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What is a VIS Score?

Understanding the Value Investment Score and how it evaluates investment opportunities.

Overview

The Value Investment Score (VIS) is a proprietary 0-100 metric that condenses complex financial analysis into a single, easy-to-understand number. Think of it as a comprehensive health check for stocks, evaluating everything from balance sheet strength to market sentiment.

Unlike simple price-to-earnings ratios or other single-metric approaches, the VIS combines multiple dimensions of analysis to give you a holistic view of a company's investment potential. Higher scores indicate stronger overall investment characteristics, while lower scores suggest potential concerns or overvaluation.

Two Lenses, Two Playbooks

VIS adapts to the investor lens you choose. The Value lens rewards durable cash generation and discount-to-intrinsic value, while the Momentum lens turns up the weighting on acceleration, sentiment, and near-term catalysts. Both modes reuse the four pillars but score and weight them differently.

Value Lens Highlights

  • • Pillar weights: Financial Strength 30%, Earnings Momentum 20%, Valuation 35%, Narrative 15%
  • • Emphasizes ROIC durability, free-cash-flow coverage, and intrinsic value gaps
  • • Penalizes stretched multiples and fragile balance sheets
  • • Looks for steady earnings cadence that backs long-term ownership

Momentum Lens Highlights

  • • Pillar weights: Financial Strength 20%, Earnings Momentum 35%, Valuation 15%, Narrative 30%
  • • Focuses on EPS acceleration, revenue beats, and guidance revisions
  • • Rewards prolific news flow, ownership breadth, and upcoming catalysts
  • • Introduces a Trend Persistence subscore blending 3M and 6M return z-scores
  • • Uses valuation as a risk check instead of a strict hurdle

Score Interpretation

Strong (70-100)

70+

High-quality companies with strong fundamentals, attractive valuations, and positive momentum. These stocks typically warrant BUY recommendations for value investors.

Moderate (40-69)

40-69

Mixed signals with some strengths and weaknesses. These stocks may be fairly valued or require closer examination. Often result in HOLD recommendations.

Weak (<40)

<40

Concerning fundamentals, overvaluation, or negative trends. These stocks typically receive SELL recommendations and may present high risk for value investors.

The Four Pillars of VIS

The VIS score is calculated by analyzing four key dimensions, each contributing to the final score:

1. Financial Strength (Value 30% · Momentum 20%)

Evaluates the company's balance sheet health, liquidity, and capital structure. This pillar looks at debt levels, interest coverage, working capital, and the company's ability to weather economic downturns.

Value Lens Emphasis:
  • • ROIC trend and free-cash-flow coverage
  • • Net debt to FCF and interest coverage cushions
  • • Working-capital discipline and liquidity ratios
  • • Margin resilience across cycles
Momentum Lens Guardrails:
  • • Year-over-year revenue stability backing price action
  • • Operating leverage that sustains trend strength
  • • Leverage ratios that avoid momentum drawdowns
  • • Cash buffers to absorb volatility

2. Earnings Momentum (Value 20% · Momentum 35%)

Measures the company's profitability trends and earnings quality. This includes revenue growth, margin expansion, return on equity, and the sustainability of earnings over time.

Value Lens Emphasis:
  • • Multi-year EPS consistency and margin quality
  • • Free-cash-flow conversion of earnings
  • • Return on equity relative to sector peers
  • • Revenue growth steadiness without volatility spikes
Momentum Lens Signals:
  • • Price trend persistence via 3M and 6M return z-scores
  • • Sequential EPS acceleration and surprise cadence
  • • Guidance revisions, beat frequency, and analyst drift
  • • Volume-adjusted revenue momentum by segment
  • • Short-term operating leverage expansion

3. Valuation (Value 35% · Momentum 15%)

Assesses whether the stock is trading at an attractive price relative to its fundamentals and peer group. This is the heart of value investing - finding quality companies at reasonable prices.

Value Lens Emphasis:
  • • Discounted cash-flow gap versus market price
  • • FCF yield percentile versus history and sector
  • • Relative multiples (P/E, EV/EBITDA, P/S) vs. peers
  • • Balance between growth assumptions and cost of capital
Momentum Lens Risk Checks:
  • • Multiple expansion that could stall momentum
  • • Relative valuation stretch versus sector medians
  • • Inverted FCF-yield percentile to flag overly defensive setups
  • • Historical valuation bands that flag exhaustion
  • • Discount to growth trajectory versus peers

4. Market Narrative (Value 15% · Momentum 30%)

Captures qualitative factors including market sentiment, competitive positioning, growth catalysts, and potential risks. This pillar considers the broader context beyond pure numbers.

