What Is a Good Stock Score?
A score above 70/100 places a small-cap in the top 10%. Learn our rating system and what scores really mean. Try free for 30 days.
The most common question we receive is deceptively simple: "What's a good stock score?" Any honest answer to that question requires understanding what the stock rating system is actually measuring, how the underlying distribution is shaped, and why the same number can mean very different things depending on sector context. The short answer: a score above 70/100 places a stock in the top 10% of all small-caps by fundamental quality. The useful answer is longer.
What the Score Measures
Our score is a composite of 8 fundamental metrics, each weighted by its empirical importance to small-cap investing:
| Metric | Weight |
|---|---|
| Cash Runway | 20% |
| Revenue Growth | 20% |
| Gross Margin | 15% |
| P/S Ratio | 10% |
| Debt/Equity | 10% |
| Rule of 40 | 10% |
| Insider Ownership | 10% |
| Share Dilution | 5% |
Each metric is scored individually on a 0–100 scale, then combined using the weights above to produce a composite. The maximum possible score is 100; the minimum is 0.
The score answers one question: across the 8 fundamental dimensions that matter most for small-cap investing, how does this company compare to all 2,200+ peers? It does not predict stock price direction. It does not account for management quality, competitive dynamics, or upcoming catalysts. It is a quantitative pre-filter — designed to separate fundamentally strong businesses from weak ones before you invest your research time.
This approach aligns with how institutional analysts use multi-factor models: aggregate a set of independently-meaningful signals into a single ranked output, then apply judgment on top. The SEC requires companies to file the underlying financial data we use through EDGAR, which means every metric in our model traces back to audited source documents.
The Score Distribution
Understanding the distribution is essential for interpreting any individual score. The small-cap universe is not normally distributed around 50 — it skews heavily left.
| Score Range | Grade | % of Stocks | Count (~) | Interpretation |
|---|---|---|---|---|
| 90–100 | Elite | 0.5% | ~11 | Exceptional across nearly all metrics |
| 80–89 | Strong | 1.6% | ~36 | Top-tier fundamentals with minor gaps |
| 70–79 | Above Average | 8.0% | ~176 | Solid fundamentals, 1-2 areas of weakness |
| 60–69 | Average | 12.5% | ~275 | Decent business with notable trade-offs |
| 50–59 | Below Average | 16.5% | ~363 | Mixed fundamentals — strengths offset by weaknesses |
| 40–49 | Weak | 19.4% | ~427 | Multiple fundamental concerns |
| 30–39 | Poor | 18.5% | ~407 | Serious issues in most metrics |
| 20–29 | Very Poor | 13.0% | ~286 | Minimal fundamental merit |
| 0–19 | Critical | 10.0% | ~220 | Fundamental distress across the board |
The distribution is left-skewed — there are far more low-scoring stocks than high-scoring ones. This reflects the reality of the small-cap universe: most small companies struggle. The median score is approximately 42/100. If you're expecting to find a screener full of 70+ stocks, you'll be recalibrating quickly.
What a Score of 90+ Really Means
Scoring above 90 is rare — roughly 11 stocks out of 2,200+ at any given time. To get there, a company typically needs:
- Profitable or 36+ months of cash runway
- Revenue growing above 25% year-over-year
- Gross margins above 55%
- Reasonable valuation (P/S under 5x)
- Low debt (D/E under 30%)
- Positive Rule of 40
- Meaningful insider ownership (above 5%)
- Minimal or no dilution
That is an extremely demanding combination. Companies that achieve it are usually in a specific sweet spot: past the survival stage, growing rapidly, profitable, and not yet fully priced by the market.
A 90+ score does not mean "buy." It means the quantitative fundamentals are exceptional. The qualitative research still matters — management quality, competitive moats, regulatory risks, and sector dynamics are all outside the scope of a numerical score. For a deeper look at how the signal score works in practice, see our guide on how to read a SmallCap Signal score.
When a 90+ Score Can Still Mislead
Perfect fundamentals at the wrong valuation can still produce poor returns. A stock that scores 93 because of 40% revenue growth and 65% gross margins may already be priced for that growth at 15x sales. The score has no opinion on whether the current market price is fair. This is by design — valuation multiples are already in the model (P/S ratio carries 10% weight), but the score cannot anticipate how the market will re-rate a sector. Use the score to find the fundamentally strongest businesses, then apply your own valuation framework to decide whether the current price offers margin of safety.
What a Score of 50 Means
A score around 50 is roughly average — but "average" in the small-cap universe means significant trade-offs. A typical 50-scoring stock might look like:
- Decent revenue growth (12%) but mediocre margins (28%)
- Adequate cash runway (16 months) but notable debt (65% D/E)
- Reasonable valuation but some recent dilution
These stocks are not fundamentally broken, but they carry enough weaknesses that the investment thesis requires believing specific things will improve. They are viable research candidates for contrarian investors, but not obvious quality plays.
