Comprehensive Stock Analysis Framework & Scorecard

Valuation Metrics

Valuation Metrics help determine whether a stock is trading at a fair price relative to its fundamentals.

Scoring:

- 5 = Significantly undervalued (low P/E, PEG < 1, undervalued via DCF)

- 3 = Fairly valued (ratios near peer average, PEG ~1)

- 1 = Overvalued (high P/E or PEG > 2, poor DCF margin)

Metrics:

- P/E Ratio (Price/Earnings): Shows how much investors are willing to pay per dollar of earnings. Lower than industry

average can signal undervaluation.

- Forward P/E: P/E based on projected future earnings. Indicates expectations of future performance.

- PEG Ratio: P/E divided by expected earnings growth. PEG < 1 suggests undervaluation considering growth.

- P/B Ratio (Price/Book): Compares stock price to book value (assets minus liabilities). P/B < 1 may indicate

undervaluation.

- P/S Ratio (Price/Sales): Compares price to revenue. Useful when earnings are negative or volatile.

- EV/EBITDA: Enterprise value divided by earnings before interest, taxes, depreciation, and amortization. Measures

overall business value against cash earnings.

- DCF Value vs Market Price: Compares intrinsic value based on discounted cash flow analysis to current price.

- Margin of Safety: The percentage discount of current price from intrinsic value. A bigger margin is better.

Growth & Profitability Metrics

These metrics evaluate how efficiently a company grows and generates profits.

Scoring:

- 5 = Strong growth (>20%), high ROE/ROIC (>15%), expanding margins

- 3 = Moderate growth (5-15%), stable returns

- 1 = Low or negative growth, declining margins

 Comprehensive Stock Analysis Framework & Scorecard
Metrics:

- Revenue Growth: Annual increase in sales. Indicates market demand and scalability.

- EPS Growth: Earnings per share growth over time. Critical for shareholder value.

- ROE (Return on Equity): Net income as a % of shareholders' equity. Shows how effectively equity is used to generate

profit.

- ROIC (Return on Invested Capital): Measures how well the company uses all capital (debt + equity) to generate

returns.

- Net Profit Margin: Net income as a % of sales. Higher margins indicate better profitability.

- Operating Margin: Operating income as a % of sales. Reflects core business efficiency.

- Free Cash Flow: Cash left after operational and capital expenses. Important for dividends, debt repayment, or

reinvestment.

Dividend & Financial Health

Assesses how well a company manages its obligations and rewards shareholders.

Scoring:

- 5 = Strong yield (3-6%), low debt, growing dividends

- 3 = Modest yield (1-3%), safe payout ratios, average debt

- 1 = Unsustainable dividends, high debt, weak liquidity

Metrics:

- Dividend Yield: Annual dividend divided by stock price. Indicates cash return on investment.

- Payout Ratio: Portion of earnings paid as dividends. High ratio (>80%) may be unsustainable.

- Dividend Growth Rate: Annualized growth rate of dividends. A sign of financial health and management confidence.

- Debt-to-Equity: Compares total debt to shareholders' equity. Measures financial leverage.

- Interest Coverage: How easily a company can pay interest on debt. EBIT divided by interest expense.

- Current Ratio: Current assets divided by current liabilities. Shows short-term financial health.

- Credit Rating: External rating of creditworthiness, typically by S&P, Moody's, or Fitch.

Technical Indicators
 Comprehensive Stock Analysis Framework & Scorecard

Technical metrics help evaluate market sentiment and price trends.

Scoring:

- 5 = Bullish indicators (MACD crossover, RSI 30-50, price above 200-day MA)

- 3 = Neutral/mixed indicators

- 1 = Bearish indicators (RSI >70, MACD bearish, price below MA)

Metrics:

- RSI (Relative Strength Index): Measures recent price movements on a scale from 0 to 100. <30 = oversold; >70 =

overbought.

- Moving Averages: 50-day and 200-day price averages. Determine trend direction. Golden cross = bullish; death cross

= bearish.

- MACD: Difference between short- and long-term EMAs. Indicates momentum shifts.

- Support/Resistance: Price levels where stock tends to bounce or fall. Useful for timing entries/exits.

- Volume Trends: High volume confirms trends; low volume may indicate weak moves.

Qualitative Factors

These subjective aspects often determine long-term success or failure.

Scoring:

- 5 = Excellent management, clear moat, favorable industry

- 3 = Average management, weak moat

- 1 = Poor governance, high risk, shrinking industry

Factors:

- Management Quality: Leadership's experience, shareholder alignment, and integrity.

- Competitive Moat: Sustainable edge like brand, patents, scale, or network effects.

- Industry Growth: Sector's expected expansion or contraction.

- Market Position: Market share and dominance. Leader or laggard?

 Comprehensive Stock Analysis Framework & Scorecard
- Risks & Catalysts: External or internal events that could influence performance.

Conclusion & Action Plan

Summarize your analysis for a clear decision.

- Strengths: List top 3-5 compelling points.

- Weaknesses: List key concerns.

- Total Score (out of 100): Tally all section scores.

Interpretation Guide:

- 85-100: Strong Buy

- 70-84: Buy

- 50-69: Hold/Watch

- <50: Sell or Avoid

Action Plan:

- Choose your stance: Buy / Hold / Watch / Sell

- Define entry and exit points.

- Include your thesis: Why is this a good or bad investment?

 Comprehensive Stock Analysis Framework & Scorecard
Stock Analysis Worksheet + Example

WORKSHEET TEMPLATE (Fill-in Section)

Stock Name: ABC Corp

Ticker Symbol: ABC

Valuation:

- P/E Ratio: 18 (Industry Avg: 22) -> Score: 4

- PEG Ratio: 0.9 -> Score: 5

- DCF Value: $150 (Current Price: $120) -> Margin of Safety: 20% -> Score: 5

Growth:

- Revenue Growth: 15% -> Score: 4

- EPS Growth: 12% -> Score: 4

- ROE: 16% -> Score: 4

- ROIC: 14% vs WACC 9% -> Score: 5

Dividend/Health:

- Dividend Yield: 2.5% -> Score: 3

- Payout Ratio: 40% -> Score: 4

- Debt-to-Equity: 0.6 -> Score: 4

- Current Ratio: 1.8 -> Score: 4

Technical:

- RSI: 45 -> Score: 4

- MACD: Bullish Crossover -> Score: 4

- Price above 50/200 MA -> Score: 4

Qualitative:

- Management: Experienced, high insider ownership -> Score: 5

 Comprehensive Stock Analysis Framework & Scorecard
- Moat: Strong brand and switching costs -> Score: 5

- Industry: Growing at 8% CAGR -> Score: 4

Total Score: 83 / 100

Decision: BUY (Reason: Strong fundamentals, undervaluation, and positive momentum)

Notes:

- Monitor quarterly earnings for margin expansion.

- Reassess if price exceeds $145 without earnings increase.