The fundamental analysis criteria in First Class Trader is based on stock investing criteria used by the best investors and fund managers of our time; Warren Buffett, Benjamin Graham and Peter Lynch. The fundamental analysis criteria are divided into the following components to capture a comprehensive assessment of each company’s financial health.
Under each component there are a number of fundamental analysis ratios and growth rates (financial performance indicators) as can be seen when clicking and expanding below.
The First Class Trader Research Filter will determine each company’s financial health on a scale of 0-100 by statistically ranking each company against the fundamental analysis criteria below.
Income Sheet Assessment
Ratio /
Growth Rate | Desirable Value | Summary |
No. of Years of EPS Growth
(Out of the last 5 years) | Maximum of 4 | The number of years the Earnings Per Share (EPS) have increased out of the last five years |
No. of Years of negative EPS Results
(Out of the last 5 years) | Minimum of 0 | The number of years of negative EPS results out of the last five years |
No. of Years of Revenue Growth
(Out of the last 5 years) | Maximum of 4 | The number of years the Revenue (Sales) have increased out of the last five years |
| P/E Ratio (TTM) | Low | Price to Earnings ratio over the Trailing Twelve Months (TTM). |
| P/S Ratio (TTM) | Low | Price to Sales ratio. Compares company performance in the same Industry or Sector |
| EPS (MRQ) vs. Same Quarter 1 Year Ago | Positive and
> Market Average | The EPS growth of the Most Recent Quarter (MRQ) results compared to the same quarter one year ago |
| EPS (TTM) vs. TTM 1 Year Ago | Positive and
> Market Average | The EPS growth of the TTM results compared to the TTM one year ago |
| EPS 5 Year Growth | Positive and
> Market Average | The EPS five year growth rate |
| Sales (MRQ) vs. Same Quarter 1 Year Ago | Positive and
> Market Average | The Sales growth of the MRQ results compared to the same quarter one year ago |
| Sales (TTM) vs. TTM 1 Year Ago | Positive and
> Market Average | The Sales growth of the TTM results compared to the TTM one year ago |
| Sales 5 Year Growth | Positive and
> Market Average | The Sales five year growth rate |
Balance Sheet Assessment
| Ratio | Desirable Value | Summary |
| Current Ratio | High | Current Ratio = Current Assets / Current Liabilities.
Measures the ability to meet short term debt obligations. |
| Price / Book Value | Low | Book Value is an estimation of a company's worth on paper. Price / Book Value is used to estimate if a stock is undervalued or overpriced. |
| Price / Tangible Book Value | Low | Tangible Book Value is a company's Book Value minus Intangible Assets and Goodwill. It is a closer representation of what would be received if a company were to go bankrupt. |
| Price / Working Capital | Low | Working Capital = Current Assets - Current Liabilities.
|
Cash Flow Assessment
| Ratio | Desirable Value | Summary |
| FCF / Market Capitalization | High | FCF = Free Cash Flow which equals the operations cash flow minus capital expenditure. Market Capitalization is the Stock Price multiplied by the number of shares outstanding. FCF to Market Capitalization is also known as FCF Yield. |
| FCF / Book Value | High | Free Cash Flow to Book Value |
| FCF / Long Term Debt | High | Free Cash Flow to Long Term Debt (LTD) |
Efficiency & Profitability
Ratio /
Growth Rate | Desirable Value | Summary |
| ROA | Positive and
> Market Average | Return on Assets (ROA) = Net Income / Total Assets |
ROA
(5 Year Growth Rate) | Positive and
> Market Average | ROA growth rate over the past five years |
| ROE | Positive and
> Market Average | Return on Equity (ROE) = Net Income / Shareholder's Equity |
ROE
(5 Year Growth Rate) | Positive and
> Market Average | ROE growth rate over the past five years |
Institutional Holdings
Ratio /
Growth Rate | Summary |
| % Owned by Institutions | The percentage of shares owned by Institutions (large funds etc) |
| 3 Month % Change in Institutional Holdings | The three month percentage change by Institutions |
Debt Ratios
| Ratio | Desirable Value | Summary |
| Long Term Debt / Equity | Low | Long Term Debt (LTD) to Shareholder's Equity is a measure of how much debt a company has used in expanding operations |
| Long Term Debt / Working Capital | Low | Long Term Debt to Working Capital measures how leveraged a company is in terms of its Current Assets minus Current Liabilities |
| Capitalization Ratio | Low to
Market average | Capitalization Ratio = LTD / (LTD + Shareholder's Equity).
Indicates long term viability in regards to withstanding losses and economic downturns |
Dividends
Ratio /
Growth Rate | Desirable Value | Summary |
| Dividend Yield | High | Dividend Yield = Dividend per Share / Price per Share.
Measures how much cash flow you will receive for the invested share price |
Dividend Yield
(5 Year Growth Rate) | Positive | Dividend Yield growth rate over the past five years. |
| Payout Ratio | Depends | Payout Ratio = Dividends per Share / Earnings per Share.
Shows how companies are distributing their earnings |
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[...] list of fundamental analysis criteria to obtain a comprehensive assessment of each company’s financial [...]
[...] list of fundamental analysis criteria to obtain a comprehensive assessment of each company’s financial [...]