At ShareAnalysis we use a clearly defined research process to analyse equities that is backed by rigorous analysis.
The key benefit of our independent research is that it provides valuable information that is unbiased and factual, presented in unique visuals that are clear to investors.
Our process simplifies an otherwise complex procedure into an easily understood rating matrix. It was created using academic research, based on Warren Buffet investment methodology that centres around Intrinsic Value, testing the parameters of successful stock-picking and reinventing what is delivered to investors, as a world first research tool.
1. The process starts with raw company results and Institutional (professional) analyst forecasts
2. These numbers are then standardised (by vendors like Capital IQ) to provide better comparability between different countries and accounting standards
3. ShareAnalysis then cleans these numbers, standardises timeframes, ensures consistency where data is missing, and finally compares inputs from different vendors to identify potential data entry issues.
4. Once cleansed, the numbers are fed into the ShareAnalysis framework and analysed to create a set of reported numbers and another set of numbers that have been normalised for non-recurring items.
5. This final data set is then entered into our rigorous, proprietary analytical framework, consisting of over 730 algorithms.
6. This rigorous quantitative analysis delivers our final financial scorecards consisting of: Intrinsic Value; Safety Margin; Quality, and Performance scores.
The Financial Scorecard or “Verdict”
The ShareAnalysis Verdict is your one-stop-shop for evaluating a company’s fundamental position, growth potential and risk.
The Verdict instantly tells you if the company’s fundamentals are good or bad, how management has performed in the past, and if future growth is forecast. The Verdict concludes with the Safety Margin – the difference between a company’s share price and its intrinsic value.
Our Verdict is made up of 5 key aspects; Quality, Performance, Historical Growth, Forecast Growth and Safety Margin. It is imperative that the verdict is viewed as a whole, as using one aspect or measure in isolation will disregard vital information.
Financial Scorecard Definitions
· Quality – Rated A through C, the Quality Score measures the financial strength of a business. The Score examines factors such as a company’s earnings and level of debt to determine the likelihood of the company suffering a major liquidity event, such as bankruptcy.
· Performance – Rated 1 through 5, the Performance Score examines year-to-year changes in a company’s financial position and its ability to maintain that position. The Performance Score is also updated half yearly or quarterly, following the release of company results.
· Historical Growth – Historical Change in Value is the percentage of annual growth (or decline) in value for a company. Its calculated annually, following the release of a company’s annual results.
· Forecast Growth – Forecast Change in Value represents the forecast percentage of annual growth (or decline) in value for a company. It can (but rarely does) change daily, as forecast valuations update.
· Safety Margin – The Safety Margin is the difference between the current intrinsic value and the market price. It represents the discount (or premium) of a company’s share price relative to the intrinsic value calculated by ShareAnalysis. The Safety Margin may change daily as share prices move and/or Share Analysis’s intrinsic value estimate changes.
A summary verdict can be found in a company’s “FastFacts” and you will see the verdict on almost every screen in ShareAnalysis. Whether you’re clicking around one of the Aerial Views to open FastFacts or evaluating companies in-depth, the ShareAnalysis Verdict will be there to help you determine if the stock meets your investment goals and criteria and is worth further investigation.
ShareAnalysis uses colour as an indicator, which at a glance, gives an immediate indication as to how the stock is rated, if it can deliver value to shareholders, and whether the share price offers value or not.