Hello, I'm trying to adapt my model to be able to screen stock financials properly. I know that in this subreddit AI is frowned upon and many say that your own due dilligence is the most important here (to which I wholly agree), nevertheless, I reckon that as AI advances, using it as a tool to screen stocks will become pretty useful if done right. I have created a few framework questions to use:
Is it GAAP-profitable, or does the story require me to look past a loss? (Real net income vs. adjusted-away or one-time-gain-inflated)
Is revenue growing organically, or is it acquisition-inflated? (Organic growth vs. total growth)
Does it generate real free cash flow, reasonably from earnings? (FCF/net income)
Is the balance sheet solid, or does it need capital raises to stay alive? (Net debt/EBITDA, cash position)
Is the current valuation reasonable relative to history and peers? (P/E, EV/EBITDA, FCF yield against own history and comparables)
Is ROIC above 15%, showing the business genuinely creates value from capital? (NOPAT ÷ invested capital, checked two ways)
What else would you add if you were in my place?
I use this to screen stocks, and honestly AI has made it less time consuming (like it should), OF COURSE, when deciding to invest I will always do my own DD. If you're here to shit on my head then just skip the post entirely, thank you.