# Magic Formula

# Magic Formula — scoring rules

Source: Joel Greenblatt, *The Little Book That Beats the Market* (2005) and *The Little Book That Still Beats the Market* (2010).

1. Earnings yield = EBIT / Enterprise value. EBIT is trailing twelve months: latest annual OperatingIncomeLoss plus the quarters reported after that fiscal year end minus the same quarters a year earlier (SEC quarterly frames). When no quarter has been reported since the latest fiscal year and that year ended at most 135 days ago (the next 10-Q is not yet due), the annual figure is the trailing twelve months. If the quarterly chain is otherwise incomplete the company is not ranked (`insufficient data (quarterly EBIT chain incomplete)`); its latest annual EBIT is shown as a separate, non-comparable figure. EV = market cap + total borrowings - cash. Total borrowings reconciles overlapping tags: LongTermDebt (which already includes current maturities) + ShortTermBorrowings; otherwise LongTermDebtNoncurrent + DebtCurrent (or + LongTermDebtCurrent + ShortTermBorrowings). With no debt tag in the last 18 months, or only current-debt tags (the long-term part may sit under a tag not read, e.g. LongTermNotesPayable), the company is `insufficient data (debt unknown)`; zero is never assumed.
2. Return on capital = EBIT / (net working capital + net fixed assets), where NWC = AssetsCurrent - LiabilitiesCurrent exactly as reported (it may be negative) and net fixed assets = PropertyPlantAndEquipmentNet. If NWC + PP&E is not positive the company is not ranked and the reason is shown.
3. Rank every eligible company on each measure (1 = best), add the two ranks, and convert to a percentile.
4. Score = 100 x (1 - combined-rank percentile). 100 = best in the universe.

Excluded, as Greenblatt excludes them: financials (SIC 60, 61, 63, 64 and 67 (banks, credit, insurers, REITs and holding companies); SIC 62 (brokers, exchanges, asset managers) is scored, so GS, MS and SCHW carry scores and should be read with that in mind) and utilities (SIC 49). Companies with EV <= 0 or capital <= 0 are not scored.

Market cap = the stock page's market value: last close / depositary ratio x the latest point-in-time SEC share count (cover page, summed across equivalent classes), restated for issuer-verified splits after the count date; withheld (not ranked) when the share basis is unresolved. The annual EBIT base and the prior-year comparative quarters are history inputs: they do not set data_as_of or the stale flags.

Required fresh inputs (within 18 months): current assets, current liabilities, cash, PP&E, a debt tag, share count, price. Otherwise the company is `insufficient data (<reason>)`. Custom or alternative tags are not interpreted; absence is treated as unknown, not zero.


## Top 50 (2026-10-26)

- SOLV Solventum Corp: 99.5 · https://theclaudetrader.com/s/SOLV
- BKNG Booking Holdings Inc.: 99.0 · https://theclaudetrader.com/s/BKNG
- FISV Fiserv Inc: 98.5 · https://theclaudetrader.com/s/FISV
- SNDK Sandisk Corp: 98.0 · https://theclaudetrader.com/s/SNDK
- PNR Pentair Plc: 97.5 · https://theclaudetrader.com/s/PNR
- NFLX Netflix Inc: 97.0 · https://theclaudetrader.com/s/NFLX
- CTSH Cognizant Technology Solutions Corp: 96.5 · https://theclaudetrader.com/s/CTSH
- FICO Fair Isaac Corp: 96.0 · https://theclaudetrader.com/s/FICO
- ACN Accenture Plc: 95.5 · https://theclaudetrader.com/s/ACN
- VLO Valero Energy Corp: 95.0 · https://theclaudetrader.com/s/VLO
- BR Broadridge Financial Solutions, Inc.: 94.2 · https://theclaudetrader.com/s/BR
- CDW CDW Corp: 94.2 · https://theclaudetrader.com/s/CDW
- JKHY Jack Henry & Associates Inc: 93.5 · https://theclaudetrader.com/s/JKHY
- PTC PTC Inc.: 93.0 · https://theclaudetrader.com/s/PTC
- KVUE Kenvue Inc.: 92.5 · https://theclaudetrader.com/s/KVUE
- INTU Intuit Inc.: 92.0 · https://theclaudetrader.com/s/INTU
- PAYX Paychex Inc: 91.5 · https://theclaudetrader.com/s/PAYX
- BBY Best BUY Co Inc: 90.7 · https://theclaudetrader.com/s/BBY
- HAS Hasbro, Inc.: 90.7 · https://theclaudetrader.com/s/HAS
- AOS Smith A O Corp: 89.9 · https://theclaudetrader.com/s/AOS
- PG Procter & Gamble Co: 89.4 · https://theclaudetrader.com/s/PG
- DVA Davita Inc.: 88.7 · https://theclaudetrader.com/s/DVA
- ITW Illinois Tool Works Inc: 88.7 · https://theclaudetrader.com/s/ITW
- LII Lennox International Inc: 87.9 · https://theclaudetrader.com/s/LII
- ALLE Allegion Plc: 87.4 · https://theclaudetrader.com/s/ALLE
- DELL Dell Technologies Inc.: 86.7 · https://theclaudetrader.com/s/DELL
- DIS Walt Disney Co: 86.7 · https://theclaudetrader.com/s/DIS
- NXPI NXP Semiconductors N.v.: 85.9 · https://theclaudetrader.com/s/NXPI
- HD Home Depot, Inc.: 85.4 · https://theclaudetrader.com/s/HD
- NDAQ Nasdaq, Inc.: 84.7 · https://theclaudetrader.com/s/NDAQ
- TMUS T-Mobile US, Inc.: 84.7 · https://theclaudetrader.com/s/TMUS
- BSX Boston Scientific Corp: 83.7 · https://theclaudetrader.com/s/BSX
- EBAY Ebay Inc: 83.7 · https://theclaudetrader.com/s/EBAY
- PEP Pepsico Inc: 82.7 · https://theclaudetrader.com/s/PEP
- PYPL PayPal Holdings, Inc.: 82.7 · https://theclaudetrader.com/s/PYPL
- TRMB Trimble Inc.: 81.9 · https://theclaudetrader.com/s/TRMB
- MCO Moodys Corp: 81.4 · https://theclaudetrader.com/s/MCO
- WDC Western Digital Corp: 80.9 · https://theclaudetrader.com/s/WDC
- CMG Chipotle Mexican Grill Inc: 80.4 · https://theclaudetrader.com/s/CMG
- LMT Lockheed Martin Corp: 79.9 · https://theclaudetrader.com/s/LMT
- CBOE Cboe Global Markets, Inc.: 78.9 · https://theclaudetrader.com/s/CBOE
- CF CF Industries Holdings, Inc.: 78.9 · https://theclaudetrader.com/s/CF
- DLTR Dollar Tree, Inc.: 78.9 · https://theclaudetrader.com/s/DLTR
- AZO Autozone Inc: 77.6 · https://theclaudetrader.com/s/AZO
- ROK Rockwell Automation, Inc: 77.6 · https://theclaudetrader.com/s/ROK
- CBRE Cbre Group, Inc.: 76.6 · https://theclaudetrader.com/s/CBRE
- CHTR Charter Communications, Inc.: 76.6 · https://theclaudetrader.com/s/CHTR
- QCOM Qualcomm Inc: 75.6 · https://theclaudetrader.com/s/QCOM
- TDG TransDigm Group Inc: 75.6 · https://theclaudetrader.com/s/TDG
- MA Mastercard Inc: 74.6 · https://theclaudetrader.com/s/MA