GuruFocus' GF Score is a ranking system that has been found to be closely correlated to the long-term performances of stocks based on backtesting from 2006 to 2021.
The stocks with a higher GF Score generally generate higher returns than those with lower scores. Therefore, when picking stocks, investors should choose companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
The GF Score takes five key aspects into consideration. They are:
An in-depth explanation of each component can be found here.
We will now take a closer look at the GF Score chart, which is located at the top of the stock summary page.
As for how to interpret the chart, users can see in the Walmart Inc. (WMT, Financial) example above that a pentagon is contained within a circle. Each point of the pentagon represents one of the five criteria (which are labeled outside the circle). The further away each point of the pentagon is from the center of the circle, the better the stock scores based on that individual component.
Second, the area the pentagon covers indicates the strength of the GF Score; the bigger the area is, the higher the score.
For instance, Apple Inc. (AAPL, Financial) raked in a high GF Score of 96, receiving strong scores for growth and profitability and middling scores for financial strength, momentum and GF Value.
In comparison, Zoom Video Communications Inc. (ZM, Financial) has a moderate GF Score of 58, receiving a high score for financial strength, middling scores for growth and profitability and low scores for momentum and GF Value.
At the low end of the spectrum is Snowflake Inc. (SNOW, Financial) with a GF Score of 21. While it has a high financial strength score, its profitability is weak. Due to the fact it is a fairly young company, it doesn’t yet have a score for the other criteria and thus, the GF Score may give an incomplete picture of the stock's potential.
