Stock Ratings

Overview

Hi I am Ken Leoni Marketing Manager for Stock Rover

Today I am going to talk about Stock Rover’s Stock Ratings facility, a powerful capability that helps investors find and vet quality long term companies to invest in.

Viewing Stock Ratings

We will first go over to More Goodies and select Stock Ratings. Let’s take a look at Apple.

Here we see Apple has an overall percentile score of 80 against its Industry Peer Group. Again, the higher the percentile the better the score so an 80 shows Apple just made the top 2 deciles, while there are stocks in the Industry Peer Group that ranked better, even more 8 deciles worth ranked worse. Stock Rover is analyzing metrics in the six categories to arrive at the overall score of 80.

For each of the six categories Growth, Valuation Efficiency, Financial Strength, Dividend, and Momentum Stock Rover selects the set of metrics that are critical to determining the performance of the stock in that specific category. And then for each metric in the category, Stock Rover looks at the value, trajectory and the volatility of that metric and grades it against its peers using a proprietary algorithm it calculates a percentile score. In addition, each metric is assigned a weight based on its importance.

Rating Score Calculation

Let’s take a closer look at the scores:

• in the Growth category Apple scored in 23rd percentile after ranking 82nd out of 108 companies
• for Valuation Apple scored in the 37th percentile after ranking 67 out of 108 companies
• for Operating and Capital Efficiency Apple scored in the 100th percentile, ranking 1 out of 108
• for Financial Strength Apple scored in the 67th percentile after ranking 35th out of 108 companies
• for Dividends Apple scored 67th percentile out of companies that pay dividends
• and Price Momentum the 96th percentile out of all rated stock.

Let’s look more closely at the Growth category to see how Ranking works, keep in mind the concepts I’m about to review are applicable no matter the category.

We see that Apple scored a growth rating in the 23rd percentile, this score certainly played a factor in bringing down the overall score to 80. So why a score in the 23rd percentile?

Stock Rover looked at the value, trajectory and volatility of key growth metrics. It then ranked the performance of Apple relative to its Industry Peer Group. Based on the rank Stock Rover then generated the percentile scores we see here.

Stock Rover analyzed Revenue Growth, Operating Income Growth, Net Income Growth, and EPS Growth by looking at the computed 1 year, 3-year, 5-year and 10-year growths rates. We also look at the slope (which shows the trajectory) of the raw growth metric, as well as the volatility of that growth to arrive at an overall raw score, which is then converted to a percentile against peers.

• Earnings per share and Revenue are slightly below average against peers.
• We also see that Operating Income and EBITDA, score in the lower percentile of the 108 companies in the Industry Peer Group.
• An example of a slightly different calculation is the revenue per employee metric where we look at the industry group percentile ranking along with the trajectory and variability of revenue per employee over time.

Revenue per employee is an example of a metric that has a lower weighting towards the overall growth score verses, for example, EPS growth, which has a higher weighting. So, in this instance even though Apple is at 92% in terms of revenue per employee, it is less impactful to the score than the growth metrics.

We can also see the EPS and Revenue for 2019 are projected to be somewhat flat.

Let’s look at Peers Growth Scores. Stock Rover has identified 8 American Companies from the Computer Hardware Industry that are peers to Apple. You can see the Stock Rover does a really nice job of visualizing how Apple compares to its 8 peers based on Earnings Per Share, Operating Income, EBITDA, and Revenue. The bar charts clearly show Apple’s low scorings metrics which contributed to the Growth score of 23.

Peers Analysis

Below we see a Peers Analysis

Stock Rover displays the 8 selected peers, the sort order is based on the category, in this case Growth. We can see more clearly the peers like Jabil and Tech Data have much better growth scores. Let’s take a closer look Jabil. It is clear that Jabil’s growth story is more compelling, with higher rankings in most all categories.

Stock Ratings in the Table

Stock Rover’s Ratings facility isn’t simply limited to researching individual stocks within an industry group. Premium Plus users can leverage Stock Rover’s specialized “Stock Ratings View” from the Library.

For example, I’ll pick the screener Big Dog’s with Growth and then filter on Stocks with an overall Rating > 89. You can see that this is tremendously powerful as Stock Rover is doing all the heavy lifting with the analytics. Notice we are spanning industry groups, the screener identified stocks based on the following criteria. Let’s now sort to find stocks with the best overall score.

Screening with Stock Ratings

Speaking of screeners, the Stock Ratings are also available as screeners, they are in the Stock Rover Library and available to Premium users. I’ve already imported them. Let’s take a quick look at the Stock Rover Growth Ratings screener. The screener finds large cap stocks on the NYSE or Nasdaq in the top growth decile of Stock Rover’s Growth ratings that are also in the top two deciles for price momentum. So out of 12000+ stocks, Stock Rover quickly identified 17 stocks across all industry groups that met the criteria.

Here are some of the really incredibly powerful screeners available in Stock Rover.

One other thing that is it important to note is that all Stock Rover users benefit from Stock Ratings as the Stock Ratings values are always includes in the Summary Section of the Insight Panel. Premium users can get more detail from here. Keep in mind Stock Rover does require a minimum revenue and volume for a stock to be rated, so you won’t see ratings for some small cap companies.

Conclusion

The Stock Ratings Facility is a powerful part of the Stock Rover investment platform. It eliminates the investor’s need to perform the heavy lifting. Stock Rover’s advanced analytics present results in a clear and concise fashion, helping investors quickly find and vet quality long term companies.

Stock Ratings are especially helpful, as part of any stock research exercise, remember the summary stock ratings information is always available in the Summary tab of the Insight panel.

I hope you found this video helpful, thank you for watching.