What do the various ratings on Stockreports+ mean? What are they based on?
The following are the ratings/scores available on Stockreports+
- Analyst Score
- Fundamental score
- Risk Score
- Relative Valuation score
- Tech Score
- Average score
Analyst score - The Analyst ranking is based on a combination of three component factors: Earnings Surprise, Estimate Revision, and Broker Recommendation Changes. A stock needs to have at least two of the three earnings factors in order to receive a final earnings score. The earnings ratings are calculated weekly and range from 1 to 10, with 10 being most favorable.
Recent analyst upgrades coupled with a company's historic track record of reporting earnings that surpass consensus expectations will lead to a high Earnings Rating. Companies that do not have recent estimate revisions or broker recommendation changes are not penalized.
Fundamental score - Fundamental Rating is based on a combination of four component factors: Profitability, Debt, Earnings Quality, and Dividend. A stock needs to have at least three of the four fundamental factors for a given fiscal quarter in order to receive a final fundamental score. The fundamental ratings are calculated weekly and range from 1 to 10, with 10 being most favourable.
Stocks with attributes such as high margins, low debt levels, and/or growing dividends tend to have a better Fundamental Rating. Companies that do not pay a dividend are not penalized.
Risk Score - Risk Rating is derived by looking at long-term (5-year) and short-term (90-day) stock performance measures: Magnitude of Returns, Volatility, Beta, and Correlation. A stock needs to have at least two of the four factors available in order to receive a final risk score. The risk ratings are calculated weekly and range from 1 to 10, with 10 being awarded to the least risky stocks.
Larger companies with consistent return patterns tend to have a higher Risk Rating.
Relative Valuation score - Relative Valuation Rating is based on a combination of three component factors: Price to Sales, Trailing P/E, and Forward P/E. These common valuation metrics are evaluated against the overall market, the index, and the company's own historic 5-year averages. A stock needs to have at least one of the three relative valuation factors present in order to receive a final relative valuation score. The relative valuation ratings are calculated weekly and range from 1 to 10, with 10 being most favorable.
Stocks having lower valuations tend to produce a higher Relative Valuation Rating.
Tech Score - The tech rating is based on a combination of two technical performance factors: Relative Strength and Seasonality. The relative strength data must be available for the company in order to receive a final price momentum score. The price momentum ratings are calculated weekly and range from 1 to 10, with 10 being most favourable.
Stocks that have demonstrated strong recent relative price performance tend to have a higher Price Momentum Rating.
Average score - The Thomson Reuters Average Score combines a quantitative analysis of 5 widely-used investment decision making tools - Earnings, Fundamental, Relative Valuation, Risk, and technical. The score is calculated weekly. A score of 8 to 10 is considered positive, 4 to 7 is neutral, and 1 to 3 is negative. The score for the previous week may be displayed along with the current week's score for comparison.