Quick scorecard
Seven one-word readings of a company — growth, profitability, financial health, valuation, expectations, positioning and risk — each from four to seven numbers.
Not a rating: nothing nets the seven together. Each band is chosen from the signals behind it, and each signal states the good and bad values it was tested against.
Formula
Signal = 2 × (value − bad) ÷ (good − bad) − 1, clipped to −1…+1 Band = from the weighted mean of the signals
How to read it
Growth, profitability and financial health read strong, improving, neutral, weakening or weak: a good level that is not falling is strong, a poor level that is not turning is weak, and otherwise a clear direction reads improving or weakening. A pooled reading has to pass ±0.35 to count. Valuation reads attractive, fair or expensive; expectations rising, stable or falling; positioning positive, neutral or negative; risk low, moderate or high.
How to use it
The fastest way to see where the argument about a company lies: a strong business with an expensive band and falling expectations is a different debate from a weak business that is cheap.
Limitations
The thresholds are fixed round numbers, the same for every industry. A dimension with less than 40% of its signal weight on file is not drawn.
In Kereon
Investing · Summary. Growth weighs revenue growth, 3-year revenue, EPS and FCF CAGRs, revenue acceleration, last quarter's EPS growth and growth against its sector. Profitability weighs the margins, ROIC, earnings quality and the operating-margin trend. Health weighs leverage, interest coverage, the current ratio, Altman Z, Piotroski and net cash. Valuation weighs the P/E against its own range and its sector, FCF yield, PEG, EV/EBITDA and earnings yield. Expectations weighs revisions, estimate changes, expected growth, beat rate and target distance. Positioning weighs 13F accumulation, insider buying, short interest and institutional ownership. Risk weighs beta, margin volatility, leverage, forward P/E, crowding, profitable years and size.
Also called: scorecard, strong, improving, weakening, attractive, expensive, positioning.