Quantitative Value
Methodology
A systematic, rules-based approach to finding the world's most undervalued stocks — free of emotion, analyst bias, and narrative.
Philosophy
Melquiades implements the methodology from Quantitative Value (Gray & Carlisle, 2012) — a systematic framework that combines deep-value screening with financial quality filters to find stocks trading at extreme discounts to intrinsic value while avoiding value traps and distress situations.
The core insight: cheap stocks outperform over time, but naive cheapness metrics (like low P/E) select for deteriorating businesses. Combining valuation with financial quality dramatically improves the odds. All factors are computed from public financial statements via Yahoo Finance — no analyst estimates, no forecasts, no narrative.
Gray, W. R. & Carlisle, T. E. (2012). Quantitative Value. John Wiley & Sons. ISBN: 978-1118328071.
The Four Factors
Each stock is scored on four independent dimensions and ranked globally.
EBIT / TEV
Measures operating earnings relative to the total cost of acquiring the business. Preferred over P/E because it is capital-structure-neutral and harder to manipulate.
ROIC
Return on Invested Capital measures how efficiently a company generates profit from its capital base. High-ROIC businesses compound wealth over time and signal durable competitive advantage.
Gross Profitability (GP/A)
Robert Novy-Marx (2013) showed gross profitability predicts future returns as strongly as book value. Asset-light, high-margin businesses earn superior long-term returns.
Piotroski F-Score
Filters out "cheap traps" — companies that look cheap on valuation but are actively deteriorating. A stock with EBIT/TEV in the top decile but F-Score of 2 is a value trap.
QV Score Formula
Each factor is independently ranked (0–100 percentile), then equally weighted.
The final integer rank (1 = best) is assigned after sorting by QV Score across the entire global universe. Rank 1 is the stock with the most favourable combination of cheapness, quality, and financial strength.
Supplementary screening metrics — Altman Z-Score (solvency) and Accruals Ratio (earnings quality) are displayed on stock pages for reference but are not inputs to the composite QV Score.
Data & Coverage
1343+ tickers across 12 regions, sourced from Yahoo Finance (yfinance). No API keys required.
| Region | Exchanges | Tickers |
|---|---|---|
| US | NYSE, NASDAQ, AMEX | 586 |
| EU | Euronext Paris/Amsterdam/Brussels, Frankfurt | 182 |
| JP | Tokyo Stock Exchange (TSE) | 103 |
| UK | London Stock Exchange (LSE) | 97 |
| CA | Toronto Stock Exchange (TSX) | 60 |
| AU | Australian Securities Exchange (ASX) | 60 |
| IN | NSE / BSE India | 60 |
| HK | Hong Kong Stock Exchange (HKEX) | 50 |
| IT | Borsa Italiana | 45 |
| CH | SIX Swiss Exchange | 40 |
| KR | KOSPI / KOSDAQ | 30 |
| BR | B3 (Bovespa) | 30 |
What We Don't Do
Further Reading
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