What a Score of 30 or Below Means
Stocks scoring below 30 typically have multiple serious fundamental issues: declining revenue, thin or negative margins, short cash runway, high debt, and/or significant dilution.
This does not mean every sub-30 stock is a bad investment. Sometimes the market is pricing in a turnaround that the historical metrics do not yet reflect. But statistically, the odds are unfavorable. These stocks require a specific, well-researched contrarian thesis to justify. The base rate of small-cap turnarounds is low — academic research on small-cap performance consistently shows that the highest-risk decile by fundamental quality produces the worst long-term risk-adjusted returns. Investopedia's analysis of small-cap investing risks covers the survivorship and liquidity dynamics that make this segment particularly unforgiving for underprepared investors.
Sector Adjustments: Why Context Matters
A score of 65 means something different depending on the sector:
| Sector | Median Score | 65 Score Is... |
|---|---|---|
| Technology | 38 | Well above average |
| Healthcare/Biotech | 35 | Significantly above average |
| Consumer | 44 | Above average |
| Industrials | 47 | Slightly above average |
| Energy | 41 | Above average |
| Financial Services | 52 | Roughly average |
Biotech and technology stocks tend to score lower on average because many are pre-profit (cash runway drag) and trade at higher valuations (P/S drag). A biotech scoring 65 is actually quite strong relative to sector peers, even though the absolute score is modest.
When using the screener, filtering by sector first and then by score gives you a more meaningful ranking than looking at raw scores across all sectors.
Interpreting Sector Scores in Practice
If you are screening healthcare/biotech names, a cutoff of 55 will filter the universe down to roughly the top 15% of that sector — meaningfully different from using the same 55 cutoff across all sectors, which would still leave you with hundreds of mixed-quality names. Sector-relative scoring is one of the most practical features of a composite ranking system: it lets you compare apples to apples without manually adjusting for structural sector differences in margins or burn rates.
For a complete breakdown of how each of the 8 metrics interacts with sector norms, see our guide to 8 fundamental metrics every small-cap investor should track.
Score Stability and Trends
Scores are updated quarterly with new financial data. Most stocks see modest score changes (±3–5 points) between quarters. Large swings (±10+ points) typically indicate:
- A major earnings beat or miss
- Significant cash raise (improves runway, may worsen dilution)
- Debt repayment or new debt issuance
- Revenue acceleration or deceleration
The trend matters as much as the level. A stock scoring 60 that has improved from 45 over two quarters is telling a fundamentally different story than one scoring 60 that has declined from 75. Score momentum is one of the signals we track most closely when identifying emerging opportunities — rising fundamentals often precede price recognition by one to two quarters.
Using Score History to Find Inflection Points
Some of the highest-conviction setups in the small-cap universe appear when a stock moves from the 40–50 range into the 60–70 range across consecutive quarters. This pattern often corresponds to a company crossing into profitability, closing a meaningful revenue contract, or completing a balance-sheet restructuring. The score history won't tell you why the improvement happened, but it reliably flags that something has changed at the fundamental level — which is your cue to investigate further. See our walkthrough on how to find undervalued small-cap stocks for a fuller methodology.
Common Misconceptions
"A high score means the stock will go up." No. The score measures fundamental quality, not price direction. A stock can have exceptional fundamentals and still decline if the macro environment shifts, sector sentiment sours, or the market re-rates growth multiples downward.
"A low score means I should sell." Not necessarily. Some low-scoring stocks are mid-transition — investing heavily in growth (cash burn hurts the score), integrating an acquisition (debt increases), or pivoting business models. Context matters.
"I should only buy stocks above 80." This is too restrictive. Only approximately 2% of stocks score above 80. Some of the best risk/reward setups come from stocks in the 55–70 range that are improving rapidly. Restricting to 80+ narrows your universe to roughly 47 stocks — workable, but it excludes a large portion of the high-momentum, improving-fundamentals segment that frequently outperforms.
How to Use the Score
The most effective approach:
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Screen broadly — Use the score as a first pass to narrow 2,200+ stocks to 50–100 candidates. A threshold of 50+ is reasonable for growth-focused investors; 40+ for value-focused investors.
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Sort within sectors — Compare scores within the same sector for the most meaningful relative ranking.
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Track changes — Monitor score trends over time. Improving scores often precede market recognition.
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Read the breakdown — Don't just look at the composite. Examine which individual metrics are strong and which are weak. Two stocks with the same composite score can have very different risk profiles.
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Do the qualitative work — The score gets you to the shortlist. Your research on the business, management, and competitive landscape makes the investment decision.
Explore how all 2,200+ stocks score in our screener, and read the full methodology behind each metric in our 8 metrics guide.