Frequently asked questions

Findx is a visual research tool that shows you two things at a glance: whether a stock looks cheap, fair, or expensive, and whether the company behind it is actually any good.

It is built for the long-term investor who wants to make smart decisions without quitting their day job to do it. You do not need to be a Wall Street analyst. You do not need to love spreadsheets. You just need to want to buy good companies at a fair price and hold them patiently. If that is you, Findx is your tool.

The whole idea rests on one belief: over time, a stock price follows the company's earnings, not the mood of the market. Get that right, and most of the noise stops mattering.

No. That is sort of the point.

Most finance tools are built by experts, for experts, and quietly assume you already know what EV/EBITDA means. Findx goes the other way. We do the heavy lifting, turn the numbers into a picture you can read in seconds, and explain every term the moment it shows up. If you can tell whether a line is above or below another line, you can use the core of Findx today.

That said, we are not here to turn off your brain. The goal is the opposite: to help you genuinely understand what you own, so your decisions are yours and not a stranger's hot tip. We make that understanding easy to reach. You still have to show up for it.

One core idea, and everything else follows from it: over the long run, a stock price follows the company's earnings, not the mood of the market.

Day to day, prices bounce around on headlines, hype, and fear. Benjamin Graham put it best: "In the short run the market is a voting machine, but in the long run it is a weighing machine". In the short term, investors vote with their emotions. Over years, the scale weighs what the company is actually worth. Peter Lynch said the same thing more bluntly: "If earnings go up, the stock price eventually goes up". Buffett, same church: "If a business does well, the stock eventually follows".

So Findx focuses relentlessly on earnings and how they grow, rather than on price squiggles and market sentiment. We did not invent this idea. We just built a tool that makes it easy to act on. If you do not believe earnings drive prices over the long run, Findx will not be much use to you. If you do, it is built for exactly how you think.

It is supposed to be disciplined. That is not the same as complicated.

A lot of what looks like sophistication in finance is about creating structure around considerable uncertainty: ten-tab models, Greek letters, and forecasts stretching to 2040. These tools can be useful, and they certainly look thorough. But a model that ends in a number with two decimal places is not automatically more accurate than one that does not. Sometimes it is simply a more precise way of expressing a guess.

The investors who actually compounded wealth over decades, Lynch, Graham, Buffett, mostly did it on a few sturdy ideas: buy good businesses, do not overpay, be patient, do not panic. None of that requires a quant degree. It requires a clear head and good information, which is exactly what Findx is built to give you.

So no, you do not have to be the best analyst in the world. You have to be roughly right, consistently, and avoid the big mistakes. That is a game a normal person can win.

Findx calls this number the fair value, and it answers a simple question: what should this stock cost right now, based on what the company earns?

The recipe has only two ingredients:

• Earnings per share (EPS): how much profit the company makes for each share you own.
• A sensible price tag (P/E): how many years' worth of those earnings it makes sense to pay for the share. P/E just means Price divided by Earnings.

Multiply the two, and you get fair value. For example, if a company earns 5 dollars per share and a reasonable price tag is 15 times earnings, fair value is 75 dollars per share. Findx draws that as a green line on the chart, right next to the actual share price, so you can see at a glance whether the market is asking more or less than the company looks worth.

One refinement worth knowing: instead of using last year's stale earnings, Findx leans partly on what the company is expected to earn next, because the market looks forward, not backward. (That is the "weighted EPS" question, coming up.)

Fair value is a well-reasoned estimate, not a promise. It assumes the company keeps earning roughly what it has been. If earnings fall off a cliff, the fair value moves with them. Treat the green line as a starting point for your judgment, not the final word.

You are also not locked into one assumption: Findx lets you choose which growth model feeds that price tag, which we cover just below.

Because a company whose profits are growing deserves a higher price tag than one whose profits are shrinking, and pretending otherwise would give you a misleading number.

Think of it from your own seat: you would happily pay more for a business earning a little more every year than for one slowly fading. So instead of slapping the same P/E on everyone, Findx sorts companies into bands by growth rate and prices each band differently.

