I created a tool that ranks SP500 Companies by their financial fundamentals and backtested it over 10 years

swbat55 · 2026-08-24T15:11:18+00:00

=== SUMMARY === - Author built and backtested a fundamental scoring tool for S&P 500 stocks using growth, quality/profitability, and financial health metrics. - Claimed edge: score correlation of ~0.33 with forward returns and r² of ~0.10, meaning it explains about 10% of return variation. - Post is a tool showcase with a link, not a specific investment thesis or stock pick; author explicitly says it is not financial advice. - Quality assessment: This is more of an alpha-factor/tool presentation than well-researched company-specific DD. Limited methodology details and no audited performance make it difficult to validate; treat as speculative noise rather than actionable research. === SENTIMENT === NEUTRAL === TRADE IDEAS === No actionable trade ideas in this post.

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Summary

Author built and backtested a fundamental scoring tool for S&P 500 stocks using growth, quality/profitability, and financial health metrics.
Claimed edge: score correlation of ~0.33 with forward returns and r² of ~0.10, meaning it explains about 10% of return variation.
Post is a tool showcase with a link, not a specific investment thesis or stock pick; author explicitly says it is not financial advice.
Quality assessment: This is more of an alpha-factor/tool presentation than well-researched company-specific DD. Limited methodology details and no audited performance make it difficult to validate; treat as speculative noise rather than actionable research.

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Hi All,

I built a tool that ranks all S&amp;P 500 companies using a scoring formula I developed. I backtested it over the past 10 years (to include corrections, Covid, etc) and limited it to the S&amp;P 500 because these companies go through a screening process to get included and are generally seen as stable and top performing companies.

On a per-stock basis, the tool gives a correlation of +0.324 (6M) and +0.33 (12M), with an r² value of \~0.10. Meaning the score accounts for roughly 10% of the variation in forward returns, a decent edge. It also gives a breakdown of forward returns based on how the companies are ranked ie: Strong Fundamentals, Good Fundamentals, Poor Fundamentals, etc.

My tool scores a company based on these financial factors:

**Growth (45%)**

* **Revenue YoY**
* **Operating cash flow YoY**
* **A quarter-over-quarter growth acceleration check**

**Quality/Profitability (40%)**

* **Operating margin**
* **ROIC**
* **Margin trend**
* **The accruals ratio** \- compares reported net income to actual operating cash flow.

**Financial Health (15%, deliberately the smallest bucket)**

* Debt-to-equity, current ratio (short-term liquidity), and free cash flow trend/positivity

Additionally, I also run an AI analysis on each stock to get a technical writeup of each company and send it all the financial data and my scoring so it can make its own opinion and targets. The fundamental score itself does not include any AI whatsoever, that one is strictly calculation based on available financial data.

I tried to keep the post brief so you aren't buried in details, but if you want to know any additional information such as which API's im using, my tech stack, why I chose some of the financial factors etc. leave a comment and I'll try to answer.

Also, just a FYI - This tool is Backwards Looking. Meaning it uses past data to give a picture of future performance. Just because a company is #1 doesn't mean its next earnings are a knockout. DYOR.

**This Tool is NOT Financial Advice.**

**Tool -&gt;** [Deep500 Analysis Rankings](https://www.deep500.com/)

Let me know what you think!

**\*EDIT\*: I will be doing a full re-analysis of all the tickers tonight 8/24 which will change the rankings due to a change of the algorithm which determines score. Check back tomorrow for the update :)**

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