Stock Analysis Methodology

1. How Does the MoonshotScore Work?

MoonshotScore is a single 0-100 rating, but it is calculated through the lens that best fits the security. U.S.-listed common stocks use the 5-Pillar model below. ETFs, OTC names, and foreign listings — which lack directly comparable company fundamentals — use the legacy 9-Factor model in section 2.

The 5-Pillar model (U.S. common stocks). Each company is scored against its sector peers across five pillars, then combined into one number. Because the comparison is sector-relative, a stock is judged against its true peers — a utility against utilities, a software company against software — so the score reflects genuine quality rather than which industry it happens to belong to.

• Business Quality: Is this a genuinely good business? Profitability, margins, and returns on capital versus sector peers.
• Financial Safety: Could this blow up? Debt load, cash position, and overall balance-sheet strength.
• Valuation: Am I paying a fair price? Price measured against fundamentals, relative to peers.
• Growth Durability: Is the growth real and likely to last? Quality of the revenue and earnings trend, not one-off spikes.
• Momentum: Is the market already moving on this? Recent price trend.

Score bands: Exceptional (80-100), Strong (65-79), Fair (45-64), Weak (25-44), Avoid (below 25). The score also weighs risk signals, so a stock with a few strong pillars can still land lower when the fundamentals carry warning flags.

2. The Legacy 9-Factor Model (ETFs, OTC & Foreign Listings)

For securities outside U.S. common equity — ETFs, OTC names, and foreign listings — MoonshotScore uses a 9-factor composite. Each factor draws on a distinct data signal, weighted by historical predictive value.

• Revenue Growth (20%): Year-over-year revenue growth scored against fixed thresholds. Faster-growing companies score higher — the single most important factor.
• Gross Margin (10%): Gross profit as a percentage of revenue. Higher margins indicate pricing power, competitive moats, and scalable business models.
• Operating Leverage (10%): Scaling-efficiency estimate derived from the revenue-growth trend as a proxy. Stronger growth signals more efficient scaling.
• Cash Runway (10%): How long the company can operate at its current burn rate — enough cash to fund the growth strategy.
• R&D Intensity (10%): Research and development spending as a percentage of revenue. High intensity signals commitment to innovation and a future pipeline.
• Insider Activity (15%): Net insider buying or selling. When insiders buy their own stock, it signals confidence in the company's prospects.
• Short Interest (5%): Trading liquidity — daily volume turnover relative to the share float. Healthy turnover means smoother entry and exit.
• Price Momentum (10%): Price performance across 1-, 3-, and 6-month windows. Stocks with positive momentum tend to keep outperforming.
• News Sentiment (10%): AI-analyzed sentiment from recent news articles and analyst reports. Positive trends often precede price movements.

Display letter grades (same ladder for both engines): A+ (80-100), A (70-79), B+ (60-69), B (50-59), C (40-49), D (30-39), F (below 30).

3. What Data Does the Score Use?

• Financial Modeling Prep (FMP) — Primary: Fundamentals, financial statements, analyst ratings, insider transactions, technical indicators, and intraday quotes.
• Yahoo Finance — Fallback: Supplementary market data, ETF data, earnings estimates.
• Alpaca Markets — Fallback: Intraday and historical price data for charting and technicals.
• SEC EDGAR: Corporate filings (10-K, 10-Q, 8-K) and insider filings for fundamental analysis.
• News (70+ sources): Daily aggregation for sentiment, catalysts, and the Market Intelligence Journal.

4. The 7-Dimensional Quality Gate

Every stock page is scored across 7 dimensions before publication. Pages below the threshold are not published.

• Data Completeness: Profile, financials, price data presence.
• Market Presence: Volume, market cap, exchange tier.
• Financial Health: Revenue, profitability, balance sheet strength.
• Content Quality: Dossier depth, AI analysis coherence, news coverage.
• Technical Signals: TA indicators availability and reliability.
• Regulatory Compliance: SEC filing currency, disclosure status.
• Historical Data: Available time series depth and consistency.

5. Validation Pipeline

AI-generated metrics are cross-validated against source data through a 6-layer pipeline:

1. Numeric integrity (figures match source within tolerance)
2. Ticker consistency (symbol mentions match the page entity)
3. Length ratio (translated content paragraph parity)
4. Paragraph preservation (≥60% structural fidelity)
5. HTML tag validation (no malformed markup)
6. Title sanity (5-300 char range, no template leakage)

Discrepancies trigger automatic regeneration. Persistent failures route to manual review.

6. Update Frequency

• MoonshotScore: The 5-pillar model re-ranks U.S. common stocks nightly; legacy scores update as market data refreshes.
• Stock prices: Updated throughout U.S. market hours.
• Dossiers: Refreshed on material events (earnings, ±5% moves, news).
• Financial statements: After quarterly and annual filing processing.

7. Limitations & Disclaimers

MoonshotScore is an analytical signal, not a prediction. Past performance does not guarantee future results. Scores reflect current data; market conditions change continuously. AI may occasionally produce inaccurate outputs despite validation; report errors to [email protected].

Not financial advice. Stock Expert AI is an educational research platform, not a registered investment advisor. Consult a licensed financial professional for personal investment decisions.

8. Related Documents

• AI Methodology & Limitations — Technical detail of AI models, validation, hallucination prevention.
• Editorial Policy — Content creation, error correction, accountability.
• MoonshotScore Detail — Each factor explained.
• Full Disclaimer — Legal disclosures.