The thinking behind those bands is not ours alone. Shrinking businesses get a low multiple, because falling earnings carry real risk and the valuation should say so. Steady, plodding companies sit in the range Benjamin Graham argued was prudent for the defensive investor. Solid, dependable growers land near the long-run market average that Jeremy Siegel documented across two centuries of data. And the fastest growers earn a richer multiple, following Peter Lynch's idea that a growth company's P/E should roughly track its growth rate, though we apply a brake so an unusually hot number does not send the valuation into orbit.

The effect is worth seeing plainly: two companies earning exactly the same profit per share can be worth very different amounts, purely because one is expected to keep growing and the other is not. Expected growth genuinely changes what a business is worth.

The exact thresholds and multiples are listed in the Fair Value P/E help, which you can open from the ⓘ next to Fair Value P/E on any stock page, and which is also the answer to the next question.

And the number driving all of this is itself your choice: Findx offers several valuation bases, some built on analyst estimates, some on the company's own history, and some on what the market has actually been paying. See "Can I change how fair value is calculated?" below.

The caveat: this is a deliberately rules-based shortcut, not a precise measurement of any single company. Its job is to be consistent and sensible across thousands of stocks, so you can compare them on the same honest footing. For a company in the middle of a turnaround or a wild growth spurt, always sanity-check the number against the story.

EPS means earnings per share: the company's profit divided by its number of shares. Most finance sites use the last reported figure, which can be nearly a year old, while the market is busy pricing what comes next.

Findx makes the earnings per share change gradually between the yearly figures on the chart. If earnings are 10 per share one year and 12 the next, we show 11 halfway between them. For future years, we use analysts' expectations.

Say the last completed year showed 4 dollars per share, and analysts expect 5 dollars for the next year. Halfway between those two years the weighted figure is 4.50, and it moves toward 5 as the year goes on. That keeps the number current instead of frozen in the past, which matters most when earnings are changing fast: turnarounds, growth spurts, cyclical swings.

The caveat is the obvious one: the future figure is an estimate, and analysts can be too sunny or too gloomy. Weighted EPS is more timely, not more certain. Read the full explanation.

They answer two different questions, and reading them together is where the insight lives.

The green line is fair value: what the stock should cost based on the company's earnings and growth. It is the "what's it worth" line. The blue line is the historical market price: what investors have actually, on average, been willing to pay for this stock's earnings over time. It is the "what does the market usually charge for this one" line. Plenty of stocks consistently trade above or below their calculated fair value, and the blue line captures that personal habit.

Why have both? Because a stock can look expensive against fair value but cheap against its own history, or the reverse. If today's price sits below both lines, that is a stronger signal than clearing just one. The green line tells you what is reasonable; the blue line tells you what is normal for this particular stock.

The automatic fair value is a great consistent baseline, but some stocks have a strong personality: they reliably trade within a P/E range their own history reveals. The P/E Band is for those.

It draws three lines on the chart: support (the low end), fair value (the middle), and resistance (the high end), based on analysts' consensus earnings multiplied by different P/E levels. If analysts publish a target price, that is used to anchor the middle line.

The part people love: you can drag the lines directly on the chart. Slide the fair-value line until the band hugs the stock's historical peaks and troughs, and you have set your own fair-value P/E based on how the market has really treated this stock, instead of a one-size-fits-all rule.

Reach for the P/E Band when a stock trades in a recognizable range, when you want a market-based view rather than a pure growth-based one, or when you want to eyeball potential buy and sell zones. Use it alongside the automatic fair value, not instead of it: one gives you an objective starting point, the other lets you tailor the read to the individual stock.

Then the honest answer is that our main tool does not really apply, and Findx tells you so instead of inventing a number.

Fair value here is earnings multiplied by a sensible P/E. If earnings are negative, that math breaks: you cannot put a meaningful multiple on a loss. When the earnings in your selected period turn negative or zero, Findx cannot calculate a reliable growth rate, so it falls back to a default fair-value P/E and shows a clear warning that the result is shaky, and that you should dig deeper and test other time periods.

