Investing Strategy
How this report thinks about a company
A company is judged against its own sector, on as many ratios as the filings support, and never against an absolute threshold. A 30% operating margin is exceptional in a grocer and unremarkable in a software business, so a single cut-off would be measuring the industry rather than the company. Every ratio is ranked as a percentile within its sector, and that percentile is the grade.
Ratios are grouped into five factors and the five average into one composite. Averaging is a deliberate refusal to be clever: a weighting scheme that says profitability matters twice as much as valuation is a view about markets, not a fact about the company, and it would be doing the reader’s thinking for them. Where this report does hold a view, it says so in words rather than burying it in a weight.
Nothing is scored that cannot be measured. A ratio the data does not support is dropped from the average rather than filled with a zero or a sector median, and the count of what was actually graded prints beside every score. A factor graded on four ratios and one graded on twenty are not the same measurement.
The five factors
Each asks one question. Together they are most of what a set of accounts can answer about a business.
| Factor | The question |
|---|---|
| Is the company cheap for what you actually get? | |
| Is the company getting bigger, and does that reach the bottom line? | |
| Does the company turn revenue into money, and keep it? | |
| Could the company survive a bad year? | |
| What has the market been doing with the company? |
Momentum is the shortest of the five by some distance, because price history answers fewer questions than a balance sheet does. It is included because a company whose shares have already run is a different proposition from one whose have not, whatever the accounts say.
Two ratings, deliberately not merged
| Quant rating | Valuation zone | |
|---|---|---|
| The question it answers | How do this company’s ratios rank against its sector? | Is the price below a modelled estimate of what the business is worth? |
| What goes in | Every rankable ratio, including price multiples, as sector percentiles. | The median of thirteen fair-value models, banded by an uncertainty rating. |
| What never goes in | A fair value estimate. | Any sector ranking. |
| What it says | A verdict word, a letter, and a score out of five. | Undervalued, fairly valued, or overvalued. |
They disagree often, and the disagreement is the useful part. A company can rank near the top of its sector and still cost more than any reasonable estimate of its worth; another can be cheap because it deserves to be. Collapsing both into one number would hide exactly the case a reader most needs to see.
What this report will not do
| It does not | Why |
|---|---|
| Give investment advice | A verdict word on a scorecard is a summary of ratios against a sector. It is not a recommendation, it knows nothing about the reader, and it should not be read as one. |
| Score a fair value | Thirteen models produce thirteen answers. Publishing the range and the median is honest; grading a company on whichever one you picked is not. |
| Fill a gap with an estimate | A missing ratio is dropped and the count says so. Substituting a sector median would make an unmeasurable company look average rather than unmeasured. |
| Smooth the analyst tail | Consensus estimates wobble in the outer years as coverage thins. That noise is the actual published data, and hiding it would invent a confidence nobody has. |
| Tag news with sentiment | None is published and this report runs no model that could produce one. A green or red chip on a headline is the easiest way to imply an opinion the page does not hold. |
| Issue a Shariah ruling | The compliance screen is two balance-sheet ratios and a keyword test. Three of the tests the index providers run are not run here at all, and a scholar is the authority. |
The rest of this menu
Every other item here opens something that already exists elsewhere in the product rather than a second copy of it.