How GrowthPicks Scores Work

Every ticker in the GrowthPicks universe receives a single number: its GrowthPicks Score. This score expresses the model's relative conviction in the business – not a prediction of future performance, not a mathematical truth, but a structured, explainable signal that helps you compare one opportunity against another.

If you understand this guide, you understand the analytical core of the system.

What the Score Represents

A higher score means the model has more conviction in the business relative to others in the universe. It does not mean the stock will go up. It means: given what we know today about this company's growth, quality, and valuation, it ranks higher than companies with lower scores.

Scores range from 0 to a theoretical maximum of 10. In practice, very few tickers score above 7 and most sit between 3 and 5.

The Three Pillars

The score is built from three independent components. Each has one job. They are never double counted, and no component is a proxy for another.

THE THREE PILLARS

Component	Maximum	What it measures
Growth Score	Maximum 4	Scale and momentum – revenue growth rate, direction, and size
Quality Score	Maximum 4	Economic soundness – margins, Rule of 40, business sustainability
Value Modifier	Maximum 1.25	Valuation nudge – rewards attractive pricing, never penalises quality

Growth Score – Maximum 4

The Growth Score measures scale and momentum. Key inputs include TTM revenue, year-over-year revenue growth rate, and growth direction (accelerating, stable, or decelerating). A business with high revenue growth that is also accelerating will score higher than one growing at the same rate but slowing down.

Growth is the engine of the system, but it is not the only consideration. A company growing at 80% per year with terrible economics may score lower overall than one growing at 30% with excellent quality and attractive valuation.

Quality Score – Maximum 4

The Quality Score measures economic soundness and survivability. It is deliberately independent of growth rate – a fast-growing company with poor economics is not a quality business. This separation is one of the most important design decisions in the system.

Key inputs include gross margin, EBITDA margin, Rule of 40 performance, and the overall sustainability of the business model. A high Quality Score means growth is being achieved through genuine economic strength – not through burning cash, diluting shareholders, or accounting adjustments.

Value Modifier – Maximum 1.25

The Value Modifier is the valuation layer. Its job is to nudge conviction – not dominate it. A company with strong growth and quality should not be rejected solely because it is expensive, but valuation should apply restraint when prices are stretched.

The Value Modifier is derived from two metrics – P40 and GMQ. Both are lower-is-better metrics. The modifier can add up to 1.25 points to the total score, but it cannot subtract. It rewards attractive valuation without penalising businesses that happen to be expensive for good reason.

How They Combine

THE SCORE FORMULA

Score = Growth Score + Quality Score × Value Modifier

The maximum theoretical score is 10 (4 + 4 × 1.25). The score is then used to derive the Value Signal – the qualitative tier from Cheap as Chips to Full Price – and to inform portfolio logic internally.

CONVICTION LEVELS

Score Range	Conviction Level	What it means
Above 7	Very High Conviction	Strong growth, quality, and valuation alignment.
5–7	High Conviction	Good fundamentals. Worth detailed review.
3–5	Moderate Conviction	Some positives but trade-offs are visible.
Below 3	Low Conviction	Weak fundamentals, micro-company size, or valuation concerns dominant.

What the Score Does Not Do

Understanding what the score cannot do is as important as understanding what it can.

It does not predict returns.
It does not guarantee safety.
It does not account for future events the model cannot see.
It does not replace your own judgement.

The score is a structured starting point. If you disagree with a score, that is useful information – it means you see something the model does not, and you should investigate further.

The Bottom Line

The GrowthPicks Score turns three independent assessments – growth, quality, and valuation – into a single, comparable conviction signal. It is always explainable, always sanity-checkable, and always subordinate to your own judgement.

This guide is part of the GrowthPicks Toolkit. It is educational content and does not constitute financial advice.