The Fscore is the heart of the finanzoo.de fundamental analysis. It shows the fair value of one share in one key performance figure. Fundamental balance sheet key performance figures of one company are being weighted based on a points system and then put in relation to the current stock market price of the share. The maximum FScore value is 100 points. The minimum FScore value is -50 points.
A high FScore from a value investing point of view stands for an undervalued share. A low FScore in contrast stands for an overvalued share from a value investing point of view or might also simply highlight other problems one company is facing at the time of the analysis.
The reason for a negative FScore is mainly caused by any kind of special events. For example in the case of short term and very extreme price changes of a share.
How To Invest Into The Stock Market Based On The FScore?!
The FScore makes its users independent of any kind of third party analysis. The FScore is being calculated in a very transparent and comprehensible way. For its calculation only reliable and tested balance sheet key performance figures are being used. Also the calculation uses only end of day stock market prices. The FScore supports its users for a fast, transparent and up-to-date fundamental analysis of listed companies. The FScore provides an innovative and comprehensible form of comparing companies.
Benchmark for Investors
Value oriented investors can use the FScore as a benchmark for their own investment decisions. To do so investors can set their own benchmarks for their own buying or selling positions. By doing so investors are committing to a rule based system for their investment decisions. In this case the FScore is being used as a key performance figure for final decisions. In the longterm such rule based strategies very often proof to be superior compared to pure "gut decisions".
FScore for Stock Screening
It is important to keep in mind that the FScore is also relevant as a relative and comparing key performance figure. Thus, finanzoo.de offers its users the possibility of using different kinds of filters for countries, indices and sectors. Therefore the FScore fully shows its strengths as a comparative figure for different companies and their value. This idea of the FScore is mainly important when value oriented investors are searching for undervalued shares in certain market segment. For example in cases where investors are trying to shape their portfolios with shares of a special sector. For sure, the FScore can never be the only basis for any kind of investment decision and can also not replace further deep analysis. But the FScore can certainly be a method a of screening and can also support final investment decisions.
FScore Key Performance Figures and their Weighting
The FScore contains the following key performance figures:
- Price-Free Cashflow Ratio: 23%
- Equity Ratio: 20%
- Return on Investment: 17%
- Price-Earnings Ratio: 15%
- Price-to-Book Ratio: 15%
- Dividends: 10%
Finanzoo.de follows the rules of calculation and assessment methods that are successfully used in the international financial markets for many years. In most cases finanzoo.de uses the methods of the fundamental analysis of Benjamin Graham. Finanzoo.de however takes the freedom to use its own methods wherever appropriate.
All methods for the calculations of the single key performance figures are being described the the Finanzoo Wiki and are therefore transparent and comprehensible for all users at all times.