AInvestor Score: Definition and How It Is Calculated

How the score is constructed (step-by-step)

1. Collect feature set: assemble component metrics for the company such as profitability (ROIC, EBITDA margin), growth (revenue or EPS growth rates), cash generation (FCF yield), leverage (net debt / EBITDA), valuation (P/E, EV/EBITDA relative to peers), and price momentum.
2. Sanity filtering: ensure required inputs exist and are numeric; mark missing values and apply sensible defaults or flags. Certain metrics require positive denominators and are excluded when invalid.
3. Winsorize / cap outliers: limit extreme metric values (e.g., top/bottom percentiles) to reduce sensitivity to erroneous or one-off values.
4. Normalize metrics: convert raw metrics to a common 0–100 scale using percentile or z-score mapping within an appropriate universe (sector or global peer set). For example, higher ROIC maps to a higher normalized sub-score while higher leverage maps to a lower sub-score.
5. Apply weights: multiply each normalized sub-score by its predefined weight. Typical weight buckets include Quality (profitability, return metrics), Growth (revenue/EPS growth), Valuation (relative P/E, EV/EBITDA, FCF yield), Momentum (price-based signals), and Financial Health (leverage, liquidity).
6. Aggregate: sum the weighted sub-scores and rescale to a 0–100 range. If any critical metrics are missing, the aggregation applies a penalty or adjusts the denominator so the score remains comparable.
7. Stability smoothing: optionally blend the current-score with recent historical scores to avoid excessive score volatility from a single data revision.
8. Output and flags: return the final numeric score plus component breakdowns (sub-scores, weights), validation flags (e.g., missing inputs), confidence level, any industry-trend adjustment applied, and a success/quality indicator. Downstream consumers use these fields for display, sorting, and filtering.
9. Industry trend adjustments: apply sector trend sentiment to borderline scores only. Positive industry trend: upgrade borderline scores. Negative industry trend: downgrade borderline scores. Neutral industry trend: no adjustment applied. These adjustments are conservative and applied only when the score is near threshold limits.
10. Output summary: the final output includes the numeric score (0–100), component breakdowns (sub-scores and weights), validation flags (missing or invalid inputs), confidence level, any industry-trend adjustment applied, and a success/quality indicator for downstream use.

Notes

• Scores are relative to the scoring universe used for normalization (sector vs. global can change percentiles).
• A score of 80+ typically indicates strong, across-the-board metrics; 40–60 is neutral; below 30 suggests material weaknesses.
• The component breakdown is as important as the headline score — a high score driven purely by momentum differs from one driven by fundamentals.

Interpretation & practical notes

The AInvestor Score provides a composite metric that helps investors quickly assess stocks based on multiple dimensions of quality, growth, and valuation. Higher scores indicate stronger fundamentals, but investors should always review the component breakdown to ensure the score aligns with their investment thesis.

Related terms