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Improve Growth Score Metrics

Jeff Partlow 11 months ago • updated by OSV Support 11 months ago 1

Jae,

 

As you know, I sent you the email shown below last week but never received the courtesy of a reply -- so I'll try it here:


I have often used your Quality and Value Scores as good metrics, but never the Growth Score.

This morning provides a good example of why:

BIG just reported earnings and the stock is tanking.  Your Growth Score for them is B and here’s two of their 4 metrics:

Sales % Change TTM    0.1%

Sales 5 Yr +TTM CAGR %   0.2%

 

These sales numbers are anemic (below inflation rate), yet via your Growth Score Guide this is considered a positive growth metric.  No way.

A +5% CAGR is much better growth than +0.2% (obviously), and your model needs to be nuanced enough to reflect that.

 

I  hope you are open-minded when it comes to modifying/improving your metrics.  If you are, I’d be happy to provide suggested Growth Score improvement thoughts.

 

Best wishes,

Jeff Partlow

When looking at it overall, the growth stocks There are also other stocks that have done very well so there seems to be some selective bias.

Because it's not a linear system, there are some counter intuitive factors which requires a lot of testing.

We don't define a stock with a Pio F score of 4 but a CAGR of 5% is better in growth than a stock with a Pio F score of 8 with 0.3% growth. Since we are trying to eliminate low quality stocks as the first criteria and rank them, it's not as easy as just comparing numbers linearly.