.
Linear slope of annual FCF margin
A positive slope means the cash margin has been rising.
Weight inside Cash flow: 10%. Better when the reading is higher.
Free cash flow after stock-based compensation, as a share of revenue.
(FCF − stock-based compensation) / revenue
It treats stock pay as a real cost when looking at cash margin.
Weight inside Cash flow: 10%. Better when the reading is higher.
Free cash flow divided by market capitalisation.
FCF / market cap
A higher yield means more free cash flow per dollar of market value.
Weight inside Valuation: 25%. Better when the reading is higher.
Operating profit divided by enterprise value.
EBIT / enterprise value
It compares operating profit with the value of equity and net debt together.
Weight inside Valuation: 20%. Better when the reading is higher.
Today's price-to-earnings ratio divided by this company's own five-year median. Used only when earnings are positive.
Current P/E / 5-year median P/E
A figure under 1 means the multiple is below this company's own history.
Weight inside Valuation: 15%. Better when the reading is lower.
Enterprise value to sales, divided by operating margin, then ranked in the sector.
(EV / sales) / operating margin, ranked inside the sector
The margin adjustment keeps a high-margin business from looking expensive only because its sales multiple is higher.
Weight inside Valuation: 10%. Better when the reading is lower.
The current price divided by the midpoint of the illustrative model range.
Price / midpoint of the model range
It places the price against the middle of the published model range. It is not a prediction.
Weight inside Valuation: 20%. Better when the reading is lower.
Forward price-to-earnings divided by consensus EPS growth in percentage points. Used only when that growth is positive.
Forward P/E / (consensus EPS growth × 100)
It compares the forward multiple with the growth rate analysts have published.
Weight inside Valuation: 10%. Better when the reading is lower.
The price return from twelve months ago to one month ago, ranked inside the sector.
Price one month ago / price thirteen months ago − 1
Skipping the latest month is a common way to describe medium-term price strength.
Weight inside Momentum and quality: 25%. Better when the reading is higher.
How far the latest price sits from the 200-day simple average.
Close / 200-day average − 1
It describes whether the price is above or below its longer average.
Weight inside Momentum and quality: 10%. Better when the reading is higher.
The six-month price return minus the sample index return over the same window.
6-month return − index return
It shows whether the price has been stronger or weaker than the sample index.
Weight inside Momentum and quality: 15%. Better when the reading is higher.
The percent change in the current-year consensus EPS over three months.
Consensus EPS now / consensus EPS 3 months ago − 1
It records whether published estimates have moved up or down. Missing consensus drops this input.
Weight inside Momentum and quality: 20%. Better when the reading is higher.
Nine pass/fail checks on profitability, leverage, liquidity and efficiency.
Count of 9 accounting checks that pass
A higher count means more of those checks passed on the latest figures.
Weight inside Momentum and quality: 20%. Better when the reading is higher.
A published screen for earnings-manipulation risk. The flag is a reading above −1.78.
−4.84 + 0.920×DSRI + 0.528×GMI + 0.404×AQI + 0.892×SGI + 0.115×DEPI − 0.172×SGAI + 4.679×TATA − 0.327×LVGI
A higher M-score is the direction the screen treats as more concerning.
Weight inside Momentum and quality: 10%. Better when the reading is lower.