Valuation Models¶
The framework employs multiple valuation approaches to provide diverse perspectives on stock value. The dashboard displays 7 active models, each with different strengths, assumptions, and data requirements.
Active Dashboard Models¶
These are the models currently shown on the dashboard, listed in display order:
ML Ensemble¶
- AutoResearch - 5-model ensemble predicting peak 2-year returns
Peak Return Prediction (Opportunistic)¶
- GBM Opportunistic 1y - Peak return prediction within 1 year
- GBM Opportunistic 3y - Peak return prediction within 3 years
Fixed-Horizon Return Prediction¶
- GBM 1y - Gradient boosted machine, 1-year return prediction
- GBM 3y - Gradient boosted machine, 3-year return prediction
Classic Valuation¶
- Discounted Cash Flow (DCF) - Absolute fair value from projected free cash flows
- Residual Income Model (RIM) - Book value plus present value of excess returns
Model Comparison¶
| Model | Type | Predicts | Coverage | Data Required | Best For |
|---|---|---|---|---|---|
| AutoResearch | ML ensemble (5 models) | Peak 2y return | High | Fundamental snapshots + price | Ranking stocks by upside potential |
| GBM Opp 1y | Gradient boosting | Peak 1y return | ~52% | 8+ quarters | Tactical trades, timing |
| GBM Opp 3y | Gradient boosting | Peak 3y return | ~52% | 8+ quarters | Multi-year opportunities |
| GBM 1y | Gradient boosting | 1-year return | ~52% | 8+ quarters | Portfolio construction |
| GBM 3y | Gradient boosting | 3-year return | ~52% | 8+ quarters | Long-term ranking |
| DCF | Fundamental | Absolute fair value | ~98% | 1+ quarters | Stable cash flow companies |
| RIM | Fundamental | Absolute fair value | ~85% | Book value data | Banks, asset-heavy companies |
How to Use Multiple Models¶
The dashboard displays all available models for each stock. Consider:
- Convergence: When multiple models agree on upside, confidence is higher
- Divergence: Indicates model assumptions may not fit the business
- ML vs Fundamental: GBM/AutoResearch models rank stocks relatively; DCF/RIM provide absolute fair values
- Time Horizons: Compare 1y vs 3y predictions to assess near-term vs long-term opportunity
Understanding Predictions¶
- Fair Value: Estimated intrinsic value per share (DCF, RIM) or implied price from predicted return (ML models)
- Upside %: Predicted return or margin of safety vs current price
- Confidence: Model-specific reliability indicator (rank percentile for ML models)
Retired Models¶
The following models were previously available but have been removed from the dashboard:
- GBM Lite 1y/3y: Simplified GBM with 59 features and 2-quarter minimum. Removed for being overoptimistic. See archived docs.
- Enhanced DCF: DCF variant accounting for dividend policy. See archived docs.
- Multi-Stage DCF: Multiple growth phase DCF. Removed (85% failure rate). See archived docs.
- Growth DCF: Separated growth vs maintenance CapEx. Removed (85% failure rate). See archived docs.
- Simple Ratios: Market multiples valuation. Removed (broken). See archived docs.
For detailed information on each active model, click the links above.