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Revenue Growth Rate Added To Our Tool Suite!

Continuing the expansion of our set of tools here at MagicDiligence, today I'm rolling out a new data point: the 3 year average revenue growth metric.

The addition of this metric answers a common question myself (and hopefully many of you) ask when looking at Magic-style stocks: "sure its cheap, but is the company growing?".

There are few things more powerful for stock returns than buying cheap the stock of a quality company that has lots of growth in its future. By adding the revenue growth metric, we cover all 3 of these basis. Earnings yield (or free cash yield) ensures we are buying cheap, return on invested capital helps ensure we are buying a quality company, and 3 year revenue growth gives us an idea that the company is (and, hopefully, can continue) growing.

Hopefully it is helpful for you, too! Here are the ways the metric has been incorporated into our various tools.

Screener and Portfolio Ranker

For the MagicDiligence Screener and Portfolio Ranker, I've replaced the current ratio column with 3 year average revenue growth in the tables. While the current ratio is a useful measure of liquidity and financial health, I've found that it carries less immediate utility then having growth rate available. Certainly it can be added as an option later on... if you miss it please email me and let me know.

Currently, the growth rate is just a data point. It allows you to quickly see the growth rate of each screened stock. Like all the other columns, it is also sortable so you can easily see which stocks are growing the fastest.... or the ones in the midst of a business decline.

Here is a small example ("3YG" is the growth column):

TickerCompanyPriceMktCapQuarterEYMFI-ROIC3YGRank
CMGChipotle Mexican Grill, Inc.$600.6218,9752015-03-314.4%68.2%21.9%1
PNRAPanera Bread Company Class A$182.384,8462015-03-315.5%36.4%11.6%1
MCDMcDonald's Corporation$94.6391,3652015-03-317.4%30.7%0.6%1

Single Stock Stats Calculator

The single stock stats calculator has the growth rate integrated in 2 places. First, it is added as a simple data point in the summary table:

Second, it is added as one of the fields in the "Instant Diligence" section, alongside all the other statistics, giving you an idea of how good (or bad) that particular growth rate is against the market averages at large:

It would be kind of cool to see which stocks can generate all green checkmarks in Instant Diligence. Hmmm... a new tool for the future, perhaps?

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