That is deliberate. A company burning cash with no profits, an early-stage growth story, a business mid-collapse, is exactly where a simple earnings model should stay quiet rather than project false confidence. Valuing an unprofitable company is genuinely hard, and it usually hinges on a story about profits that do not exist yet. That is a judgment call, not a calculation, and we would rather hand you a warning flag than a precise-looking answer we do not believe.

The practical move: if a stock has no real earnings, lean on the Quality and Strength scores and the raw financial history instead of the green line, and treat fair value as "not applicable here" rather than gospel.

Fair value is not the price you should pay. It is the price that would be merely reasonable, the ceiling of sensible, not a target to buy at.

Benjamin Graham's whole idea of a margin of safety was to buy meaningfully below what a business is worth, so that even if your estimate is too rosy or the future disappoints, you still do not overpay. Findx is built to help you do exactly that, in two ways.

First, the fair-value line is where you start bargaining, not where you sign. Buying comfortably below the green line is the margin of safety: the bigger the gap, the more room for your estimate to be wrong.

Second, safety is not only about price. A cheap stock with a weak balance sheet is not safe at any discount. Pairing the discount to fair value with a strong Quality score and, especially, a strong Strength score builds in a second layer of protection: you are buying a sturdy business below what it is worth, not a fragile one that merely looks cheap.

So the discipline is not "buy at fair value". It is "buy below it, in a good company". Fair value tells you what full price looks like; the gap beneath it, and the scores beside it, are where your safety comes from.

DCF stands for Discounted Cash Flow. The idea: estimate all the cash a company will generate far into the future, then translate that future cash back into what it is worth today. It is the model most professionals reach for, and on paper it is the "proper" way to value a company.

Here is the catch. A DCF is wildly sensitive to its own assumptions. Nudge the assumed growth rate, the interest rate, or the profit margin by a little, and the answer can swing by 30 to 50 percent or more. And since you are forecasting a decade or more of cash flows yourself, there are a lot of those knobs to turn. The number ends up looking precise while resting on a tall stack of personal guesses.

To be clear, Findx is not allergic to looking forward. Just the opposite: our fair value is built on where earnings are expected to go, not only where they have been, because the market prices the future, not the past. The difference is who does the forecasting. We do not build our own shaky ten-year model. We let the professional analysts do the heavy forecasting they are paid for, take their consensus estimate for the company's expected growth, and turn that single, crowd-sourced number into a sensible fair-value P/E. And if you would rather trust the track record than the forecast, you can switch the growth input to a historical period you choose. The point is not which assumption we force on you; it is that the assumption is always yours to see and set, never buried in a black box.

That is the whole trick: lean on the pros' estimates for the one input that genuinely needs a forecast, then keep the rest of the math simple and transparent enough that you can see exactly where the number came from. It is still an estimate, and consensus can be wrong, so it is never a guarantee. But it is one honest, checkable guess instead of a dozen hidden ones.

A reverse DCF starts with today's share price and works backward: what must the company deliver for that price to make sense?

That is a genuinely useful question. As a sanity check, we like reverse DCF. What we do not like is pretending it has removed the guesswork.

A reverse DCF normally solves for one unknown, often growth, while holding everything else fixed. So "the market expects 8% growth" really means: if margins, reinvestment, the discount rate and the terminal assumptions behave exactly as entered, then 8% growth makes the equation work. Change those assumptions and a different future makes the same share price look reasonable.

The spreadsheet has not abolished uncertainty. It has given it more columns.

Findx therefore takes a more pragmatic route. We use a visible growth assumption, translate it into a visible multiple, and cross-check the growth story against cash generation, returns on capital and dilution. It is less academically elegant, but much easier to understand, challenge and use consistently.

A reverse DCF is a good question generator. We just do not treat it as an answer machine.

It feels like it should be. More math, more inputs, more accuracy. But that is not how forecasting the future works.

Every extra assumption in a model is another place to be wrong, and those errors stack up. A model with twenty inputs has twenty chances to drift off course, and it hides that drift behind a confident-looking final number. A simpler model has fewer moving parts, so when it is off, it is usually off in a way you can see and reason about.

