The Seven Factors
The Apter Rating evaluates each stock across seven dimensions, each capturing a different aspect of investment quality:
1. Growth (20%) — Revenue growth, EPS growth, and 3-year CAGRs measure the company's expansion trajectory.
2. Profitability (25%) — ROE, ROIC, gross margin, operating margin, and net margin assess how efficiently the company generates profit.
3. Earnings Quality (built into Quality) — Free cash flow conversion and consistency ensure reported earnings translate into actual cash.
4. Financial Strength (built into Risk, 15%) — Debt-to-equity, interest coverage, and current ratio evaluate balance sheet resilience.
5. Valuation (20%) — P/E, P/B, P/S, EV/EBITDA, and FCF yield determine whether the current price is justified by fundamentals.
6. Momentum (20%) — Price relative to moving averages, RSI, and short-term returns capture market sentiment and trend.
7. Risk/Stability (15%) — Beta, 30-day volatility, and drawdown metrics quantify downside exposure.
Relative Scoring
Each factor is scored on a 1-10 scale relative to sector peers. A company is not penalized for having characteristics typical of its industry — a utility company is not marked down for slow growth if that growth rate is above-average for utilities.
This relative approach ensures the final rating identifies the best-in-class stocks within each sector rather than systematically favoring one sector over another.
Risk Gates and Penalties
Extreme conditions trigger automatic penalties regardless of other factor scores. These risk gates include:
- Negative earnings with no clear path to profitability - Debt-to-equity ratios exceeding sector-specific thresholds - Liquidity concerns (current ratio below 0.5) - Extreme volatility spikes (3x historical average)
Risk gates prevent a stock from receiving a high composite rating when fundamental risks are elevated, even if individual factors look attractive.
Score Interpretation
8.0-10.0: Strong conviction. The stock rates well across most or all factors relative to peers.
6.0-7.9: Constructive. The stock shows above-average characteristics on balance, with identifiable strengths.
4.0-5.9: Neutral. Mixed signals; no clear directional lean.
1.0-3.9: Weak. The stock underperforms peers across multiple factors.
The rating is a quantitative assessment, not a buy or sell recommendation. It provides one input for your own research process.
Update Frequency
Ratings are recalculated regularly as new fundamental data and price data become available. Earnings releases, quarterly filings, and significant price movements all trigger rating updates.
The Confidence Score shown alongside the rating indicates data freshness and completeness. A lower confidence score means some data inputs are stale or unavailable, and the rating should be interpreted with additional caution.