Incorporate Balance Sheet Testing into StockRanks
See Paul Scott's SCVR comment on Wincanton (WIN) dated 5/11/14. Despite having a very poor balance sheet, which shows the company is essentially insolvent, the StockRank for this company is a near perfect 99!
There must be some revision required here to factor in poor balance sheet performance for this company and others like it.
This is something we’re considering, although the emphasis of the Quality Rank is on predictive, rather than descriptive, factors and we’re not aware of empirical research that negative book equity is actually a predictive factor (despite Paul’s understandable focus on it).
We note however that there’s a good discussion thread about this topic here: http://www.stockopedia.com/content/small-cap-value-report-5-nov-2014-win-mnzs-87474/
I think there are other red flags around the balance sheet that Paul has referred to in relation to Globo for instance e.g. large cash position alongside large debt?