Findx is not trying to out-predict the future with a better crystal ball, because nobody has one. Our edge is different: we are honest about what is actually knowable, and we apply the same consistent yardstick to thousands of stocks so you can compare them fairly. A good-enough valuation you understand and actually use beats a "perfect" one you cannot check and do not trust.

Forecasting the future is hard for everyone, and a more complicated model does not make it less hard. It mostly makes the guess harder to see.

Professional analysts are sharp and well-resourced, and their consensus estimates are genuinely useful, which is exactly why Findx leans on them for the growth input. But "sophisticated model" and "accurate prediction" are not the same thing. A forecast that reaches ten years out is a forecast either way, whether it lives in a fifty-row spreadsheet or on the back of an envelope. The spreadsheet just hides the uncertainty more elegantly.

Our point is not that the pros are foolish. It is that no model, simple or complex, can make the future knowable. Given that, we would rather use a method whose assumptions sit out in the open, where you can judge them for yourself.

Terminal value is how a DCF closes the calculation. You forecast a limited number of years and then estimate, in one number, everything the company may generate after that.

That is not financial nonsense. A disciplined DCF constrains long-term growth, reinvestment, returns on capital and risk. But the result still depends on assumptions about a company that may look very different ten years from now. Its market may have changed, its margins may have collapsed, its competitive advantage may have disappeared, and the cost of capital may be somewhere nobody predicted.

Terminal value can represent a large part of a DCF, although the percentage varies by company and forecast period. A large terminal value does not automatically make the model bad. It does mean that much of the answer depends on the distant future, the part of the forecast we know least about.

Findx therefore does not calculate a terminal value. Our P/E multiple is not secretly the same calculation; it is a simpler relative-valuation tool. It compresses expectations about growth, durability and risk into one visible assumption that you can inspect and change.

We give up some theoretical elegance in exchange for transparency. That is deliberate. We would rather show you one debatable assumption than twelve uncertain assumptions dressed up as precision.

Not literally. A DCF estimates intrinsic value from future cash flows; P/E is a relative-valuation tool. But both are influenced by the same economic forces, which is where the comparison is useful.

Most valuation methods rest on the same underlying factors: how fast earnings can grow, how risky those earnings are, how much capital the growth requires, and how long the company can sustain an attractive return. A DCF makes those assumptions explicit by spreading them across future cash flows, discount rates, and a terminal value. A P/E multiple gathers many of the same expectations into a single number. Same economic logic, different form.

We prefer the multiple for the sake of transparency, not laziness. When the valuation depends largely on one visible multiple, it is easier to see which expectation is driving the result, and how sensitive the answer is to a change. In a comprehensive DCF model the assumptions can be more detailed, but detail is not the same as precision. A model with many variables also makes it easier to unconsciously adjust several inputs until the result matches the conclusion you were already leaning toward.

That does not mean the analysis behind a P/E is simple. The earnings estimates we build on can themselves come from extensive models of revenue, margins, capital spending, financing, and tax. The complexity often lives in the estimate, while the multiple keeps the valuation assumption itself out in the open.

And multiples are not always better. A P/E can mislead if earnings are temporarily high or low, if the capital structure is changing, or if companies with very different growth and return profiles are compared head to head. The point is that for a non-professional investor, a simple, understandable valuation is often more robust than a sophisticated model whose assumptions cannot be seen through or tested. A P/E you understand and can challenge beats a DCF you cannot check.

Where the chart tells you whether a stock looks cheap or expensive, the three scores tell you whether the company is worth owning in the first place. Each one runs from 0 to 100, and each answers a different question:

• Quality: Is this a good business? It looks at how well the company turns capital into profit, how reliable that profit is, and whether sales are growing.
• Momentum: Is the business improving lately? It checks whether revenue, earnings, cash generation, and profitability are trending up, plus analyst estimate revisions and the latest earnings surprise. It deliberately ignores the share price; price and trend live in the separate Entry and Trend signals.
• Strength: Can this company survive bad times? A higher score is safer; it weighs debt, the stability of earnings, and how hard the business gets hit in a downturn.

