What is The GMR Score of Stock Engine [Explained]

GMR Score vs Overall Score

Introduction

If you’ve been using GetMoneyRich’s Stock Engine, you might have come across the term “GMR Score.”

It often raises questions, especially when compared to the Overall Score.

I’ve noticed some confusion among users, and I’m here to clarify what the GMR Score is, how it differs from the Overall Score, and why is its utility under the umbrella of the Overall Score.

So, let’s dive in and I’ll try to explain what is GMR SCORE and its usage in the Stock Engine app.

1. What Is the GMR Score?

The GMR Score is a unique feature of GetMoneyRich’s Stock Engine (Stock Screener).

It’s a theme-specific score assigned to stocks within the app’s pre-built screening themes.

Think of it as a tailored rating that focuses on specific qualities of a stock.

GMR Score is dependent on the theme you’re exploring.

For example,

• A stock’s GMR Score in the “Growth Stocks” theme reflects its growth potential.
• Similarly, the same stock might get a different GMR Score in the “Undervalued Stocks” theme.

This score is calculated using an algorithm that evaluates stocks based on metrics relevant to the chosen theme.

It’s designed to help you quickly identify stocks that fit your investment strategy.

It is pretty straightforward, right? But here’s where things get tricky for some users of the Stock Engine (especially first time users).

2. How Is the GMR Score Different from the Overall Score?

The Overall Score and GMR Score often get mixed up.

So let me simplify it for you.

• The Overall Score is a comprehensive rating that looks at a stock from all angles. It considers six key parameters: price (intrinsic value), growth, profitability, financial health, management, and economic moat. This score gives you a 360-degree view of a company’s fundamental strength. It’s like a full health check-up for a stock.
• The GMR Score, on the other hand, is narrower. It’s tied to a specific theme, like undervaluation, growth, or profitability. The algorithm behind it only looks at metrics relevant to that theme. For instance, in the “Profitable Stocks” theme, the GMR Score might focus on metrics like net profit margin or return on equity. It won’t consider other aspects like management quality or moat, which the Overall Score includes.

To make it clearer, imagine you’re judging a car.

The Overall Score is like evaluating the car’s engine, design, safety, and comfort together.

The GMR Score is like judging only its speed for a “fast cars” category. Both are useful, but they serve different purposes depending on the user’s preference at that moment of time.

3. Why Do We Need the GMR Score?

You might be wondering, if the Overall Score is so comprehensive, why bother with the GMR Score?

It is a good and deep question.

The GMR Score is all about focus. It helps you zero in on stocks that excel in a specific area. If you’re hunting for growth stocks, the GMR Score in the “Growth Stocks” theme will highlight companies with strong revenue or earnings growth.

If you’re after undervalued stocks, the GMR Score in that theme will point to stocks trading below their intrinsic value.

The Overall Score, while detailed, might not always spotlight stocks that fit your specific strategy.

For example, a stock with a high Overall Score might be fundamentally strong but not necessarily undervalued. The GMR Score fills this gap by giving you a quick, theme-specific snapshot.

4. Are GMR Scores the Same Across Themes?

Another common confusion is whether the GMR Score for a stock is the same across different themes.

The answer is no.

Each pre-built screener theme in the Stock Engine, like undervalued stocks, growth stocks, or profitable stocks, has its own GMR Score algorithm.

A stock might score high in the “Growth Stocks” theme because of its strong earnings growth but score lower in the “Undervalued Stocks” theme if its price is above its intrinsic value.

Let’s take an example.

Suppose you’re looking at Reliance Industries in the Stock Engine. In the “Growth Stocks” theme, it might have a high GMR Score due to its consistent revenue growth. But in the “Undervalued Stocks” theme, its GMR Score could be lower if its current price is higher than its estimated intrinsic value.

This theme-specific scoring ensures you get relevant results for your chosen strategy.

5. How to Use the GMR Score Effectively?

The GMR Score is a powerful tool when used correctly.

Here’s how you can make the most of it:

• Pick the Right Theme: Choose a screener theme that aligns with your investment goal. Want stocks with high growth? Go for the “Growth Stocks” theme. Looking for bargains? Try the “Undervalued Stocks” theme.
• Compare with the Overall Score: A high GMR Score in a theme is great, but check the Overall Score too. A stock with a high GMR Score but a low Overall Score might have weaknesses in other areas.
• Dig Deeper: First, use the GMR Score to shortlist stocks (screen stocks). Then visit the stock’s detailed page in the Stock Engine. Check its financials, trends, and other metrics for a complete picture.

This approach ensures you’re not just chasing a single metric but making a well rounded and informed decision.

6. Why GMR Score Matters

When I first started coding the financial algorithm for stock analysis, I wrote the code for undervalued stocks. This was my first GMR Score.

Overtime, multiple themes were developed and each of them had its own GMR Score.

In 2018, the Overall Score algorithm first came into picture. At that time I thought, after the Overall Score, I’ll shunt the GMR Score theory.

But while were were building the Stock Engine app, we realized that, as users need pre-build screeners, we must have a separate algorithm for each screeners. To do this, we already had the concept of GMR Score full ripe for advanced use.

Now, let’s look at the GMR Score from a stock investor’s perspective.

As stocks investors, we often juggle multiple priorities, finding value, growth, or stability in a dynamic market. The Stock Engine’s GMR Score simplifies this by letting us focus on what matters most to us.

Whether one is a beginner or a seasoned investor, the GMR Score can help cut through the noise and find stocks that match the investor’s priority.

For example, suppose we are in a midst of a 2008 financial crisis. At that time, our priority will not be to find an undervalued stock. Why? Because in those times almost all stock’s prices crashed by some 30-40%. In such times, our priority will be to identify a list of blue chip stocks.

How the Stock Engine becomes useful in such times? It has its own algorithm to screen blue-chips from plethora of other stocks.

Conclusion

The GMR Score in GetMoneyRich’s Stock Engine is a focused, theme-specific algorithm based rating that complements the broader Overall Score.

While the Overall Score gives you a complete view of a stock’s health, the GMR Score zooms in on qualities like growth or undervaluation, depending on the theme.

And no, the GMR Score isn’t the same across themes. Each theme has its own algorithm to keep things relevant.

I hope this clears up the confusion.

If you’ve used the Stock Engine, have you found the GMR Score helpful?

Drop your thoughts in the comments—I’d love to hear how you’re using it to pick stocks.

Have a happy investing.