Value Lens Perspective:
  • • Management stewardship and capital allocation
  • • Competitive moat durability and industry structure
  • • Long-horizon growth thesis support
  • • Insider alignment and institutional ownership quality
Momentum Lens Catalysts:
  • • Upcoming earnings, product launches, or macro catalysts
  • • Headline velocity, sentiment shifts, and social traction
  • • Participation breadth: insider/institutional flows
  • • Risk events that could break price momentum

Calculation Methodology

The VIS score is calculated through a multi-step process:

  1. 1.
    Data Normalization: Raw financial metrics are standardized and normalized to create comparable scores across different companies and industries.
  2. 2.
    Pillar Scoring: Each of the four pillars is scored independently on a 0-100 scale based on the underlying metrics and their historical trends.
  3. 3.
    Weighted Aggregation: Pillar scores are combined using lens-specific weights: Value (30/20/35/15) and Momentum (20/35/15/30) across Financial Strength, Earnings Momentum, Valuation, and Market Narrative respectively. Momentum also applies a Trend Persistence overlay derived from 3M and 6M return z-scores.
  4. 4.
    Sector Adjustment: Scores are calibrated relative to sector peers to account for industry-specific characteristics and norms.
  5. 5.
    Final Score: The result is a single 0-100 number representing the overall investment quality and value proposition of the stock.
  6. 6.
    Distribution Normalization: Momentum VIS outputs are converted to a percentile-derived 0-100 scale where only the top 0.5% of the universe reach 98 or higher, ensuring elite scores remain rare.

What the VIS Score Means

What VIS Does:

  • • Provides a quick, at-a-glance assessment of investment quality
  • • Combines multiple dimensions of analysis into a single metric
  • • Enables easy comparison between different investment opportunities
  • • Highlights companies with strong fundamentals and attractive valuations
  • • Serves as a starting point for deeper research and due diligence
  • • Adapts to different investor modes (Value, Momentum, Dividend)

What the VIS Score Does NOT Mean

What VIS Does NOT Do:

  • • Guarantee future returns - Past performance and current metrics don't predict future price movements
  • • Replace comprehensive research - VIS is a screening tool, not a complete investment analysis
  • • Account for all risks - Black swan events, regulatory changes, and unforeseen disruptions aren't captured
  • • Time market entries/exits - VIS doesn't provide trading signals or optimal timing recommendations
  • • Substitute for professional advice - Always consult qualified financial advisors for personalized guidance
  • • Consider your personal situation - Risk tolerance, time horizon, and financial goals are individual factors

⚠️ Critical Investment Disclaimer

DO NOT make investment decisions based solely on the VIS score.

The VIS score is an educational tool designed to help you learn about fundamental analysis and value investing principles. It should never be the only factor in your investment decisions.

Before investing, you should:

  • Conduct thorough due diligence on any company
  • Read financial statements, annual reports, and SEC filings
  • Understand the business model, competitive landscape, and industry dynamics
  • Consider your personal financial situation, risk tolerance, and investment goals
  • Consult with qualified financial, tax, and legal professionals
  • Diversify your portfolio to manage risk
  • Consider the time horizon for your investments

Remember: All investing involves risk of loss. No scoring system, algorithm, or AI model can predict the future or eliminate investment risk. Historical performance does not guarantee future results.

How to Use VIS Effectively

✓ Screening Tool

Use VIS to quickly identify companies worth researching further. High scores can help you build a watchlist of potential investments.

✓ Comparative Analysis

Compare VIS scores across companies in the same sector to identify relative value and strength differences.

✓ Learning Framework

Study how different financial metrics and fundamentals contribute to the overall score to deepen your understanding of value investing.

✓ Research Starting Point

Use the VIS breakdown to identify areas requiring deeper investigation - weak pillars may signal risks or opportunities.

See VIS in Action

Generate a report for any stock and explore how the VIS score breaks down across the four pillars.

Generate Report