How this site works

qqquant ranks companies by five separate criteria: Profit, Growth, Payout, Safety and Price. The rankings are relative, so a rank of 1 is the best result among the companies that currently qualify. A large company receives no automatic advantage over a smaller company.

You decide how selective each criterion should be. If you set Growth to 33, the result includes only companies in the top 33% for Growth. If you also set Profit to 50, a company must be in both the top 33% for Growth and the top 50% for Profit.

Who is included?

The starting point is shares listed on Nasdaq or the New York Stock Exchange. Being listed is not enough, however. A company must also:

be active and not classified as an ETF or a fund;
have a market capitalization of at least $1 billion;
have a CIK identifier with the SEC;
use the US reporting system, with both a 10-Q quarterly report and a 10-K annual report filed within the past 30 months; and
have at least eight usable, consecutive quarters of financial data.

This means that not every US-listed company is included. Foreign issuers that report through forms such as 20-F and 6-K are excluded, even if their shares trade in New York. Companies are also left out of the ranking when the data required for one of the five criteria cannot be calculated reliably. Missing values are not treated as zero.

How are financial companies identified?

Financial companies have different accounts from most other companies. For a bank or an insurer, debt, cash and financial assets are part of the product itself. Calculations designed for ordinary companies can therefore give misleading results. qqquant identifies these companies so that they can be evaluated using more appropriate methods.

Most companies are classified as Normal. A company is classified as Financial only when banking, lending, insurance or similar financial activities are central to its business.

Stock exchanges, asset managers and payment networks are normally classified as Normal, because they mainly earn fees rather than using their own balance sheet to make money.

The classification is based mainly on the company's SIC code. A short list of exceptions is used when the SIC code is misleading. The same classification is used throughout qqquant.

How is Profit calculated?

Profit measures how efficiently a company uses the capital available to it. qqquant selects the first meaningful measure that can be calculated for each company rather than forcing every type of business into the same formula.

Financial companies normally use return on equity (ROE), because debt is part of their operating model and return on invested capital (ROIC) is therefore less meaningful. ROE compares net income with average shareholder equity.

For other companies, qqquant uses the following order:

ROIC: after-tax operating profit divided by average invested capital. Invested capital is equity plus debt minus cash.
ROE/ROA: if ROIC cannot be calculated reliably, qqquant ranks both ROE and return on assets (ROA) against the other qualifying companies and averages the two percentile scores.
ROA: net income divided by average assets, when ROA is available but the combined ROE/ROA measure is not.
ROE: the final fallback when ROE is the only usable return measure.

The latest trailing twelve months (TTM) are given twice the weight of the preceding TTM period. This gives recent performance more influence without allowing a single quarter to dominate. The selected measure — ROIC, ROE/ROA, ROA or ROE — is shown on the company page and is used consistently throughout that company's displayed Profit history.

Profit does not use the current share price or market capitalization.

How is Growth calculated?

Growth measures the development of the underlying business through two year-over-year TTM growth rates:

60% sales growth; and
40% operating cash flow growth.

For financial companies, growth in net income replaces operating cash flow growth. The two components are combined 60/40. When both the latest and the preceding growth period can be calculated, the latest period is given twice the weight of the preceding period. The resulting Growth score is ranked against the other qualifying companies.

Operating cash flow and net income can move from negative to positive or the other way around. qqquant therefore uses a symmetric growth calculation for these figures instead of dividing by a negative or near-zero starting value.

How is Payout calculated?

Payout measures the company's observed capital-allocation choice: how much of its accounting profit is returned to shareholders, and how much is retained inside the company. It does not judge whether the retained profit is invested wisely. Shareholder distributions consist of:

cash dividends; and
share repurchases after deducting shares issued during the same period.

For all companies, distributions are divided by net income. Net income is calculated after depreciation and amortization, which recognise the accounting cost of consuming existing assets. This provides a standardised approximation that does not treat all capital expenditure as either compulsory maintenance or voluntary growth investment.

