GLOSSARY

FPI Rating

The FPI Rating is Fair Price Index's proprietary measure of company quality. It condenses six dimensions of fundamental analysis into a single number on a 0 to 10 scale, accompanied by a plain-English verdict that explains the score.

The six factors evaluated are profitability, quality, growth, debt, stability, and valuation. Each is scored from 0 to 100 and graded A, B, or C. The average of these scores forms the base rating, which is then adjusted by the Piotroski F-Score and Altman Z-Score.

How the Score Works

A rating of 8.0 to 10.0 indicates excellent fundamentals across most dimensions. Between 6.0 and 7.9 signals good quality with some weaknesses. Between 4.0 and 5.9 represents an average company with a mixed profile. Below 4.0 indicates significant fundamental weaknesses.

The FPI Rating measures company quality, not stock price attractiveness. A company can score 8.5 while being overvalued. To determine whether a stock is a good investment, combine the FPI Rating with the fair value estimate and margin of safety.

EXAMPLE

A company scoring 5.8 with the verdict 'Low debt levels and consistent growth trajectory, but weak profitability margins and expensive valuation' tells you instantly where the strengths and weaknesses lie.

How to Read Stock Fundamentals: P/E, ROE, and Dividend Yield

Learn the three most important stock metrics every investor needs: P/E ratio, Return on Equity, and Dividend Yield. Includes formulas, real stock examples, sector comparisons, and how to use all three together.

RELATED TERMS

Piotroski F-Score

A 0–9 scoring system that evaluates a company's financial strength through nine binary accounting tests.

Altman Z-Score

A formula predicting the probability of corporate bankruptcy within two years by combining five financial ratios.

Fair Value

The estimated intrinsic worth of a stock based on fundamental analysis rather than its current market price.

Margin of Safety

The difference between a stock's intrinsic value and its market price, providing a cushion against analysis errors.

GET ALERTS

Track fair values for 37,000+ stocks

Download Fair Price Index and receive push notifications when valuations shift for stocks you follow.

Free tier available · PRO from $1.67/month

DISCLAIMER: This glossary is for educational purposes only and does not constitute financial advice. Fair value calculations are estimates based on models and assumptions. Always conduct your own research and consider consulting a financial advisor before making investment decisions.