Our Rating and Valuation Methodology
How use Eyestock Rating?
How use valuation?
Securities with high Eyestock Rating consistently outperform the market
Annual portfolio return
eyestock
21.1%
S&P 500
13.7%
Portfolio return over 5 years
eyestock
+161%
S&P 500
+90%
What stocks are included in the eyestock portfolio?
Eyestock Rating
Valuation
Market cap
Benchmark outperformance
71%
Information ratio
0.81
Eyestock portfolio consists of an average of 20 US undervalued by Eyestock methodology stocks with high Eyestock Rating. Returns are based on historical performance (backtest method) from January 2019 to December 2023. The portfolio was rebalanced quarterly, and returns were calculated with an equal distribution of weights and taking into account the actual dates on which companies published new reports.
Benchmarks
The Eyestock Rating is calculated based on the relative performance of each of the indicators vs its benchmark.
Benchmarks are calculated both based on our own statistical research as well as insights from other investors such as Warren Buffett, Benjamin Graham, and Peter Lynch.
Profitability
Gross Margin
40%
Net Profit Margin
20%
Earnings quality
100%
Balance
Debt / Equity ratio
0.5
CFO / Debt ratio
1
Current ratio
1.5
Efficiency
ROE
20%
ROIC
20%
Stability
Stability Ratio (2y)
1.5
Stability Ratio (5y)
1
Valuation
Our valuation process emphasizes the use of historical Price-to-Earnings (P/E) values. The P/E ratio, a key metric comparing a company's market price per share to its earnings per share (EPS), is central to our analysis. By evaluating historical P/E ratios, we place a company's current financial metrics within a broader historical context. This comprehensive approach allows us to identify potential investment opportunities by highlighting discrepancies between a stock's market price and its intrinsic value, informed by its historical performance and valuation trends.
The interactive chart below shows the historical valuation of a stock (GRMN)
Greatly Undervalued
If the current P/E is below its minimum historical value (green line), the stock is at the lowest capitalization to its net income ratio over the specified time period. Such an investment could have great potential.
The minimum value level on the charts is indicated by a green line. Pay attention to the periods at the beginning of 2020 and the end of 2022 when the price dropped or came very close to it. GRMN shares at these moments had the status of being greatly undervalued by Eyestock methodology, after which a powerful and confident price growth followed.
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Methodology Constraints
We are very careful about the quality of the data used in our methodology. We meticulously collect data from our official data vendor Finnhub LTD in order to calculate the company's rating as accurately and in detail as possible. But sometimes you may face that the company's rating is not available. This is due to contrains of the methodology or available data.
Eyestock Rating calculations exclude:
Banks
Insurance companies
REITs
Companies without any revenue
We do not calculate Eyestock Rating if:
Fewer than three years of public financial records available
The company's reporting frequency has changed
The data received from the supplier is incomplete
The company does not disclose the data necessary to calculate key indicators