Operating cash flow, free cash flow and capital expenditure do not adjust the Payout score. Ordinary operating cash flow is not economically comparable for banks and insurers, while total capital expenditure does not reliably distinguish maintenance from growth. Free cash flow remains part of the Price criterion instead.

For each of the four latest quarter-end dates, the latest TTM period is given twice the weight of the preceding TTM period. Each of the four resulting payout ratios is then converted into a score. When all four periods are available, the scores are combined with weights of 40%, 30%, 20% and 10%, with the most recent period receiving the greatest weight. This allows up to eleven quarters to influence the ranking and rewards companies that maintain a consistent allocation policy over time.

The Payout score is highest at a payout ratio of 70%. This means that $70 of every $100 of net income is returned to shareholders, while $30 is retained for growth investment, acquisitions, debt reduction or additional financial resilience. Below 70%, the score rises as the ratio approaches the target. From 70% to 100%, the score declines moderately. Above 100%, it declines more rapidly because distributions exceed accounting profit.

A missing distribution is treated as zero only when the reported data show that no payment was made. Missing data are not automatically treated as zero.

The score is reduced further when payout exceeds 100% in both TTM periods, because a repeated excess shows that distributions have repeatedly exceeded accounting profit. A company can still be attractive when it retains profit for investment rather than distributing it; users who accept that allocation choice can make the Payout filter less selective or set it to 100%.

Payout does not use the current share price or market capitalization.

How is Safety calculated?

Safety measures financial resilience rather than expected return. It combines two equally weighted relative scores:

50% balance strength: shareholder equity divided by total assets; and
50% stability: the consistency of positive operating cash flow over eight quarters.

For financial companies, net income replaces operating cash flow because ordinary operating cash flow is not a meaningful measure for banks and insurers.

The balance measure combines the latest equity-to-assets ratio with the ratio from one year earlier, giving the latest figure twice the weight. The stability measure compares each of the latest four quarterly figures with the same quarter one year earlier. This reduces the effect of normal seasonality while rewarding companies whose cash flow or net income remains both positive and consistent.

Financial and non-financial companies are ranked in separate peer groups for both components, because their normal capital structures differ substantially. The two percentile scores are then combined 50/50, and the resulting Safety score is ranked across the full qualifying universe.

Safety does not use the current share price or market capitalization. It is a comparative accounting measure, not a prediction that a share price cannot fall.

How is Price calculated?

Price measures how much current business value you buy for each $100 of current market capitalization. It combines two equally weighted relative scores:

50% earnings yield: TTM net income divided by current market capitalization; and
50% free cash flow yield: TTM operating cash flow minus capital expenditure, divided by current market capitalization.

For companies treated as financial under the classification above, book yield — shareholder equity divided by current market capitalization — replaces free cash flow yield, because ordinary free cash flow is not a meaningful measure for banks and insurers.

Earnings yield is ranked across the full qualifying universe. The second component is ranked within the relevant peer group: financial companies are compared with other financial companies on book yield, while non-financial companies are compared with other non-financial companies on free cash flow yield. The two percentile scores are then combined 50/50, and the resulting Price score is ranked across the full universe. Book value and free cash flow are therefore never compared directly.

Berkshire Hathaway is one example. It is a diversified group, but insurance underwriting, reserves and invested insurance float are central to the group, and the SEC classifies it under SIC 6331, Fire, Marine & Casualty Insurance. qqquant therefore treats Berkshire as Financial and shows Book rather than FCF under Price.

Price is the only one of the five criteria that deliberately uses the current market capitalization and therefore responds directly to changes in the share price.

Where does the data come from?

Nasdaq Trader supplies the listed-share universe, SEC EDGAR supplies filing status and financial statement data, Finnhub supplies current quotes and market capitalization, and Alpha Vantage supplies expected earnings dates. All monetary financial statement figures are taken from SEC's USD facts; qqquant does not perform currency conversion.