VST

SmartInvestingAI's Fair Value Estimate offers a sophisticated approach to determining a stock's true economic value, independent of prevailing market sentiment. This estimate is grounded in a proprietary discounted cash flow (DCF) model, which posits that a company's intrinsic worth is the sum of its future free cash flows, discounted back to their present value. The discount rate employed is carefully calibrated to reflect the specific risk profile of the projected cash flows. While this methodology provides a robust framework for valuation, investors should be mindful that the Fair Value Estimate's accuracy is inherently linked to the precision of SmartInvestingAI's forward-looking cash flow projections and other critical model assumptions.

The difference between a stock's market price and its Fair Value Estimate (from SmartInvestingAI) indicates potential investment opportunities. A negative difference suggests undervaluation; a positive difference suggests overvaluation. Prudent investors seek a "margin of safety," buying below assessed intrinsic worth. If a company is valued at $500 billion via DCF, an investment case emerges when the market cap is below this. The required margin of safety correlates with uncertainty. Higher uncertainty demands a larger discount; stable cash flows warrant a smaller one. This ensures the reward compensates for the risk.

Return on Equity (ROE) (TTM) is a powerful metric for evaluating a company's ability to create shareholder value. Calculated by dividing net income by average shareholder equity over the past 12 months, ROE quantifies the return on capital entrusted to the company by its owners. A robust ROE suggests effective utilization of shareholder investments to enhance wealth.

Net Margin (TTM) indicates profit per revenue dollar. It's calculated as net income per share divided by revenue per share over twelve months. A higher margin signifies greater profitability and cost management.

SmartInvestingAI's Capital Allocation Rating judges management's use of cash, focusing on shareholder value. Analysts consider investment strategy, balance sheet, and distributions, assigning Exemplary, Standard, or Poor ratings. This forward-looking, absolute assessment typically results in a Standard rating for most companies.

The SmartInvestingAI Economic Moat Rating gauges a company's durable competitive advantage.  A "moat," a term coined by Warren Buffett, allows a company to earn excess returns on capital long-term and fend off competition. SmartInvestingAI analysts assign ratings of Wide, Narrow, or None, based on five sources: intangible assets, switching costs, network effect, cost advantage, and efficient scale.

The SmartInvestingAI Long Term Growth Grade ranks a company's five-year revenue per share growth trend relative to the broader universe. This grade, part of SmartInvestingAI's quantitative stock-scoring system, offers a quick snapshot of fundamental performance. An "A" grade denotes a company among the highest growth percentiles. The grade is determined by first calculating a normalized historical revenue per share growth rate using linear regression. This rate is then standardized using a z-score, which accounts for the mean and standard deviation of growth rates across the SmartInvestingAI universe.

The SmartInvestingAI Profitability Grade is determined by a five-year ROE analysis. Companies need at least four consecutive years of ROE data, including the latest fiscal year, or they receive a "--" grade. The grade is a weighted combination of historical ROE growth, average ROE, and the latest year's ROE, resulting in a classification of Cash Cow, Very Profitable, Profitable, Non-Profitable, or Bad. SmartInvestingAI calculates the grade monthly.

The SmartIvestingAI Uncertainty Rating assesses the potential range of a company's intrinsic value, guiding analysts in determining the appropriate margin of safety required before investing. This rating subsequently influences SmartIvestingAI's stock star rating system.  Essentially, the Uncertainty Rating reflects the confidence with which analysts can estimate a company's fair value. A wider range of potential outcomes for intrinsic value translates to higher uncertainty and a greater need for a margin of safety.

The SmartInvestingAI Solvency Score predicts financial distress by evaluating if a company's assets sufficiently cover its liabilities. Using structural models, it treats equity as a call option on assets. Default is expected if asset value falls below liability value. Based on the calculated "distance to default," companies are ranked: 10% "Best," 20% "Good," 40% "Average," 20% "Poor," and 10% "Very Poor." SmartInvestingAI updates this score daily.