Rating System
Our 5-star rating system provides a clear, consistent assessment of companies and market opportunities.
Our stock ratings are a fundamental assessment of expected 6–12 month relative performance versus the relevant UK benchmark — either the FTSE 350 or the FTSE AIM All-Share Index. The purpose of the rating is not to predict short-term share price moves, but to judge whether a company's underlying fundamentals are likely to drive outperformance, in line performance, or underperformance over the coming year.
We assess the quality of the business, the strength of the balance sheet, the earnings outlook, and the credibility of execution. We do not base ratings on short-term market noise, technical indicators, or temporary sentiment swings. Ratings are intended to change only when the underlying fundamentals change.
In forming a rating, we evaluate several core factors: balance sheet strength, revenue growth, profitability, cash generation, earnings momentum, management execution, strategic positioning, and valuation context. Valuation matters, but only in the context of business quality, growth durability, and earnings delivery.
What Each Rating Means
Each star level carries a specific meaning to help you quickly assess our view on a company or result.
A 1* rating reflects high conviction that a stock is likely to materially underperform its benchmark. This is reserved for companies where the fundamental picture is clearly deteriorating and where the downside risks are substantial. Typical characteristics include revenue decline, repeated earnings disappointments, persistent margin erosion, weak or negative cash generation, refinancing or leverage concerns, poor capital allocation, or structural pressure on the business model.
A 2* rating signals that we expect the stock to underperform its benchmark over the next 6–12 months. These companies typically show signs of weakening fundamentals — such as slowing growth, margin pressure, deteriorating cash flow, rising leverage, or growing earnings risk. Guidance may be cautious, consensus expectations may still look too high, or management execution may be coming under pressure.
A 3* rating means we expect the stock to perform broadly in line with its benchmark. These are typically businesses with adequate balance sheets, stable margins, and earnings that are broadly in line with expectations. They are not necessarily poor companies; rather, the current fundamentals and valuation appear fairly balanced, with limited scope for meaningful relative outperformance or underperformance.
A 4* rating indicates that we expect the stock to outperform its benchmark, but with a lower degree of conviction than a 5*. These are generally businesses with sound finances, consistent growth, stable or improving margins, and a supportive earnings outlook. The fundamental direction is positive, but there may be some valuation risk, execution risk, or a lower level of upside relative to our highest-rated names.
A 5* rating reflects high conviction that a stock is likely to materially outperform its benchmark over the next 6–12 months. These are typically companies with strong or net cash balance sheets, superior revenue growth, improving margins, robust free cash flow generation, and clear positive earnings momentum. Guidance is often being upgraded, or there is good reason to believe market expectations remain too low.
Our ratings are designed to be relative, forward-looking, and benchmark-aware. A 4* or 5* rating does not necessarily mean a stock will rise in absolute terms; it means we believe it should do better than its relevant index. Equally, a 1* or 2* rating indicates expected underperformance, even if the wider market environment is positive.
The framework is intended to provide consistency across sectors and market capitalisations while recognising the differing characteristics of FTSE 350 and AIM-listed companies. Above all, the rating reflects our judgment on where fundamentals are improving, stable, or deteriorating, and how that should translate into relative share price performance over the medium term.
Where You'll See Ratings
Our star ratings appear across several key areas of the platform.