Revenue quality
Revenue growth can come from units, price, acquisitions, currency, or accounting changes. Look for concentration, recurrence, contract terms, backlog quality, and the difference between billed activity and recognized revenue.
Margins and operating leverage
Gross margin can reveal product mix and pricing power. Operating margin reflects the cost of running and expanding the business. Ask whether margin changes are structural, cyclical, or created by temporary cost decisions.
Cash conversion
Compare net income with operating cash flow and free-cash-flow definitions. Working capital, capitalized costs, stock compensation, and acquisitions can materially change the economic picture.
Financial health
Liquidity, debt maturity, interest cost, covenants, pension obligations, lease commitments, and dilution affect the range of possible outcomes. Strong growth does not remove financing risk.
Valuation context
Multiples are shorthand for assumptions. A discounted model makes more assumptions visible, but does not remove uncertainty. Use ranges, disclose inputs, and separate company guidance, licensed consensus context, and your own deterministic estimates.
Evidence quality
Confidence in evidence is not certainty about the future. Note source age, coverage gaps, restatements, conflicting definitions, and whether a metric can be reproduced from admitted inputs.