“Cheap” is the most abused word in investing, mostly because every metric defines it differently. A stock can be cheap on earnings and expensive on book value at the same time — ask any bank investor. The value rank refuses to pick a favourite: it asks the question four ways and averages the answers.
The four lenses
- Price / Sales — the bluntest lens, and the hardest to manipulate. Revenue is revenue; there are no depreciation choices hiding in it.
- Price / Earnings — the classic. Most informative for mature, profitable businesses; noisy where earnings swing or accounting choices dominate.
- Price / Book — what are the accumulated assets worth? Indispensable for banks and asset-heavy industries; almost decorative for software.
- Dividend yield — cash you actually receive. The lens that disciplines the other three, because dividends are hard to fake for long.
Each lens is ranked 1–100 against the company’s true peers, then the four ranks are averaged into the consolidated value rank. The averaging is what makes it robust: a company that looks cheap on a single distorted metric — earnings inflated by a one-off, book value bloated by goodwill — rarely looks cheap on all four at once.
When the lenses disagree
The disagreements are often the most informative part. High P/S rank but low P/E rank? Revenue is valued cheaply but margins are thin — an efficiency story, if you believe in the turnaround. High P/B but low dividend? The market prices the assets fairly but management isn’t returning cash. On any stock page, expand the value bar and the four detail ranks tell you which kind of “cheap” you’re actually buying.