Back to the index

How to read the composite score

Step 1 of 4

"All I know is: if I buy the right kind of business, at the right price, with the right people, I'll do well over time."

All I know is: if I buy the right kind of business, at the right price, with the right people, I'll do well over time.

Warren Buffett, speech at the University of North Carolina, Chapel Hill, 1996

Every company gets a 0-100 composite score built from four groups: fundamental strength, profitability and efficiency, capital structure, and valuation against intrinsic value.

Each group is a weighted set of criteria - EPS growth, ROIC above 10%, gross margin, price to free cash flow, debt levels - and every criterion is shown with the number behind it. The score is a starting point for reading, never a verdict.

The score does not tell you whether to buy or sell: it tells you where to start reading. A high score built on one weak group - for example excellent profitability but an already expensive valuation - deserves to be opened up and understood, not just read as a final number.

The underlying idea is not new: the right business, the right price, the right people. The composite score follows the same principle in more detail - fundamentals and capital structure cover the business, valuation covers the price, profitability and efficiency describe how well the available capital is managed.