A complete guide to QuantStrike's composite stock rating
The QS Score is QuantStrike's proprietary 1–10 rating that summarizes the quality of a publicly traded company in a single number. It exists to answer a deceptively simple question: before I spend an hour reading financial statements, is this company even worth my time? Rather than forcing you to juggle dozens of ratios in your head, the QS Score aggregates four independent dimensions of business quality into one comparable figure, so you can scan a watchlist quickly and then dig deeper where it matters.
Crucially, the QS Score is not a buy or sell signal. It is a measure of fundamental quality and momentum at a point in time. A 9 does not mean “buy now” and a 3 does not mean “short it.” It means the underlying business currently scores well, or poorly, on the factors that have historically separated durable companies from fragile ones. How you act on that information depends on your goals, your time horizon, and your own research.
Every QS Score is built from four equally important pillars. Each is scored on its own, then combined. Splitting the score this way is deliberate: two companies can land on the same overall number for very different reasons, and the pillar breakdown tells you why.
This pillar asks whether the company actually makes money and whether it is getting bigger. We look at margins (gross, operating, and net) to judge how much of each dollar of revenue survives to the bottom line, return on equity and return on invested capital to see how efficiently management turns capital into profit, and multi-year revenue and earnings growth to confirm the business is expanding rather than slowly shrinking. A company with fat, stable margins and steady growth scores highly here; a business that is growing revenue but burning cash with no path to profit does not.
A wonderful business can still be a poor investment if you overpay. The valuation pillar compares the current price to the company's earnings, sales, cash flow, and book value, and weighs those multiples against the company's own history and its sector. The goal is not to reward the cheapest stock — cheap stocks are often cheap for good reason — but to flag when the market price has run far ahead of, or fallen well behind, what the fundamentals support.
This pillar measures resilience: can the company survive a bad year? We examine the balance sheet for leverage (how much debt sits against equity), liquidity (whether current assets can cover current liabilities), and interest coverage (whether operating profit comfortably pays the interest bill). Strong financial health rarely makes headlines, but it is what keeps a company solvent through recessions, rate shocks, and demand slumps.
Fundamentals tell you what a company is worth; momentum tells you what the market currently thinks. This pillar incorporates recent price trend relative to longer-term averages and the direction of analyst estimate revisions. Momentum is included because, empirically, trends in both price and earnings expectations tend to persist over intermediate horizons — but it is intentionally only one quarter of the score, so a hot stock with weak fundamentals cannot coast to a high rating on hype alone.
Each pillar is normalized so that companies are graded relative to a broad universe rather than against an arbitrary absolute threshold. The four pillar scores are then combined into the final 1–10 QS Score. Inside QuantStrike, a score of 7 or higher is treated as investment-grade quality — a useful default filter when you are screening hundreds of names — while mid-range scores warrant a closer look at which pillar is dragging the number down.
That pillar-level transparency is the point. If a stock scores 6, the breakdown might reveal an excellent business (profitability 9, health 8) that simply looks expensive today (valuation 3). Another stock might reach the same 6 because it is cheap but structurally weak. Same headline number, completely different investment cases — and the QS Score shows you the difference instead of hiding it.
The QS Score does not predict short-term price movements, does not account for your personal tax situation or risk tolerance, and cannot anticipate one-off events like fraud, litigation, or a sudden change in regulation. It is a disciplined, repeatable summary of measurable fundamentals and momentum — a tool to make your research faster and more consistent, not a substitute for it.
Ready to see it in action? Open any ticker on the QuantStrike dashboard to view its live QS Score and the full pillar breakdown, or keep reading with our guide on how to analyze a stock.
Disclaimer: QuantStrike is an analysis tool, not a registered investment adviser. The QS Score and everything in this article are for informational and educational purposes only and are not financial advice or a recommendation to buy or sell any security. Always do your own research and consider consulting a licensed professional before investing.