No single score tells the whole story, and they are meant to be read together. A high-quality, financially sturdy company trading at a fair price is a very different prospect from a cheap-looking one that is quietly drowning in debt. The scores exist so you can spot that difference in seconds instead of digging through a financial report.

Quality answers one question: is this a good business? A high score points to a company that earns strong profits and uses its money wisely.

Under the hood it blends several plain-English ingredients: how much profit the company earns on the capital it puts to work (return on capital), how much real cash it generates after running and growing the business (free cash flow), whether reported profits actually turn into cash, how steady its profit margins are from year to year, and whether sales are growing. Score well on most of those and you are usually looking at a sturdy, well-run company.

A high Quality score does not mean the stock is a good buy at today's price. That is what the chart is for. It means the business underneath is worth your attention.

The Strength score asks: can this company survive bad times? A high score means a financially sturdy business that can weather a downturn; a low score is a caution flag.

It weighs things like how much debt the company carries and whether it can comfortably cover the interest, how stable its earnings stay through good years and bad, how hard profits get hit in a recession, and whether the dividend is actually affordable.

A low Strength score does not automatically mean "do not buy". It means be careful: the company may be more exposed to rising interest rates, refinancing trouble, or an economic slump. Pair it with the other scores. A cheap stock with a low Strength score is a very different animal from a cheap one with a high Strength score, and you want to know which one you are holding.

No, and this is where Findx's Momentum is different from what the word usually means. It looks at zero share-price data. None. It cannot be "chasing" a hot stock, because it never looks at the stock.

What it measures instead is whether the business is getting better or worse recently: is revenue per share growing, are earnings rising, is the company generating more cash, are margins and capital returns improving, is it buying back shares or diluting them, are analysts revising their estimates up, and did the latest result beat or miss? A high score means the business is improving, around 50 means roughly unchanged, and a low score means it is deteriorating. The estimate and earnings-surprise pieces are a useful early-warning system, since a weakening business often shows up in the numbers before it shows up anywhere else.

So read Momentum as "is the company itself on the up?", not "is the stock hot?" It works best layered on top of Quality, Strength, and value: a strong, fairly priced business that is also improving is a more comfortable hold than one quietly going backwards. (Price and trend behaviour do matter for timing, but Findx keeps those in its separate Entry and Trend signals, not in this score.)

No single score tells the whole story; the value is in reading them together. A few common patterns:

• High Quality + high Strength score: a robust, well-run business with a strong balance sheet. The kind of company you can hold through a storm.
• High Quality + improving Momentum: a good business that is also getting better lately. Worth a closer look, then check the chart for the price.
• Weak Momentum + low Strength score: a genuine warning. Find out why before you go anywhere near it.

The scores are a starting point for your own thinking, not a verdict. Click into each one to see the underlying numbers and charts, and let the combination, not any single dial, shape your view.

Both features exist to stop you from drawing a big conclusion from too little history.

The light gray vertical bands on the chart mark known recessions, like the 2008 to 2009 financial crisis and the 2020 covid crash. They make it easy to see how a company behaved when things got ugly: did earnings hold up or collapse? Did the price fall from an already-expensive level, or from a cheap one? A business that kept earning through a crisis has earned a quality stamp; one that repeatedly cratered is waving a flag.

Switching between time periods (say 3, 5, and 10 years) does the same job from another angle. A stock that looks cheap over one year might have a decade of slowly declining earnings behind it; one that looks pricey today might be in a healthy long-run growth phase. Zoom in and out before you decide. The short view shows you the moment; the long view shows you the character.

