The Intrinsic-Valuation.com Quality Rating is derived from 10 criteria, the data of which are obtained from the financial reports of the company in question.
In the below, NROE is the Normalized Return on Equity which is the most important metric to a Value Investor as it is the primary measure of profitability. ROAA is Return on Average Assets.
The criteria used varies slightly depending on the industry with which the company resides. For example Insurance companies have their own set of criteria, as to banks etc.
An important output of the Quality Rating is the Required Return which is a critical input into the Valuation formula.
The Quality Rating is also used in the Investment Grade Score calculation. The Investment Grade Score is the Margin of Safety multiplied by the Quality Rating, divided by 100. This scoring system allows for only those companies with a combination of quality and value to achieve a high result.
The below Quality Rating is completed on around 900 of the most profitable US listed companies which make up the Intrinsic-Valuation.com database.
