How Oak Growth scores a company
Every valuation and score on this site is produced the same way, by the same method, for all ~1,000 companies we cover. This page explains exactly how — so you can judge the numbers for yourself rather than take them on faith.
The foundation: Graham, then Buffett
Oak Growth's method isn't invented from scratch. It's a systematic application of the value-investing principles laid out nearly a century ago by Benjamin Graham — the framework Warren Buffett learned directly from Graham at Columbia and has used ever since.
Two books underpin everything here. Security Analysis (Graham and Dodd, 1934) makes the case that a stock's price and its underlying business value are two different things, and that disciplined analysis of the financial statements can estimate the latter. The Intelligent Investor (Graham, 1949) distils that into principles any investor can use: treat a share as part-ownership of a business, insist on a margin of safety between price and value, and ignore the mood swings of the market.
Benjamin Graham · Security Analysis (1934) · The Intelligent Investor (1949)From those ideas come three questions Oak Growth asks of every company, and the rest of this page is how we answer each one with data:
- Is it a good business? — quality and durability
- Is it cheap relative to what it's worth? — valuation and margin of safety
- Is the timing reasonable? — price trend and signals
The four pillars
Each company is checked against four pillars drawn straight from Buffett's stated criteria. A company either clears a pillar or it doesn't, and the verdicts appear on every stock page.
A durable competitive advantage — pricing power, scale, brand, or switching costs — that protects returns over time.
Trading at a discount to its intrinsic value, measured by discounted cash flow (see below). The margin of safety.
Strong return on equity, healthy free cash flow, and a balance sheet that isn't over-burdened with debt.
Capital allocated sensibly — reinvestment, buybacks and dividends that build per-share value over time.
Intrinsic value & margin of safety
Intrinsic value is our estimate of what the business is actually worth, independent of today's share price. We compute it with a discounted cash flow (DCF) model: project the company's future free cash flows, discount them back to today at a rate that reflects the risk of those cash flows, and add a terminal value for the years beyond the projection window.
The margin of safety is simply how far below that intrinsic value the share currently trades:
A stock trading at £40 with an intrinsic value of £80 has a 50% margin of safety. Graham's central insight is that this gap is your protection: the bigger the discount to fair value, the more room you have to be wrong about the future and still do well.
The relative-valuation (RV) score
DCF answers "what is it worth in absolute terms?" The RV score answers a complementary question: "how is it priced against its own sector?" We compare four valuation multiples to the sector median and blend them into a single 1–100 score, weighted as follows:
A higher score means cheaper relative to peers:
The BP Score /100
The BP Score (Buffett Pillars) is the single headline number on each card — a 0–100 composite of three components, so you can rank companies at a glance:
- Value — is it cheap, on both intrinsic-value and relative-valuation measures?
- Quality — is the business strong: returns on equity, free cash flow, low debt?
- Momentum — is the price trending up rather than falling?
Higher is better; a score of 65 or above indicates a company that scores well across all three. The BP Score is a starting point for research, not a verdict — it points you to companies worth a closer look, which is what the rest of each stock page is for.
The traffic-light signals
Alongside the scores, each company carries a simple signal based on its price trend and proximity to support and resistance levels:
Moving-average crossovers: the Golden Dot & Death Dot
Two long-term moving averages show which way a share's momentum has turned: the 50-day moving average (the recent trend) and the 200-day moving average (the long-term trend). The point where they cross is one of the most-watched signals in markets, and Oak Growth marks it on the chart with a coloured dot at the exact spot the two lines meet.
The dot sits on the chart at the precise point the averages crossed, so you can see at a glance when the trend last shifted — a gold/yellow dot for a golden cross, a red dot for a death cross. These are momentum signals, not predictions: moving averages lag the price by design, so the dots confirm a change in trend rather than forecast one. Use them alongside the fundamentals and intrinsic value, not instead of them.
Screened RNS news
Listed companies publish a constant stream of announcements through the Regulatory News Service (RNS) — the official channel for disclosures from London-listed companies, with equivalent official filings for the other markets we cover. Most of it is routine: holdings notifications, director dealings, administrative housekeeping. Very little of it actually moves a share price.
Oak Growth filters that firehose down to the announcements that genuinely matter — results, trading updates, guidance changes, M&A, major contracts and the like — and surfaces only those on each stock page. The aim is the same as the rest of the method: cut the noise, show the signal. You see the handful of announcements worth reacting to, not the hundreds that aren't.
Slow-moving fundamentals — the balance sheet, income statement and cash flow figures that drive the scores — are reviewed and updated as companies report. Live share prices and charts are pulled from market-data providers. Each stock page carries a "last reviewed" date so you always know how current the analysis is.
What this is — and isn't
Oak Growth is an analysis tool that applies a consistent, transparent method to a large universe of companies. It is not a personal recommendation to buy or sell, and it isn't financial advice. The value of investments can go down as well as up, you may get back less than you invest, and past performance is not a reliable indicator of future results. The method is here to help you think clearly and do your own research — the decisions are yours.