The MOATEY Matrix
How we rate every stock — on two axes, with no black boxes.
The MOATEY Matrix is the visual heart of our methodology. Every stock in our universe is plotted on a five-by-five grid: fundamentals on the vertical axis, valuation on the horizontal. The intersection produces one of five ratings.
The two axes
Fundamentals (vertical) measures business quality across four pillars: growth, financial health, management, and competitive advantage. We score each pillar from a battery of academically validated metrics — Altman Z-Score for bankruptcy risk, EPV-vs-NRV for moat strength, and multi-year CAGRs for sustained compounding. The maximum is 65 points.
Valuation (horizontal) measures whether the price you pay today gives you a margin of safety. We use a discounted cash flow model — sometimes EPS-based, sometimes free-cash-flow-based, sometimes residual income — to estimate intrinsic value. The score reflects how far the current price is from that estimate.
The five ratings
- Excellent — high-quality business at an attractive price. The ideal long-term holding.
- Good — strong business at a fair valuation. The bread and butter of compounding.
- Fair — acceptable quality and price. Requires conviction and patience.
- Poor — fundamentals do not yet support an investment thesis.
- Risky — excellent business, but the price leaves no margin of safety. Quality without value protection.
The 20-year backtest
MOATEY is not a hypothesis — it is a tested algorithm. Across the S&P 500 over 20 years, an Excellent-only portfolio produced a 19.01% gross CAGR versus a 12.11% benchmark.
The framework was validated at Tilburg University. We do not believe in stock tips or hot picks. We believe in transparent, evidence-based ratings — and in giving you the reasoning behind every one.