When doing ratios do you take TTM figures [for the Action Score] or do you average for longer periods?
TTM is used because the goal of the Action Score and other ratings and grade is to determine where the company stands now.
When you pick stocks, you want to use data to figure out where the company is going to be 2, 5, 10 years from now.
In the valuation models, we average data over 3 years and more to normalize the data.
The Action Score does things differently by ignoring historical data which could create false impressions. The goal of the Action Score is to find companies that will grow, compound and profit today and tomorrow.
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