Databook displays the financial strengths and weaknesses for a company at the top of the Highlights page.
Generally, Databook assesses strengths and weaknesses for the following financial metrics:
Total shareholder return
Revenue growth
Profitability (usually EBITDA margin)
SG&A Expenses as a percentage of revenue
Gross margin
Revenue per employee
For some industries, especially for financial services sectors, we use different metrics that are more relevant, such as Return on Equity.
Databook's strengths and weaknesses algorithm scores the company's performance versus other members of its peer group for each metric as follows:
Historical performance. We assess the performance of the target company over a number of years (usually three), to reduce the chance that an exceptional event in one year could skew the score. More recent years are weighted more heavily than previous years.
Forecast performance. We use analyst consensus estimate data to gauge future performance. We only take into account future performance for metrics where estimated data is available (e.g. revenue growth, profitability and gross margin). Generally, we weigh forecast performance less strongly than the actual, historical performance that a company has achieved.
Scores are indexed and normalized to account for variations in the amount of data available for different companies in the peer group.