By not forcing them all through the same template. The fair-value chart still works the usual way, a sensible multiple applied to earnings, but Findx feeds it the right earnings number for the business, and the Quality and Strength scores swap in the metrics that actually make sense. It detects the company type automatically across seven different financial-statement templates. A few examples:

• REITs (property): earnings per share are replaced throughout by FFO per share (funds from operations), the real-estate industry's standard measure of cash earnings, because reported EPS is buried under huge non-cash depreciation. So both the valuation and the scores rest on a number that reflects the actual business.
• Banks: EPS and P/E still work for the price chart, but the scores drop ROIC and gross margin (meaningless for a bank) in favor of ROAE (return on average equity) and net interest margin, with a heavier weight on financial safety. Interest coverage is dropped, since for a bank interest is simply the cost of doing business.
• Insurers: similar treatment, with the safety component carrying the highest weight of any company type, because a weak balance sheet is what most often sinks an insurer.

The point of all this is comparability. Score a bank on ROIC and it always looks terrible, because ROIC is meaningless for a bank, and you draw the wrong conclusion. Adapting the yardstick to the business is what lets you compare a bank fairly against other banks and a REIT against other REITs. You do not have to do anything; Findx picks the right template for you.

Cheap is an invitation to look closer, not a green light.

Sometimes a low price is a genuine bargain. Sometimes it is the market warning you about a problem you have not spotted yet, a fading product, mounting debt, an industry in slow decline. That second case has a name among investors: a value trap, a stock that looks cheap all the way down. The price alone cannot tell you which one you are looking at.

This is exactly why Findx never shows you price in isolation. Pair the chart with the three scores. A stock that is cheap and high-quality and financially safe is a completely different proposition from one that is merely cheap. The cheap price gets your attention; the scores and the story are how you earn the conviction to act. Do the second half of the work.

Fair value is a careful estimate, and we would rather you trust it for the right reasons than treat it as gospel.

It rests on two things being roughly true: that the company keeps earning about what it has been, and that the analyst expectations feeding the forward-looking part are in the right ballpark. When both hold, the green line is a genuinely useful guide. When they do not, it moves, and it should.

It is weakest in a few specific situations: companies in the middle of a turnaround, deeply cyclical businesses whose profits swing with the economy, and anything where the last few years simply do not represent what comes next. In those cases the rules-based shortcut can be fooled, because it is built to be consistent across thousands of stocks, not perfectly tuned to any single one. The fix is simple: check the stock across several time periods, read the three scores, and sanity-check the number against the company's actual story. The fair value is your starting point, not your conclusion.

Findx leans toward the what and the whether (is this worth owning, and does the price look fair) more than precise market timing. But it does give you two honest, simple nudges, one on each side.

On the buy side, an entry-timing view looks at whether momentum and price signals suggest a moment is more or less favorable. On the sell side, Findx flags when a stock's uptrend breaks, a classic, straightforward technical sell signal: the trend that carried the stock higher has stalled or turned.

Treat both as helpful heads-ups, not commands. They are deliberately simple rules, not a black-box trading system, and they will not hand you the perfect day to act, because nobody can. A broken uptrend is a reason to pay attention and re-check your thinking, not an automatic "sell everything".

The honest version: Findx helps you decide what is worth owning, roughly whether the price looks fair, and gives you a simple signal when a trend turns. The final call, and the timing of it, stays with you. (And as the next question covers, none of this is personal advice.)

No, and we want to be completely straight with you about that.

Findx is a research and education tool. It shows you data, and a sensible way to think about it, so you can make better-informed decisions of your own. It does not know your finances, your goals, your timeline, or how much risk you can live with, and it cannot tell you what to buy or sell. Those decisions, and the responsibility for them, are yours. If you want guidance tailored to your situation, talk to a qualified financial professional. We will be here to help you understand the companies; the call is always yours to make.

The company figures, analysts' estimates and share prices come from S&P Global Market Intelligence, one of the large providers of financial data. Findx does its own calculations on those figures to produce the fair value lines, ratios, scores and comparisons; those results are Findx's own, not the provider's recommendations. Read about our data sources and calculations, including where to send a question about a figure.

Findx covers listed companies across North America and Europe, including the UK. That spans the major exchanges most long-term investors actually buy from, the big US names alongside European and British companies, so you can research and compare stocks on both sides of the Atlantic with the same tools and the same yardstick. If a company you follow is not in there yet, coverage keeps expanding over time.