How It Works
Know if an ASX Stock Is Worth Holding — in 10 Seconds
Warsi scores 1,000+ ASX stocks on value investing criteria (ROE, debt, margins) and dividend rules (6% yield, BESST sector preference, consistency). Two scores. One clear verdict.
Real example: How Warsi scores Magellan Financial Group Limited
Value Criteria
Inspired by Warren Buffett
Find companies with unfair advantages that competitors can't replicate.
Dividend Criteria
Inspired by Luiz Barsi
Build retirement income through consistent, high-yield dividend stocks.
How Scoring Works
No weighted averages. Each methodology has mandatory gates — a stock either meets them or it doesn't. Pass all gates to score 70+. Additional points for dividend quality and value metrics.
Minimum Pass
70
Awarded when all mandatory gates pass
Scored Criteria
+30
For quality metrics (predictability, payout stability, moat, etc.)
Rating System
Scores 85+ on BOTH methodologies.
Scores 70+ on BOTH methodologies.
One methodology passes while the other is a near-miss — close to qualifying but not quite there.
Both methodologies are near-misses — neither fully passes, but neither is far off.
At least one methodology scores below 50. This reflects our scoring lens, not the stock's potential.
Who is Warren Buffett?
CEO of Berkshire Hathaway and widely considered the greatest investor of all time. His strategy: buy excellent businesses at fair prices and hold forever.
“It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Value Criteria
Thresholds adjusted by industry — 19 configurations covering banks, healthcare, retail, technology, infrastructure, digital platforms, capital markets, utilities, mining, energy, and more.
Return on Equity (ROE)
Profit Per Dollar Invested
Threshold: 20%+ average (generic). Adjusted by industry: 6-18% depending on sector
Return on Equity (ROE)
Profit Per Dollar Invested
For every $1 shareholders invest, how much profit does the company make? Thresholds vary because goodwill from acquisitions (healthcare), lease capitalisation (retail), and regulated capital (infrastructure) distort equity.
Formula: Net Income / Shareholders' Equity x 100
Example: If a company earns $20M on $100M equity, ROE = 20%
Debt-to-Equity Ratio
How Much the Company Owes
Threshold: Less than 0.5 (generic). Adjusted by industry: retail 1.5 (IFRS 16 leases), infrastructure skipped (project finance)
Debt-to-Equity Ratio
How Much the Company Owes
Great businesses shouldn't need debt to succeed. Thresholds vary because IFRS 16 inflates retail D/E with lease liabilities, and infrastructure uses project finance debt as the business model.
“Really good businesses usually don't need to borrow.” - Warren Buffett
Gross Margin
Pricing Power
Threshold: 40%+ (generic). Ranges from 20% (retail) to 70% (digital platforms) by industry
Gross Margin
Pricing Power
Can the company charge premium prices? Thresholds calibrated to business model — a retailer with 22% margin and 32% ROE has better economics than a generic company with 40% margin and 15% ROE.
Formula: (Revenue - Cost of Goods Sold) / Revenue x 100
Example: Coca-Cola: 60% margin / Airlines: 14% margin
Current Ratio (Liquidity)
Cash to Pay Bills
Threshold: Above 1.5 ($1.50 cash per $1 owed)
Current Ratio (Liquidity)
Cash to Pay Bills
Can the company pay its short-term debts? This cushion protects against unexpected expenses.
Formula: Current Assets / Current Liabilities
Return on Invested Capital (ROIC)
Economic Moat Indicator
Threshold: 8%+ above industry cost of capital (varies by sector)
Return on Invested Capital (ROIC)
Economic Moat Indicator
How efficiently does the company turn invested capital into profits? High ROIC = competitive moat that keeps competitors out.
Formula: NOPAT / Invested Capital
Example: ROIC 15% with WACC 9% = 6% economic profit (strong moat)
Note: Skipped for banks/insurance (leverage model), mining/energy (commodity volatility), and infrastructure (concession goodwill)
Earnings Predictability
Can You Forecast 5 Years Out?
Threshold: 8+ positive years out of 10, ideally no losses
Earnings Predictability
Can You Forecast 5 Years Out?
Buffett only invests in businesses he can predict. Erratic earnings = too complex or cyclical.
Example: Coca-Cola: Predictable / Airlines: Unpredictable
“If a business is complex or subject to constant change, we're not smart enough to predict future cash flows.” - Warren Buffett
Dividend Persistence
Moat Evidence via Dividend Track Record
Threshold: 20+ consecutive years = +5 pts, 10-19 years = +3 pts
Dividend Persistence
Moat Evidence via Dividend Track Record
An unbroken dividend streak spanning decades is strong evidence of a durable competitive advantage — the company has generated sufficient cash through recessions, disruptions, and management changes.
Example: CBA: 20+ years of dividends = exceptional durability bonus
Note: Excluded for mining, energy, and infrastructure (dividend already used as EPS proxy — would double-count)
Earnings Yield (Valuation)
Fair Price Check
Threshold: 2.0-7.5% depending on industry. Higher for cyclicals, lower for moated growth businesses
Earnings Yield (Valuation)
Fair Price Check
Even wonderful companies can be overpriced. Thresholds calibrated by predictability — generic 7.5% (P/E 13x), healthcare/infrastructure 3.0% (P/E 33x), technology 2.0% (P/E 50x).
