As Stock Rover continues to evolve, we are now heavily focusing on using the comprehensive stock data we collect to provide you with higher level analytics that help you make more informed investment decisions.
We have written two blog posts on the new higher level analytics we have added to Stock Rover. The first blog post was on Fair Value and Margin of Safety. The second posted covered our new Stock Scoring System which offers our concise analysis of a stock in four key dimensions: Valuation, Growth, Quality and Sentiment.
In this blog post I am going to discuss a third new feature that we think will be indispensable to investors when evaluating whether a stock is worthy of capital investment or not. This new feature we call the Investor Warnings Facility. The new component of Stock Rover is designed to makes investors aware of certain characteristics of a given stock that makes it riskier and less desirable from an investment standpoint. The things Stock Rover finds are things that are hard to notice or would require a lot of manual work to figure out.
The screenshot below shows how you find the Investor Warnings Facility in Stock Rover. You select Insight from the grey selector panel on the left, then the ticker you want from the navigation panels. Finally, select the Summary tab within the Insight Panel as shown below.
The Investor Warnings Facility looks at 29 separate issues of potential concern and indicates which ones a given stock is afflicted with (if any) and to what degree. The warnings cover a variety of issues concerning financial and operational performance, price technicals and analyst estimates.
Below is an example of what the Investor Warnings look like from the Insight Summary Panel for IBM.
If you click on the blue Warnings text, Stock Rover will open a window displaying the actual warnings, as shown below.
The Investor Warnings Facility uses color to communicate the severity of the warning. There are three possible severities: Low (Yellow), Medium (Orange) and High (Red), indicating how seriously we think an investor should consider the condition. The flags shown on the insight panel take the color of the most severe warning for that stock, as well as how many warnings a stock has triggered.
Most warnings have multiple possible severities based on the metrics used in the test condition. For example, the High Short Percent warning first triggers as yellow when the Short % of Float is between 3.5% and 5.0%. It triggers orange when the short percentage is between 5% and 10%, and red when it is greater than 10%.
Starting with the financial area, there are a number of things we look at. For example, we examine advanced financial health metrics indicators such as the Piotroski F score, the Altman Z-score and the Beneish M-score. These are all well-known, time-tested indicators that are adept at exposing financial areas of concern. We also look at issues like large discrepancies between GAAP and non- GAAP reported results, as well as late filings, missing financial data and a low financial quality score, which is based on ROIC, margins, interest coverage and debt to equity ratio.
Related to financial performance, but more operationally or quality-of-management oriented, examples of the kinds of issues we look at include declining sales growth, declining EPS growth, earnings misses, dividend cuts, high stock-based compensation, share dilution, and years with negative earnings, cash flow or sales growth. We also look at things like downward EPS revisions, high goodwill and high intangibles.
We also look at a stock’s price technicals and issue warnings when appropriate. For example, high volatility, negative MACD crossovers and price pullbacks.
There are also miscellaneous issues we warn about such as high short interest, low volume and poor value, growth or sentiment scores.
The link below will list all possible warnings that Stock Rover can issue.
Complete Warning List
You can control which warnings you see by disabling warnings you don’t care about. Disabling a warning disables the check for all stocks. Using Autodesk (ADSK) as an example, we see eight separate warnings as shown below.
If we click the checkbox to disable a warning as shown in the above screenshot, we will get the warning message about the warning being disabled for all stocks as shown below.
If you change your mind about a warning, it is easy to re-enable any warnings that have been disabled. This is done by clicking on the arrow to the right of your user name and selecting Preferences from the ensuing menu as shown below.
Here you can both re-enable warnings that have been disabled as well as disable additional warnings. The screenshot below shows this.
We think this new facility will have tremendous value for investors as it will allow the power of the computer to automate the comprehensive checking of a variety of high level issues that would be a Herculean task for investors to perform manually. The warnings that Stock Rover produces can alert investors to situations that are often subtle (e.g. missing data, late filings) that may be very important for the future performance of a stock. This knowledge will allow investor to make decisions at a higher plane of knowledge, with eyes wide open.
The new Investors Warnings Facility is open to all users on an unlimited basis into August. After that, the number of tickers that warnings can be checked for each month will be based on plan, with Premium Plus being unlimited.
Great feature thanks for adding this
very nice feature & time saver for investors.
How often are the warnings updated?
They are updated daily
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