Criteria | 2 Stars | 1 Stars | Max. Stars |
Revenue Growth (5 yrs) | constant growth | most yrs show growth | 2 |
Net Profit Growth (5 yrs) | constant growth | most yrs show growth | 2 |
Gross Profit Margin (5 yrs) | >= 25% | 15% to 24.99% | 2 |
Cash flow from Ops (5 yrs) | constant growth | all show positive | 2 |
ROE (5 yrs) | >= 15% | 10% - 14.99% | 2 |
Quick Ratio (recent) | >= 1.5 | 1 - 1.49 | 2 |
Debt / Asset Ratio (recent) | <= 0.2 | <= 0.4 | 2 |
P/E ratio (current)* | <= 6 | 6 - 12 | 2 |
Max. | 16 |
* for US stock <= 8 (2 stars), 8 - 15 (1 star).
Now I use China Gaoxian as an example to illustrate how it works:
Revenue growth - 1 star
Net profit growth - 2 star
Gross profit margin - 2 stars
Cash flow from operations - 1 star
ROE - 2 stars
Quick ratio 1.13 - 1 star
Debt / Asset ratio 0.13 - 2 stars
P/E ratio 5.5 - 2 stars
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Total star points: 13
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