Formula: EPS / Stock Price x 100
Example: If EPS is $5 and price is $50, earnings yield = 10%
Margin of Safety (Two-Stage DCF)
Buy Below Intrinsic Value
Threshold: Informational for stable businesses / 15%+ mandatory for mining/energy
Margin of Safety (Two-Stage DCF)
Buy Below Intrinsic Value
We calculate intrinsic value using Buffett's Two-Stage DCF: project owner earnings for 10 years, add terminal value, discount at Treasury + industry risk premium. Predictable businesses need less margin; cyclical ones need more.
Formula: Intrinsic Value = PV(10yr growth) + PV(terminal value)
“If you understood a business perfectly, you need very little margin of safety. The more volatile, the larger the margin needed.” - Warren Buffett
Capital Intensity (CapEx)
Does the Business Bleed Cash Into Maintenance?
Threshold: Less than 50% of cumulative earnings (generic). Technology/platforms: <25%. Mining/energy: informational only
Capital Intensity (CapEx)
Does the Business Bleed Cash Into Maintenance?
Buffett prefers businesses that don't need massive reinvestment to grow. If CapEx consumes most of what a company earns, there's less left for shareholders.
Formula: Cumulative CapEx (10yr) / Cumulative Net Income (10yr) x 100
Example: See's Candies: ~15% (ideal) / Airlines: ~80% (capital trap)
Note: Skipped for banks, insurance, and REITs (no traditional CapEx)
Long-Term Debt Payoff
Can Earnings Extinguish the Debt?
Threshold: Under 4 years (generic). Technology/platforms: <3yr. Utilities: informational only
Long-Term Debt Payoff
Can Earnings Extinguish the Debt?
If a company can pay off all long-term debt from just a few years of earnings, it has real earning power. High debt relative to earnings signals fragility.
Formula: Long-Term Debt / Average Net Earnings (3yr)
Example: Coca-Cola: ~1 year / GM: 10+ years
“Companies with enough earning power to pay long-term debt in less than 3 or 4 years are good candidates.” - Warren Buffett
Note: Skipped for banks, insurance, infrastructure, and capital markets (leverage is the business model)
Net Income Margin
How Much Profit Per Dollar of Revenue?
Threshold: Industry-adjusted: 3% (grocery) to 25% (digital platforms). Generic: >10%
Net Income Margin
How Much Profit Per Dollar of Revenue?
High net margins indicate a durable competitive advantage — the company can charge premium prices or operate extremely efficiently. Thresholds are calibrated to each industry's structural economics.
Formula: Net Income / Total Revenue x 100
Example: Technology: 20%+ expected / Grocery: 3%+ is strong
Note: Skipped for banks (net interest margin used instead)
Systemic Event Exceptions
National or global events (e.g. COVID-19, regulatory crises) can temporarily depress ROE, EPS, and ROIC. When a company demonstrates recovery to pre-event levels, we exclude affected years from historical averages rather than penalising otherwise strong businesses for extraordinary circumstances.
Who is Luiz Barsi?
Brazil's largest individual investor. He started with $500 and built a $2 billion fortune using one simple strategy: buy high-dividend stocks and reinvest.
“I don't buy stocks, I buy dividends.”
6%
Minimum dividend yield (6-year average, not trailing 12 months)
4% market return + 50% safety margin = 6% minimum
Dividend Criteria
BESST Sectors (Essential Services)
BESST stocks receive a 3-point scoring advantage. Non-BESST stocks can still qualify with exceptional dividend history, but carry higher cyclical risk.
Dividend Consistency
Two pass/fail gates, plus eight scored criteria that assess dividend quality holistically.
✗Skipped a dividend ($0 payment) — deal-breaker
✓Payment frequency consistency — met expected payments each year
✓Predictability (CV) — low variation in annual dividend amounts
✓Payout ratio sustainability — consistent 30-75% payout range
Debt Warning
Informational warning when debt-to-equity exceeds sector-appropriate thresholds. Does not affect score — purely educational. Financial Services are skipped (leverage is the business model). REITs tolerate higher debt (backed by property). Standard threshold is D/E > 1.5.
Price Ceiling
Maximum price to pay to guarantee 6% yield.
Price Ceiling = 6-Year Average Dividend / 0.06
Example: $0.72/year average → Ceiling = $12.00. Below $12? Locked in above 6%.
📖Quick Glossary
- ROE (Return on Equity)
- Profit generated per dollar of shareholder investment
- ROIC (Return on Invested Capital)
- Profit generated per dollar of invested capital (equity + debt - cash)
- D/E (Debt-to-Equity)
- How much the company owes compared to what it owns
- Gross Margin
- Percentage of revenue left after production costs
- EPS (Earnings Per Share)
- Company profit divided by shares outstanding
- Earnings Yield
- EPS divided by stock price - inverse of P/E ratio
- Intrinsic Value
- True worth of a company based on owner earnings (Buffett's preferred metric)
- Owner Earnings
- Net Income + Depreciation - CapEx (Buffett's cash flow measure)
- Margin of Safety
- Discount to intrinsic value - cushion against analysis errors
- WACC
- Weighted Average Cost of Capital - minimum return a company should earn
- Graham Number
- P/E multiplied by P/B - should be 22.5 or less for value stocks
- Dividend Yield
- Annual dividends as percentage of stock price
- Price Ceiling
- Maximum price to pay to guarantee 6% yield
- BESST Sectors
- Banking, Energy, Sanitation, Insurance, Telecom
Important Disclaimers
Not Financial Advice: This tool is for educational and informational purposes only. Always consult a qualified financial adviser before making investment decisions.
Data Source: Analysis is based on publicly available market data, which may have delays, gaps, or occasional inaccuracies. Always verify important numbers.
Historical Focus: These methodologies analyse past performance, but markets are forward-looking. What worked historically may not predict the future.
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