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Measuring the quality of HSBC (LON.HSBA) as an investment

13th Feb by Jack Brumby

A company with a high Quality Rank has strong cash-generation, consistent profits, high rates of return on investment, high margins and robust financial health. Quality companies are good at reinvesting at high returns, which allows earnings (and share prices) to compound over time. You can tell them apart by their high returns on capital.

Stockopedia has built its Quality Rank to quickly show investors how well every stock in the market stacks up according to these criteria. Let’s take a look at HSBC Holdings (LON:HSBA)’s Quality Rank.


What Stockopedia’s Quality Rank says about HSBC (LON:HSBA)

HSBC has a Quality Rank of 51. This means it has above average quality characteristics but is not in the top bucket.

Judging a stock based on quality attributes is a solid way to think about potential investments - but it is not the whole story. Evidence suggests combining factors can lead to more robust returns, so screening for high Quality Rank stocks in conjunction with either the Value Rank or Momentum Rank is a good idea.

Studies indicate that combining factors such as Value, Quality and Momentum is a more effective way of outperforming the market over longer time frames. That's why we have constructed our StockReports to give an instant impression of how well exposed Hsbc Holdings (LON:HSBA) is to these three factors. We go into greater detail on factor investing in this video

Stockopedia helps you to identify return-enhancing factors such as Quality, Value and Momentum by analysing thousands of data points every day. To find out more about you find investment opportunities and analyse your portfolios then take one of our two-week free trials and have a look around.

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