Some Overall Ranking figures are greater than any of the three individual Ranking figures, eg BP and BT. How is this possible?
They compute the average of the Q V M ranks, but then they rerank the results so that the stock rank runs from 0 to 100 again.
Yep Nick is right.
This is a common question.
The StockRank is not the average of the three other ranks. We take the sum of all three for every stock in the market, and then re-rank the output as a percentile between zero and 100. It's almost impossible for a stock to have Q, V and M equal to 100, but there will always be a stock with an overall StockRank equal to 100.
A couple of current examples are on this screen - SCS and Evraz. https://www.stockopedia.com/sc...
Of course the same phenomenon can happen all the way through the rankings not just at the high end.
Oddly enough nobody has ever asked... "why do stocks sometimes have a lower StockRank than the individual QVM ranks?"
But that's perfectly possible too:
Here's Gfinity:
Funnily enough we did an exhibition and this company had a stand opposite us at a show a year ago. They were furious that we had a low StockRank for the stock, a Speculative RiskRating and a "Sucker Stock" classification... the stock has halved.
Surprised to see £BT.A has a SR of 98. Ed's article about red flags was 2 years ago today, seems some of those issues are still current but some have lessened. Surprising also that quite a few high ranked shares have falling EPS forecasts, MATAS is one that is one Ed's link, EPS fell in 2017, 2018, forecast to fall 2019 and 2020. I rarely buy shares in companies with falling EPS unless I know something fundamental has changed. £BT.A is similar, not sure why it is rated so highly when other much more profitable and growing companies are ranked much lower, does Stockopedia favour some types of companies?
Interesting you should ask :
does Stockopedia [StockRank] favour some types of companies?
Of course the short answer is yes - it is demonstrable that the StockRanks favour the 'type of company' whose share price will go up!
Smart-Alexry aside, I was actually look at a particular group of companies recently that made me ask the same question. I have not, yet, got around to looking at that in any more detail, but the initial scratching of the surface I did suggested that the may be degree of industry bias, but if there is it is also probably has a degree of cyclicity to it. But whether any bias is 'good' or 'bad' I cannot say.
At some point (probably not soon) I hope to get back an have a more detailed rummage into that question.
But there are some great facilities on Stockopedia to allow you to investigate ratings and ratios.
In the case of BT's falling EPS, if that was to be reflected anywhere in the SR you would think it would be in the momentum score (split between price momentum and earnings momentum).
But in fact this is not part of the earnings component of the momentum rank.
The earnings element of the momentum score is focussed pretty much entirely on whether the 'outlook' for earnings is improving or not, and on this BT scores highly.
