Business Valuation Algorithm Criteria
(The goal is to refine an algorithm to project the future value of a stock based on the criteria listed below and then to calculate an appropriate buy price within a reasonable margin of safety)

Is the markeplace expanding? 
Are the company’s share of the marketplace expanding?

Does the company display strong leadership, entrepreneurial character and competitiveness?

Have earnings been going up during the last 3 years?
Are Earnings projected to continue to go up this year and next year?

What is the cumulative value of 5 years of earnings shown compared to the stock price? 

What is the price over earnings?
What is the 5 year growth percentage?
What is the growth % compared to the P/E?

Is the dividend generous (ie: above 4%)?
Is the dividend easily covered by earnings?
Is the stock a dividend aristocrat (ie: dividend growth on a yearly basis over 25 years).

Does the company sell globally?

Do the directors own more than 10% of the company?
Are directors adding to their share ownership? 
Is the company buying back its shares?

            Nuvei                         Company 2                 Company 3                  Company 4                  Company 5
Directors Buying Shares
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​Keep in mind, when looking at transaction activities by insiders, purchasing activity may reflect perceived value in a security. Selling activity may or may not be related to a stock’s valuation; perhaps an insider needs to raise money for personal reasons. An insider’s total holdings should be considered because a sale may, in context, be insignificant if this person has a large remaining position in the company. I tend to put great weight on insider transaction activity when I see multiple insiders trading a company’s shares or units.
Profit Margin
What creates a high gross profit margin is the company's durable competitive advantage, which allows it the freedom to price the products and services it sells well in excess of the cost of goods sold...As a very general rule (and there are exceptions): Companies with gross profit margins of 40% or better tend to be companies with some sort of durable competitive advantage. (From Warren Buffet and the Interpretation of Financial Statements_page 34)
 & Other Durable Competitive Advantage Ratios via WB and the interpretation of FS
  • SGA/gross profit ratio < 30% - 80% 
  • Interest payouts ≤ 15% of operating income.
  • Historical net earnings/total revenue ratio ≥ 20%. Never ≤ 10%.
  • Current ratio > 1. & Debts to shareholders’ equity ≤ 0.8
  • Net earnings enough to pay all long-term debt in 3–4 years.
  • Capital expenditures/net earnings ≤ 25% - 50%.
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