XPON

Capital-structure-agnostic earnings yield. Pairs with Greenblatt ROC to compute the famous Magic Formula rank (the universe-rank of earnings yield plus universe-rank of return on capital). Pre-tax operating earnings divided by the full claim on the firm gives a cleaner cross-firm valuation comparison than P/E or earnings yield alone, because it strips out the distortions from leverage, cash, and tax structure.

Easier to compare than operating margin across firms with very different leverage and depreciation profiles, because it adds D&A back. Software platforms commonly run above 30%; capital-light service businesses cluster around 20%; capital-intensive industrials sit below 15%. The weakness: ignores the cash needed to maintain the asset base — pair with FCF margin for a complete profitability picture.

End-to-end conversion ratio: of every dollar of revenue, how much falls through to genuine free cash flow available to all capital providers? More honest than net margin because it accounts for the capex needed to maintain (and grow) the business. The single best indicator of whether the business is a quality compounder or a GAAP-earnings illusion.

Free cash flow the business throws off, divided by what the market currently charges for the equity. Treats the equity claim as a perpetual stream of free cash. More honest than earnings yield because it reflects the cash actually available to shareholders after all reinvestment. Cyclicals can swing below zero in a downturn — read with the trailing-cycle range.

Joel Greenblatt's reformulation of return-on-capital, designed to filter for businesses that earn high pre-tax returns on the tangible operating capital that actually generates EBIT. Excludes goodwill and acquired intangibles so that two firms with the same operating economics rank similarly regardless of acquisition history. Pairs with Greenblatt's Earnings Yield (EBIT/EV) to produce the famous 'Magic Formula' rank — quality stocks at value prices.

First-line profitability measure — how much revenue is left after the direct cost of producing it. Stable or rising gross margin signals pricing power and low input-cost exposure; falling gross margin is one of the earliest reliable signals of competitive pressure or commodity-input squeeze. Industry context is everything: 30% gross margin is excellent for a grocery chain and disastrous for a software company.

Operating margin minus interest, tax, and below-the-line items. Useful but noisier than operating margin: tax rate changes, debt-service shifts, and one-time items can move net margin year-over-year even when the operating business is unchanged. Always pair with operating margin and FCF margin — divergence between them is a tell about leverage, tax structure, or earnings quality.

Captures the leverage between revenue and operating profit — the core test of whether a business converts sales into income at the operating level. Independent of capital structure (excludes interest) and tax-jurisdiction noise. Trend matters as much as level: an improving operating margin indicates pricing power or operational efficiency gains; a falling margin signals input-cost pressure, wage inflation, or competitive erosion.

Capital-efficiency measure that ignores how the assets are financed. Useful for comparing within a sector but heavily biased by industry — banks and utilities run low ROA by design (huge balance sheets), software and franchise businesses run high ROA (asset-light). The DuPont decomposition links it to ROE: ROE = ROA × (assets / equity), so leverage inflates the gap between ROA and ROE.

Pre-tax cousin of ROIC using operating capital employed (long-term debt plus equity, approximately equal to total assets minus current liabilities). Damodaran publishes ROCE by industry annually, so it benchmarks cleanly against sector norms. Particularly useful for capital-intensive businesses where you want to see pre-tax returns on the long-term capital base.

The headline profitability metric. Net income divided by average book equity tells you how productive each dollar of shareholders' capital is. High sustained ROE compounds book value when the business can reinvest at a similar return. Two warnings: ROE rises mechanically with leverage (high D/E inflates ROE without making the business better), and aggressive buybacks can shrink the equity denominator faster than they shrink earnings, artificially boosting ROE even as fundamental returns are flat.

The single best operations-quality metric. Negative CCC means the firm is funded by suppliers — the customer pays before the supplier needs to be paid (Apple, Costco, Amazon at scale). Long CCC ties up working capital and forces operating-loan dependence. Combines three sub-metrics: days inventory outstanding, days sales outstanding, days payable outstanding.

DuPont productivity measure. Combined with margin, it tells the asset-light vs. asset-heavy story: low turnover with high margin is the luxury / branded model, high turnover with thin margin is the supermarket / discount model. Very high turnover in retail can also flag stockouts (lost sales) — the metric reads best industry-relative, not absolute.

The Coppock Curve is a weighted moving average of the sum of two rate-of-change measures, originally designed as a long-horizon, buy-only bottom indicator for equity indices. This screener applies it to daily bars and adds a bearish state for symmetry: a cross up through zero is the classic long-term buy tell, a cross down through zero flags a bearish momentum cycle.

+1 while the Coppock Curve is above zero; -1 while it is below zero; 0 only at exactly zero.

+1 = bullish zero-line cross (classic long-term buy), -1 = bearish zero-line cross.

ROC is the simplest momentum oscillator: (close − close_N_ago) / close_N_ago × 100. It's unbounded, sign-bearing, and reads as 'how much price has moved in absolute % terms over the lookback'. A configurable threshold (default 5%) separates ordinary fluctuation from strong directional thrusts. Useful as a coarse momentum cross when you want a less smoothed signal than RSI or MACD.

+1 while ROC is above +threshold (strong bullish thrust); -1 while ROC is below −threshold (strong bearish thrust); 0 inside the ±threshold band.

+1 = ROC above +threshold (bullish thrust), -1 = ROC below −threshold (bearish thrust), 0 = ROC within ±threshold.

Stochastic RSI applies the stochastic oscillator formula to RSI values rather than price, producing a faster, more sensitive 0-100 momentum read. Readings below 20 are oversold and above 80 overbought. The signal latches bullish when FastK crosses above FastD while in the oversold zone and stays on until FastK drops back below FastD; the bearish mirror latches on a cross down in the overbought zone. More reactive than plain RSI, so best filtered by trend context.

+1 latches when FastK crosses above FastD while FastK is below the oversold threshold (default 20), and holds until FastK falls back below FastD; -1 latches when FastK crosses below FastD while FastK is above the overbought threshold (default 80), and holds until FastK rises back above FastD; 0 otherwise.

+1 = bullish oversold cross still latched, -1 = bearish overbought cross still latched, 0 = no latched cross.

TRIX is the one-bar rate of change of a triple-exponentially-smoothed closing price. The triple smoothing strips out short-term noise, so TRIX oscillates slowly around zero. A cross up through zero marks momentum turning positive (bullish); a cross down through zero marks it turning negative (bearish). Smoother and lower-frequency than most momentum oscillators, which trades responsiveness for fewer whipsaws.

+1 while TRIX is above zero; -1 while TRIX is below zero; 0 only at exactly zero.

+1 = TRIX turned positive (bullish momentum), -1 = TRIX turned negative (bearish momentum).