Fair Value Uncertainty
To generate the Fair Value Uncertainty Rating, analysts consider factors such as sales predictability, operating leverage, financial leverage, and a firm’s exposure to contingent events. Analysts then classify stocks into one of several uncertainty levels: Low, Medium, High, Very High, or Extreme. The greater the level of uncertainty, the greater the discount to fair value required before a stock can earn 5 stars, and the greater the premium to fair value before a stock earns a 1-star rating.
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