Field Guide
Every number, explained
The metrics on each company page, in plain language, and why each one helps you judge a business as a long-term compounder. We deliberately leave price out of it. Here is why.
Market cap
What it is. The total value of all a company's shares (share price times shares outstanding).
Why it matters. It sets the ceiling. A company worth $200B effectively cannot become a 100-bagger; the giant winners are found while they are still small. Size is physics.
Revenue
What it is. The top line: total sales over a period.
Why it matters. It is the clearest read on whether customers want what the company sells, and how fast that demand is growing. The trend matters more than any single quarter.
Revenue growth
What it is. The annualized rate at which revenue is compounding.
Why it matters. Pace of the top line. Always pair it with per-share growth: fast revenue growth funded by issuing stock is not the same as real compounding.
What if it shows “?”. Not enough reporting history is available to calculate a reliable multi-year growth rate. This almost always means a recently public company (a couple of fiscal years are needed to compute a rate). It is a sign of youth, not weakness.
Gross margin
What it is. The share of revenue left after the direct cost of making the product or service.
Why it matters. High and rising margins are the fingerprint of pricing power and a moat. Thin or falling margins usually mean a commodity with little defensibility.
EPS, beats and misses
What it is. Earnings per share, shown against the analyst estimate each quarter.
Why it matters. Execution versus expectations. A steady run of beats points to a management team that under-promises and over-delivers; repeated misses are a warning.
Profitable vs pre-profit
What it is. Whether the business currently earns a net profit, or is still spending ahead of revenue to fund growth.
Why it matters. A profitable compounder can fund its own growth and weather lean markets. A pre-profit one is betting that scale arrives before the cash, or the market's patience, runs out: a higher ceiling, but higher risk.
Return on equity (ROE)
What it is. Profit expressed as a percentage of shareholder equity.
Why it matters. How efficiently the business turns the capital it holds into profit. High, durable returns on capital are the engine that makes compounding possible.
Free cash flow
What it is. The cash left over after running the business and reinvesting to keep it going.
Why it matters. Real, spendable cash, as opposed to accounting profit. It funds growth, buybacks, and resilience without the company having to borrow or issue stock.
Net cash
What it is. Cash on the balance sheet minus total debt.
Why it matters. Survivability and optionality. A net-cash company can push through downturns and pounce on opportunity; a heavily indebted one is fragile when conditions turn.
Dilution and shares outstanding
What it is. How fast the share count is changing. Positive means the company is issuing stock; negative means it is buying back.
Why it matters. Every new share shrinks your slice. Headline growth bought with constant share issuance is not compounding. Shrinking share counts (buybacks) quietly grow your ownership.
Archetype: asset-light vs scale economics
What it is. The two kinds of business our screen scores: capital-light compounders, and scale-economics engines.
Why it matters. They compound in completely different ways, so we judge each on its own terms.
The two engines, explained →Recent IPO
What it is. A company that went public very recently and has limited reporting history.
Why it matters. Per-share metrics and growth rates are distorted by the offering itself, so early numbers deserve extra caution until a few years of history accumulate.
Educational content, not investment advice. We evaluate businesses, not prices.