Introduction
Ranking Invest is an innovative platform that simplifies the analysis of companies listed on stock exchanges. Using mathematical indicators based on real data from the companies themselves, it offers a clear and objective view of the market, facilitating decision-making for the common investor with more awareness and control over their investments.
Focused on value investing, the tool supports fundamentally grounded company analysis based on public quarterly data and proprietary indicators such as IVR, IVR2, and MLL. Its goal is to make fundamental analysis accessible, helping users compare companies and support investment decisions without relying only on speculation or subjective opinions.
Aimed at those seeking to build wealth or passive income in the long term, the platform attracts investors who prioritize a rational and logical approach, free from emotions or unfounded recommendations. Its differentiators include simplicity, with intuitive tables and charts, transparency of public data, and practicality for investing without complex reports or analysts.
Concepts
IVR
IVR (Ranking Invest Valuation Index) is a proprietary indicator that compares Ranking Invest's estimated valuation with the company's market value. It works as a relative measure: the higher the IVR, the greater the difference between the fundamental estimate and the price assigned by the market, which may indicate a discount; lower values may indicate a premium or overpricing.
Under the current methodology, valuation considers net worth, profit history, and net debt, respecting the rules and data availability of each market. IVR is obtained by dividing this valuation by market value and is used to rank companies by relative fundamental attractiveness—not as a standalone buy or sell recommendation.
IVR2 and MLL
In addition to IVR, the ranking presents two complementary valuation readings. They use different references to help assess the relationship between fundamentals and market value from more than one angle.
IVR2 compares a second valuation estimate with market value. For Brazilian companies, it considers net worth and profit attributable to controlling shareholders over the last 20 quarters, adjusting net debt cost using the Selic rate and the applicable debt factor. The index is calculated only when all required data is available.
MLL divides the sum of net profit attributable to controlling shareholders over the latest 16 quarters by market value. It preserves as a reference the historical methodology previously displayed as IVR2 and provides a reading focused on profit-generation capacity.
For all three indexes, values above 1 indicate that the calculated reference exceeds market value; values below 1 indicate the opposite. Interpretation depends on data quality and availability and should be combined with the other indicators.
Interpretation
- IVR > 1: The estimated valuation exceeds market value, which may indicate a discount. Example: IVR = 2 means the calculated estimate is equivalent to twice the current market value.
- IVR < 1: Market value exceeds the estimated valuation, which may indicate a premium or overpricing. Example: IVR = 0.8 means the calculated estimate is equivalent to 80% of the current market value.
How to use IVR?
Think of IVR as a comparison signal between the calculated valuation and the price assigned by the market. Values above or below 1 help identify possible discounts or premiums, but do not determine on their own whether a stock should be bought or sold.
Don't analyze in isolation: A high IVR may indicate a cheap stock, but if the company has high debt or negative profit trend, it could be a "value trap".
Combine IVR, IVR2, and MLL readings with trend, predictability, and debt (DIV/PAT, DIV/L4T) to assess the quality and risks of the opportunity.
Practical example
- Company A: IVR = 2.0, but DIV/PAT = 1.2 (high debt) and negative profit trend. May be risky.
- Company B: IVR = 1.3, DIV/PAT = 0.3 (low debt), and growing profit and revenue trends. It merits further analysis, considering the sector, risks, and other fundamentals.
Limitations
- Broad Comparison: The methodology is standardized within each market, but may vary according to data availability. Comparisons between very different sectors (e.g., mining vs. technology) tend to be less precise.
- Balanced Comparison: Works better within the same sector, where conditions are similar.
- Young Companies: For new companies, with little history or focus on future growth, IVR may be low (indicating "expensive"), even if they have potential, as it reflects more current results than projections. Young companies may show accelerated growth at the beginning of their operations.
Indicators
Ranking Invest indicators make the data provided by companies easier to understand. They are based on mathematical formulations that reflect quarterly results reported over the years. Trend and predictability indicators analyze revenue, profit, and margin.
Relative A–G grades
The six predictability and trend indicators receive grades from A to G based on the latest 16 quarters. The ranges are calibrated against the complete universe of companies in the selected market, so filters applied to the table do not change the grades.
For predictability, the lower the deviation, the better the grade. For trend, A represents the strongest growth, B and C indicate progressively more moderate growth, D indicates stability, and declines intensify from E through G. Grades summarize historical behavior and are not forecasts of future results.
Predictability
Predictability shows how much a company's quarterly results varied relative to its own trend line. The lower the deviation, the more consistent the historical revenue, profit, and margin have been. The indicator describes the company's past behavior and does not guarantee that results will repeat in the next quarter.
Revenue Deviation
The Revenue Deviation Indicator is the quantitative index of the predictability of the company's revenue, or gross revenue. The lower the value, the less variation the company has shown in its revenue over the last quarters, relative to the trend of revenue progress.
Profit Deviation
The Profit Deviation Indicator is the quantitative index of the predictability of the company's net profit. The lower the value, the less variation the company has shown in its net profit over the last quarters, relative to the trend of profit progress.
Margin Deviation
The Margin Deviation Indicator is the quantitative index of the predictability of the company's net profit margin. The lower the value, the less variation the company has shown in its margin over the last quarters, relative to the trend of margin progress.
Trend
Trend indicates the progression of the company's data, whether in its revenue, profit, or margin. Each quarter new data is reported by companies, consolidating results from their operations. All this data can be observed over time, and based on our analysis we can visualize the trend of these numbers, whether growth, decline, or stagnation. Trend is an important indicator that allows us to know objectively the trend of company results, as well as the intensity with which this occurs.
