Nine yes/no questions for the balance sheet, one point each, no weighting. Is the company improving fundamentally, or stuck in a downward spiral?
Save the strategy and StockScorer checks its rules for you every day. You'll get a heads-up whenever a stock crosses the upper or lower score threshold.
Gap to MSCI World: -99.9 percentage points total, -3.9 per year
Index, start = 100
Past performance is not a reliable indicator of future results.
Based on all 16,182 stocks with a score. Not rated are stocks that the profile does not classify because of a size limit or an exclusion rule.
| Score | Number of stocks | High match | Medium match | Low match | Not rated |
|---|---|---|---|---|---|
| 0 | 98 | 0 | 0 | 24 | 74 |
| +1 | 437 | 0 | 0 | 185 | 252 |
| +2 | 1,049 | 0 | 0 | 511 | 538 |
| +3 | 1,913 | 0 | 884 | 0 | 1,029 |
| +4 | 2,722 | 0 | 1,219 | 0 | 1,503 |
| +5 | 3,320 | 0 | 1,483 | 0 | 1,837 |
| +6 | 3,156 | 0 | 1,300 | 0 | 1,856 |
| +7 | 2,255 | 904 | 0 | 0 | 1,351 |
| +8 | 1,025 | 375 | 0 | 0 | 650 |
| +9 | 207 | 69 | 0 | 0 | 138 |
Every stock runs through the same disclosed rules. The points add up to a score, traceable down to the individual rule.
Each rule checks a metric against a threshold, here for example “Net income positive”.
In this profile, each rule that is met counts +1 point. Exclusion rules take a stock out of the rating regardless of its points: it is then not rated.
The sum is the score. That gives three classes: high, medium, low match.
These terms describe only the match with the criteria, not a recommendation to buy or sell.
Net income and operating cash flow must be positive, with cash flow above profit.
Return on assets, liquidity, gross margin and asset turnover are checked against the prior year.
A falling leverage ratio signals a balance sheet getting stronger rather than more fragile.
No new share issuance: dilution is often the first sign of capital distress.
These exact rules run over every stock daily.
After signing up for free, you can copy the full profile in the rule editor, adjust its thresholds, and save it as your own starting profile.
See and copy all rules for freeIndex, start = 100
The backtest shows a total return of +140.3%. The MSCI World reaches +240.1% over the same period.
The same strategy with the same settings, started at every possible date. Each dot is a separate run over 5 years.
The periods overlap heavily, neighbouring runs share almost all periods. The spread therefore looks smaller than it would for independent periods. Past results say nothing about future ones.
Strategy calculated without fees and taxes, dividends reinvested.
Point-in-time composition since June 30, 2009: each period uses the members at that time. Stocks that left the market early may be missing, which favours the result.
Historical period, quarterly rebalancing. Past performance is not a reliable indicator of future results.
Purely mechanical rule application, no curated-list effect: stocks with a high match can fall just like any other stock.
Dots per card, in this order: Profitability, Valuation, Quality, Balance sheet & risk. Filled means at least one rule in the category is met.
For safety-conscious fundamental investors, and as a quality filter before value investments: a low price is worthless if the substance is eroding. If you screen optically cheap stocks, this is where you see whether the balance sheet confirms the story.
The 9-point balance-sheet check assesses a company's financial condition with nine strictly binary criteria. Each one met earns exactly one point. The blueprint is the F-Score that Joseph Piotroski developed at the University of Chicago in 2000: he applied the score explicitly to the top book-to-market quintile only, meaning classic value stocks. StockScorer reconstructs that quintile through an exclusion rule on a P/B up to 1.5. Especially within this cheaply valued segment, the unweighted sum of weak individual signals reliably separates companies with real substance from those burning capital internally. The accrual check is particularly revealing: if operating cash flow exceeds net income, the profit is backed by real money, not by accounting effects.
An exclusion rule first ensures that only value stocks are scored: a P/B up to 1.5 (an approximation of Piotroski's top book-to-market quintile; a stock without a P/B is not scoreable). Only then do the nine yes/no questions count, each worth exactly one point, deliberately unweighted. The empirical research behind the F-Score principle shows that it is precisely the unweighted accumulation of many weak signals that maximises predictive power for financial stability. Missing data conservatively earns no point.
Four criteria test profitability (positive profit, positive cash flow, rising return on assets, cash flow above profit), three the capital structure (long-term debt over total assets down versus the prior year, rising liquidity, no dilution), two operating efficiency (rising gross margin and asset turnover). The upper threshold is a uniform 7 points across all size classes, with priority given to small caps: Piotroski's Table 4 finds the effect statistically insignificant for large caps, so a stricter hurdle there is not warranted.
Value gate (exclusion rule): P/B up to 1.5, an approximation of the original's top book-to-market quintile.
Profitability: (1) net income positive, (2) operating cash flow positive, (3) return on assets above prior year, (4) operating cash flow above net income (earnings quality).
Capital structure: (5) long-term debt over total assets below prior year, (6) current ratio above prior year, (7) share count not increased.
Efficiency: (8) gross margin above prior year, (9) asset turnover (revenue/total assets) above prior year.
The check is a trend instrument: it measures improvement over the prior year, not absolute levels. A solid but stagnant company can therefore score lower than one improving rapidly; by design, because those improvers have historically delivered the excess returns in the cheap end of the market.
Fidelity update as of 23 August 2026: the leverage trend now follows the paper via long-term debt over total assets instead of the debt-to-equity ratio. The buy threshold of 7 points is a practitioner convention, not an original requirement: Piotroski's own paper contrasts the extremes of 8 to 9 points against 0 to 1, without naming a fixed "buy from 7" rule.
For anyone who wants to check balance-sheet quality systematically, standalone, or as a second filter next to a valuation strategy such as Two-Factor Value + Quality.