Like you, we are always on the hunt for tools and strategies that can give us an edge in selecting winning stocks.
We really liked the Piotroski F-Score
While we admired the Piotroski F-Score (and added it in the Quant Investing Stock Screener) for its ability to sift through the market's noise to find gems, we're constantly exploring ways to refine our tools and provide even more value to you.
That's why we're thrilled to introduce the Financial Strength Score (FS-Score), developed by the great guys at Alpha Architect, to our screener.
We are adding the Financial Strength Score (FS-Score)
You might wonder, "How is the FS-Score different from the F-Score I've come to rely on?"
The F-Score, as many of you know, is a great tool for identifying fundamentally strong stocks using nine accounting-based signals across:
- Profitability,
- Financial leverage
- Liquidity, and
- Operating efficiency.
However, the FS-Score takes this a step further by tweaking these variables and adding another ratio to better align with traditional value-investing principles, ultimately aiming to isolate the financially strongest stocks with even greater precision.
How is the FS-Score calculated
The FS-Score is calculated by evaluating a stock's:
- Current profitability,
- Stability, and
- Recent operational improvements
through a revised set of ten metrics, compared to the nine used in the F-Score.
This includes measures like net income, free cash flow relative to total assets, and net-share repurchases, among others.
Each metric is assigned a binary score, and the total FS-Score ranges from zero (weakest) to ten (strongest), giving you a comprehensive snapshot of a stock's financial health.
The FS-Score improves your returns
In comparing the performance of stocks with high FS-Scores to those with high F-Scores the FS-Score consistently outperforms by a notable margin.
Specifically, value stocks identified using the FS-Score beat the market by an impressive 15.9% annually, compared to 15.2% with the F-Score, over a 40-year period.
This isn't just about higher returns; it's about smarter investing by focusing on quality and stability.
Summary – The FS-Score gives you an additional advantage
In summary, the FS-Score represents another advancement in our quest to provide you with the best possible tools for making informed investment decisions.
Its emphasis on current profitability, stability, and recent operational improvements, along with the inclusion of net-share repurchases and free-cash-flow metrics, offers a more nuanced and effective approach to finding high quality companies.
We're excited about the potential of the FS-Score to help you find financially strong, undervalued stocks with the best chance of outperforming the market.
How to get access to the FS-Score on over 22,000 companies
You can start using the FS-Score right away by signing up for a subscription to the Quant Investing Stock Screener.
Don't miss out on this opportunity to enhance your investment strategy with one of the most powerful tools available.
Sign up today and take the first step towards smarter, more profitable investing.
