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Financial Factory

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FF Stock Rank Methodology

The FF Stock Rank is a stock ranking system that ranks listed US companies/stocks along quality and sentiment dimensions using a multi-factor scoring methodology. FF Stock Rank is a numerical ranking system that uses quantifiable factors.

A brief presentation of the methodology is found below. Feel free to contact us for further information.

Universe

The initial universe consists of all listed US stocks, amounting to more than 5,000 securities. A few filters are applied with the purpose of excluding stocks not suitable for investments. The filters are:

  • Company size; small-, mid- and large capitalization stocks are included, meaning no micro-caps.
  • Stock price; only stocks with a current stock price exceeding $5, i.e. no penny stocks.
  • Liquidity; stocks with low average daily volume are excluded.
  • Optionable; to retain the possibility of using the versatility that options bring, only stocks that have options listed are included.

After applying these filters, more than 2,000 US stocks remain.

FF Quality Rank

This ranking creates a composite score for every company in the universe based on ‘quality’ factors. The factors are in areas such as sales and earnings growth, return on equity, profit margins, debt positions. The scores range from 0% to 100%. High scores are given solid companies as evidenced by strong scoring on the individual factors.

Individual stock scores are aggregated to form industry scores, resulting in the possibility of determining high/low ‘quality’ industries.

FF Sentiment Rank

This ranking creates a composite score for every company in the universe based on ‘sentiment’ factors. The factors are in areas such as earnings estimates, price momentum, analysts’ ratings. The scores range from 0% to 100%. High scores are given companies that are experiencing good sentiment/momentum.

Individual stock scores are aggregated to form industry scores, resulting in the possibility of determining high/low ‘sentiment’ industries.

Update frequency

The ranking is updated weekly, typically during Mondays or Tuesdays, based on data as of the previous Friday. End-of-week-ranks are often available before market opening on Mondays.