how to analyze a stock

stock analysis is the process of deciding whether a company is worth owning at today's price. it sounds simple. the hard part is building a repeatable framework so you're not just reacting to headlines.

this is the framework xvary uses. it's the same process behind every snapshot and deep dive in the stacks. we're publishing it because the best way to trust a research product is to see how the sausage is made.

step 1 — understand the business

before touching a single number, answer three questions in plain english:

• what does this company do? — one sentence. if you can't explain it simply, you don't understand it yet.
• how does it get paid? — revenue model. subscriptions, ads, hardware, licensing, transaction fees. where the money comes from determines how the business behaves.
• why is it winning (or losing)? — competitive advantage. moat. switching costs, network effects, cost structure, brand, regulatory capture. this is the single most important question in stock analysis.

every xvary snapshot starts with these three answers in the "start here if you're new" section. they're the foundation everything else is built on.

step 2 — read the financials

the numbers tell you whether the story is real. here are the metrics that matter most:

you can find all of these in a company's 10-K filing (annual report) or 10-Q (quarterly). xvary pulls them automatically and translates the numbers into context — what does 48% gross margin actually mean for this specific company?

step 3 — assess the valuation

a great business at the wrong price is a bad investment. valuation is the bridge between "this company is good" and "this stock is worth buying."

the main tools

• p/e ratio (price-to-earnings) — how many dollars you pay for $1 of profit. a 15x p/e is cheap; a 40x p/e means the market expects a lot of growth.
• ev/ebitda — enterprise value divided by operating earnings. more useful than p/e for comparing companies with different debt structures.
• dcf model (discounted cash flow) — project future cash flows, discount them back. the most rigorous method, but sensitive to assumptions about growth rates and discount rates.
• relative valuation — compare the stock's multiples against peers in the same sector. is it trading at a premium or discount, and is that justified?

step 4 — identify the risks

every stock has a bear case. the question is whether you're being paid enough for the risk.

xvary categorizes risks by severity (high / med / low) and by type:

• business risk — competition, customer concentration, product obsolescence
• financial risk — leverage, cash burn, refinancing exposure
• regulatory risk — antitrust, compliance costs, policy changes
• execution risk — management transitions, integration of acquisitions, technology bets
• valuation risk — the stock is priced for perfection and there's no margin of safety

the kill criteria question: what specific event or data point would make you sell? if you can't answer that, you don't have a thesis — you have a hope.

step 5 — form a thesis

a thesis is not "i think the stock will go up." a thesis has three parts:

1. the view — what you believe the market is missing or underweighting.
2. the evidence — the specific data that supports your view.
3. the kill criteria — what would prove you wrong.

every xvary deep dive leads with the thesis. the rest of the report is evidence for or against it. this is how institutional investors think — and it's how anyone serious about stock analysis should structure their work.

step 6 — score it

xvary's composite score (0–100) combines four dimensions into a single number:

scores above 70 suggest above-average opportunity. below 40 signals elevated risk or poor value. the number is a starting point, not a conclusion — read the report to understand what's driving the score.

see it in action

every concept on this page is applied to real companies in the stacks. pick any name and you'll see the framework at work — business model, financials, risks, and composite score.