
The Contrarian Way by Kaneki Kojo
A composite score, typically ranging from 0 to 18, that measures how attractively a stock is priced relative to its assets, cash flow, earnings growth, debt load, and dividend yield. In certain edge cases, some stocks could score less than 0 (due to a mix of a heavy debt load, negative book value, and negative free cash flow) or more than 18 (due to a high yet manageable dividend yield).
The Stock Evaluator app is to be used to save time in the preliminary analysis of stocks as part of a full fundamental analysis process. The goal is to put stocks on your radar via the Screener tab and to help you avoid paying a high price for risky assets via the Analysis tab. Inspired by the books The Intelligent Investor (Benjamin Graham) and One Up On Wall Street (Peter Lynch), the valuation score aims to aggregate seven independent valuation signals into a single number.
Four of these signals come from valuation metrics (Price / Book, P/E × Price / Book, Price/FCF, Growth/Earnings), and two come from debt health ratios (Net Debt / Book, Net Debt/FCF). A dividend bonus rewards dividend-paying stocks, while non-payers don't receive a bonus. Dividend payers above a 100% payout ratio receive a penalty to their valuation score because they're paying out more money in dividends to shareholders than they've earned in net income over that same period. The scores are grouped into the following categories:
Beyond the core valuation score, the app provides two historical charts to give you a long-term perspective on a stock's true value:
If a company's total liabilities exceed its total assets (i.e. Book Value < 0), the score is automatically set to −18. This flags technical insolvency if debts had to be paid today. None of the other metrics matter if the balance sheet is underwater.