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Price/free earnings score

The value of this score is an indication of the relationship between the price at which the company trades on the stock exchange and the single exponential moving average (EMA) of the company's free earnings for the last seven accounting periods. A high score will indicate that the quote price is low relative to the free earnings. A low score will indicate a high price in relation to these free earnings.

How to use the score

The following table can serve as a reference for the use of this Score:

Score value range Interpretation
from 0 to 5 High company price in relation to its free earnings
from 5 to 7 Company price proportional to its free earnings
from 7 to 10 Low company price in relation to its free earnings

Free earnings

Free earnings are an earnings variant calculated by Gradement and used to value the company using this score.

In order to calculate the free earnings we adjusts the earnings of the last seven accounting periods by inflation and technical amortization, and incorporating the capital expenses of the company. This free earnings are a more appropiate factor to value the company than the simple earnings figure as published by the companies in its profit and loss statement.