Tutorial: value a company in SteadyShares, start to finish

This is the whole process, end to end, on a real company, using SteadyShares. It takes about twenty minutes and it will leave you with a written argument rather than a feeling. Pick any company you already have an opinion about, because the interesting part is finding out whether the numbers agree with you.

1. 1
   Start with the verdict, not the chart

   Open any stock and go to the Financials tab. The Financial Health panel gives you what is good and what to watch, in plain English, before you have looked at a single ratio. Read it, then form a hypothesis: is this a quality business at a fair price, a cheap business with problems, or an expensive one you are being asked to believe in?
2. 2
   Check whether the quality is real

   On the Overview tab, look at the Quality Radar. A big shape on value and income with a collapsed shape on growth tells a very different story from the reverse. Then look at the moat score. If it is high, ask which of the five moat types this actually is. If you cannot name it, do not believe it.
3. 3
   Read the cash, not the profit

   Still on Financials, look at The business, drawn. Revenue and net income as bars, the margin line on top, cash generation beneath. You are looking for one thing above all: does operating cash flow track profit, or has it separated? If it has separated, stop and find out why before you go any further.
4. 4
   Compare it to its rivals

   Open the Compare tab and add two or three competitors. Now the numbers mean something. A 20% margin is meaningless alone; a 20% margin against rivals earning 8% is a moat, and a 20% margin against rivals earning 35% is a warning. Look especially at the revenue trajectory chart: who is actually compounding?
5. 5
   Stress the valuation until it breaks

   Go to Valuation Lab. Do not ask what the fair value is. Ask what growth rate today's price already assumes, then decide whether that is believable. Then move the discount rate by one point and see how much fair value swings. If it swings enormously, your conviction should be correspondingly small.
6. 6
   Write the sentence

   Finish this: "I would buy this because ___, and I would be wrong if ___." The second half is the important one. If you cannot state what would prove you wrong, you have not done analysis, you have done advocacy. Save it with the stock on your watchlist.