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1. Financial Strength -- Relative measure of financial strength of the companies in the VL universe. Ratings range from A++ (strongest) down to C (weakest), in nine steps (A++ A+ A B++ B+ B C++ C+ C)
2. Price Stability -- Measure of the stability of a stock's price. It includes sensitivity to the market (see Beta) as well as the stock's inherent volatility. VL ratings range from 100 (highest) to 5 (lowest).
3. Price Growth Persistence -- Measures the historic tendency of a stock to show persistent price growth compared to the average stock. VL ratings range from 100 (highest) to 5 (lowest)
4. Earnings Predictability -- Measure of the reliability of earnings forecast. Predictability is based on the stability of year-to-year comparisons, with recent years being weighted more heavily than earlier ones. The most reliable forecasts tend to be those with the highest rating (100), the least reliable, the lowest (5). The earnings stability is derived from the standard deviation of percentage changes in quarterly earnings over an eight-year period. Special adjustments are made for comparisons around zero and from plus to minus.

Another way to determine if the 'price is right' or in a reasonable range for purchase. Below 1 could mean an undervalued stock.

Stock price: Get it from any source

Sales per share: Get it from Value Line (it's the line right above 'earnings per share') or a company's reports (annual report, quarterly report; it's sales/number of outstanding shares). This is a 'quick hit' ratio. It can be calculated quickly by just glancing at the Value Line page.

Example: Southwest Airlines

Price = $23
Sales per share = $23.45
Price/Sales per share = .98

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