Quantic for value investors
Five independent reads on what a share is worth — and a margin-of-safety band that says cheap, fair or expensive.
Value investing needs a number to argue with: an estimate of what a business is worth, independent of what the market is charging today. One model is a guess; several models that disagree tell you how much the answer depends on your assumptions.
Every stock page carries a discounted-dividend fair value in two forms — a single-stage model and a two-stage one that fades high growth to a terminal rate — plus a margin-of-safety band over the better of them, Dividend Yield Theory (is today's yield high against this company's own five-year range?), a percentile rank against its own sector, the earnings multiple, and the worst peak-to-trough fall in six years. A 0–10 value score condenses them, and the compare page puts two to four names side by side with a winner marked on each row.
The value score leans on dividend inputs: two of its three components come from the dividend yield band and the dividend discount model, so a company that pays nothing usually has no score at all. There is no price-to-book, price-to-sales or EV/EBITDA in Quantic — those figures are not collected.
How to start
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1
Open any stock page and scroll to Valuation & strategy for the fair values and the margin-of-safety band.
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2
Check the sector percentile — cheap against the whole market and cheap against its own industry are different claims.
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3
Put your two best candidates through Compare and read the Valuation group row by row.
Key terms
- Fair value (DDM)
- An estimate of what a share is worth based on its dividend: next year's dividend divided by the required return minus the dividend growth rate (the Gordon Growth model). Compared with the price to flag under- or over-valuation; it only applies when growth stays below the required return.
- Two-stage DDM
- A dividend discount model with two phases: a few years of fast growth at the company's recent rate, then a slower, permanent "terminal" rate. Because the fast phase is finite, it can value fast growers where the simple Gordon Growth model breaks down (when growth is close to or above the required return).
- Margin of safety
- Benjamin Graham's idea of only buying when the price sits a comfortable distance below your fair-value estimate, leaving room for error. Here a stock reads "cheap" when the price is at least 15% below fair value, "expensive" when 15% above, and "fair" in between.
- Dividend Yield Theory
- A valuation idea (Geraldine Weiss): a quality dividend payer is relatively cheap when its yield is near the high end of its own historical range, and expensive near the low end. The implied fair price is the annual dividend divided by the stock's average historical yield.
- Sector-relative valuation
- How cheap a stock looks compared with the other dividend payers in its own sector, rather than against the whole market. Shown as a percentile: "cheaper than 78% of the sector" means only 22% of its peers screen as better value on the same yardstick.
- PER (price/earnings)
- Price-to-earnings: the share price divided by earnings per share — roughly how many years of today's earnings you're paying for. Lower can mean cheaper, but only compare within the same industry.
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