Revenue Angle
The Revenue Angle measures the slope of the company's revenue trend line over quarterly periods, indicating the direction and strength of growth (or reduction) of its revenue. A positive value shows increase in sales, an angle close to zero reflects stability, and a negative value points to a drop in revenue.
Profit Angle
The Profit Angle reflects the slope of the company's net profit trend line over time, measuring whether earnings are growing, stabilizing, or decreasing. A positive value indicates ascending profitability, zero shows consistency without advance, and a negative value reveals losses or reduction in profits.
Margin Angle
The Margin Angle measures the slope of the profit margin trend line (net profit divided by revenue) over quarterly periods, showing whether the company's operational efficiency is improving, remaining stable, or worsening. A positive value indicates margin increase, zero reflects stability, and a negative one points to decreasing efficiency.
Debt
DIV/PAT (Net Debt / Net Worth)
DIV/PAT is the ratio between net debt (gross debt minus cash and cash equivalents) and the company's net worth, expressed as a decimal number. It shows the level of indebtedness relative to the value that belongs to shareholders after paying all obligations. A low value indicates less dependence on debt, while a high value suggests greater financial risk.
Objetivo
Helps the investor assess the company's financial security. On the platform, the scale is: dark green (up to 0.2), light green (above 0.2 through 0.5), yellow (above 0.5 through 0.7), red (above 0.7 through 1), and dark red (above 1). Negative net debt—when cash exceeds debt—is highlighted in blue in the Net Debt indicator; negative net worth appears in dark red.
Exemplo
A DIV/PAT of 0.3 (green) indicates controlled debt, while 1.2 (dark red) shows that debt exceeds net worth, requiring caution.
DIV/L4T (Net Debt / Last 4 Quarters Profit)
DIV/L4T calculates how many years the company would take to pay off its net debt (gross debt minus cash and cash equivalents) based on the accumulated net profit of the last four quarters (L4T). It is obtained by dividing net debt by total profit of the last year, resulting in a number that reflects the debt payment capacity with recent earnings.
Objetivo
Allows the investor to measure the company's financial health and debt sustainability relative to current profitability. On the platform, the scale is: dark green (up to 1), light green (above 1 through 3), yellow (above 3 through 5), red (above 5 through 7), and dark red (above 7). Low or negative values tend to be more favorable, but should be interpreted in the context of the sector and earnings quality.
Exemplo
A DIV/L4T of 1.5 means the company would pay the debt in 1.5 years with current profits, while -0.8 (negative) shows that cash already covers the debt, suggesting financial solidity.
L4T
L4T is the total value of net profit generated by the company in the last four quarters, calculated by summing the profits disclosed in the most recent quarterly balance sheets. Expressed in reais (usually in billions for listed companies), it offers a consolidated view of the company's profitability over a year, smoothing seasonal variations or one-time events.
Objetivo
Serves as a basis for evaluating the company's recent capacity to generate consistent earnings, being used directly in the DIV/L4T indicator to measure how long it would take to pay off debts with these profits. A high and stable L4T is a positive sign of financial health.
Exemplo
If a company reported profits of R$ 1.2 billion, R$ 1.5 billion, R$ 1.3 billion, and R$ 1.4 billion in the last four quarters, L4T would be R$ 5.4 billion, indicating robust profitability in the last year.
MM4T
MM4T is the average percentage of profit margin (net profit divided by revenue) of the last four quarters, reflecting the company's operational efficiency in the last year. It smooths seasonal or quarterly variations, offering a more stable view of profitability relative to sales.
Objetivo
Serves for the investor to evaluate the company's consistency in generating profit from its recent revenue. High and stable margins indicate good management, while low or decreasing values may point to operational problems or cost increases.
Exemplo
An MM4T of 20% shows that, on average, 20% of revenue became profit in the last 12 months, while 5% may suggest low efficiency, depending on the sector.
Net Debt
Net Debt is the value resulting from subtracting cash and cash equivalents from the company's gross debt (total financial obligations), expressed in reais (usually in billions for listed companies). A positive value indicates that debt exceeds available cash, while a negative value shows that cash exceeds debts, reflecting a solid financial position.
Objetivo
Allows the investor to evaluate the company's real indebtedness, considering its immediate capacity to pay obligations with the liquid resources it has. It is the basis for indicators such as DIV/PAT and DIV/L4T, helping to identify financial risk associated with debt level.
Exemplo
If a company has gross debt of R$ 4 billion and cash of R$ 3 billion, Net Debt is R$ 1 billion (positive). If cash is R$ 5 billion, Net Debt will be -R$ 1 billion (negative), signaling financial robustness.
Net Worth
Net Worth is the value that would remain to shareholders after the company sells all its assets and pays all its debts, calculated as the difference between total assets and total liabilities, expressed in reais (usually in billions). It represents the company's liquid "wealth" belonging to owners and may include share capital, retained earnings, and equity adjustments.
Objetivo
Serves to measure the company's financial solidity and its capacity to support losses or debts without compromising shareholders. A positive value indicates financial health, while a negative value (liabilities exceeding assets) suggests insolvency and is highlighted in red on the platform.
Exemplo
If a company has assets of R$ 88 billion and liabilities of R$ 46 billion, Net Worth is R$ 42 billion. If liabilities are R$ 90 billion, Net Worth would be -R$ 2 billion, pointing to significant risk.