Our financial Health trend meter is based on the Piotroski F-Score, a 9 point scoring system that analyses the trend in a company's accounts across a set of tests that cover profitability, leverage, liquidity, sources of funds and efficiency.
Piotroski showed that stocks scoring 8 or 9 significantly outperformed stocks scoring 1 or 2. It is a good shorthand for deeper financial analysis and the popover on click gives a breakdown of how the score is compiled, quickly highlighting red flag areas.
More recent studies have shown that focusing on high F-Score stocks can reduce the volatility of returns in a value portfolio.
You can check the F-Score for any stock in our database here.