How Lician Quant Grades work

Each factor is built from the metrics below. A metric we cannot compute for a stock (no filing, no estimate, no price history) is left out; it never counts against the stock.

1. Peer group. A stock is compared with its sector (Technology, Healthcare, Financials, Consumer Discretionary, Consumer Staples, Industrials, Energy, Utilities, Real Estate, Materials, Communication Services). When a sector has fewer than 10 graded stocks, its stocks are compared with all graded US stocks instead, and the card says so. Share classes of one company (GOOG and GOOGL, BRK.A and BRK.B) count as one peer.
2. Percentile per metric. For each metric we rank the stock among the peers that have that metric: the share of peers it beats, with ties counted half. For valuation multiples a lower value ranks higher. A metric is ranked only when at least 5 peers have it.
3. Losses rank last on multiples. A P/E, P/S, P/FCF, EV/EBITDA or P/B with a zero or negative denominator (a loss, negative cash flow or negative equity) is shown as NM, “not meaningful”, and ranks below every positive multiple. That is reported data, not missing data.
4. Factor score. The average of the stock’s metric percentiles in that factor, with at least 2 metrics, else no grade. The averages are ranked again within the peer group, so grades spread from A+ to F instead of bunching in the middle.
5. Letter grade. The factor score (0 to 100) maps to a letter:

The rating is the equal-weight average of the stock’s factor scores, ranked within its peer group and scaled to 1.00 to 5.00. A stock needs at least 3 factor grades, one of them valuation, growth or profitability, to get a rating; otherwise the card shows the grades it has and says why there is no rating.

• Strong Buy 4.50 – 5.00
• Buy 3.50 – 4.49
• Hold 2.50 – 3.49
• Sell 1.50 – 2.49
• Strong Sell 1.00 – 1.49

Because the rating is a rank within the sector, about one stock in eight in each sector is a Strong Buy and one in eight a Strong Sell. The card shows the sector and how many peers the stock was ranked against.

• Statements: income statements, balance sheets and cash flow statements parsed from SEC filings (10-K, 10-Q). Trailing twelve months is the sum of the last four quarters; when the fourth quarter exists only in the annual report, it is the last fiscal year plus the quarters since, minus the same quarters a year earlier. Statements whose latest period ended more than 460 days ago are not used.
• Market cap: the stored price × shares outstanding; forward P/E uses the consensus EPS from the earnings calendar (EODHD).
• Momentum: adjusted closing prices from EODHD end-of-day files for the latest session and 1, 3, 6 and 12 months earlier. The 12-month return stops one month ago, which avoids the short-term reversal effect.
• Revisions: the EODHD earnings trend for the current and next fiscal quarter (consensus EPS now vs 30 and 90 days ago, and the count of upward and downward revisions in 30 days). Trend data older than 45 days is ignored. Revenue-estimate revisions and changes in analyst ratings are not included yet: we do not store their history.
• Schedule: the grades are recomputed after each US trading day, between 01:00 and 04:00 UTC (Tuesday to Saturday). Each stock keeps one set of grades per day, so grade changes can be shown and the method can be tested on past data.

• ETFs and funds get no grades. The grades compare operating companies with their sector, which does not apply to a basket of stocks.
• Foreign companies (ADRs) that report in another currency get no price-based valuation metrics (their per-share figures are per ordinary share, not per ADR). Growth, margins, momentum and revisions still count, so many get factor grades but no overall rating.
• Blank-check companies (SPACs) and stocks we cannot place in a sector are not graded.

The grades describe how a stock’s reported numbers and price trend compare with its sector today. They do not predict returns and are not investment advice. Read the full disclaimer and the general data methodology.