Fundamentals: The Fundamentals grade underlying the Schwab Equity Rating is based upon several earnings quality measures derived from recent financial statement data. Stocks with attributes such as high cash return on investment, improving asset utilization, and a track record of reporting earnings above consensus forecasts tend to have better Fundamentals grades.

Valuation: The Valuation grade underlying the Schwab Equity Rating is based upon several value-oriented investment criteria. From a valuation ratio perspective, stocks with attributes such as high levels of operating income and free cash flow per dollar of current stock price tend to have better Valuation grades. From an investor sentiment perspective, stocks with shrinking shares outstanding and with relatively few total shares sold short tend to have better Valuation grades.

Momentum: The Momentum grade underlying the Schwab Equity Rating is based upon several measures of short-term investor expectation change. Stocks with attributes such as recently improving cash earnings and analyst forecasts, strong relative price performance, and decreasing short interest tend to have better Momentum grades.

Risk: The Risk grade underlying the Schwab Equity Rating is based upon several diverse measures of investment risk. Larger stocks with attributes such as low stock price volatility, stable sales growth, low analyst EPS forecast dispersion, and low analyst EPS growth forecasts relative to current profitability tend to have better Risk grades.