What is the Openbook Reward score and how is it calculated?

The Reward score is a 0–100 summary of four weighted factors — Growth (40%), Momentum (25%), Profitability (20%) and Valuation (15%). Inputs are converted into rule-based sub-scores and combined; this is not a general peer-ranking or return-forecasting model. Higher is better within the model.

What is the Openbook Risk score and what does it measure?

The Risk score is a 0–100 summary of four weighted risk factors — Volatility (45%), Financial Solvency (30%), Operational Quality (15%) and Size (10%). Lower means lower modelled risk. It does not predict the probability or size of a future loss.

Why is volatility weighted so heavily in the Risk score?

Volatility has a 45% weight, the largest in the Risk calculation. When volatility is measured, its factor score can also raise the overall Risk result to a minimum of 45, 56 or 72 at defined volatility thresholds, so lower scores elsewhere cannot completely mask strong price-risk signals.

Should I buy a share just because it has a high Reward score?

No. A high Reward score only means the available Growth, Momentum, Profitability and Valuation inputs produced a high weighted result under the current rules. It is not evidence that the share will rise. Use it as a starting point for research, not a buy signal.

What does "Data Coverage" mean on the score card?

Data Coverage is the percentage of the four top-level factors marked as calculated with sufficient data, so it changes in 25-point steps. It is not the percentage of every underlying metric present. An entirely unavailable factor stays at a neutral 50; within a factor, the calculation may reweight available inputs or use a documented fallback. Lower coverage calls for more caution.

Can a share have a high Reward AND a high Risk score?

Yes. A fast-growing small-cap can score well on Growth and Momentum while also scoring high-risk on Volatility and Size. The two scores summarise different inputs and are meant to be read together, not netted off against each other.

Do the scores work the same way for UK and US shares?

The same factor structure and top-level weights apply to UK and US shares. Selected Profitability and Valuation inputs use sector averages, while one-year and six-month Momentum can use an available market benchmark; the model does not peer-rank every input. US score coverage is expanding, so check Data Coverage on each company.

Understanding Risk & Reward Scores

For companies with sufficient data, Openbook shows separate Reward and Risk numbers. This lesson explains what they summarise, how they're put together, and — just as importantly — what they deliberately ignore.

Think of them as an organised summary, not a verdict. They show how a defined set of inputs scores under the model; they don't tell you what to do about it.

Example

This page is a plain-English summary. The methodology page gives more technical detail about the inputs, weights, coverage limits and known weaknesses. The production calculation is ultimately defined by the scoring code.

The Two Scores

The Reward score — a number from 0 to 100 summarising Growth, Momentum, Profitability and Valuation inputs. Higher is better within the model.
The Risk score — a number from 0 to 100 summarising Volatility, Financial Solvency, Operational Quality and Size inputs. Lower means lower modelled risk.

They are not two ends of one scale. They are two separate questions asked about the same company, and a share can score highly on both.

Important: these are educational tools built from historical and current data. They are not buy or sell recommendations, and they carry no forecast of future returns.

How the Reward Score Works

The Reward score asks: what result do the company's available growth, price, profitability and valuation inputs produce under the model's rules?

Four factors, weighted:

Factor	Weight	What it looks at
Growth	40%	Historical revenue, net income and free cash flow growth, plus available revenue, EPS and analyst-target inputs
Momentum	25%	1-year, 6-month and 3-month returns, shorter-term consistency and volume trend; 1-year and 6-month returns use a supplied benchmark when available
Profitability	20%	Sector-relative gross and net margins, free cash flow conversion, EBIT growth, return on equity and return on assets
Valuation	15%	PEG, P/E, EV/EBITDA (or price/book for financials), price/free cash flow and EV/revenue, with leverage and earnings-quality adjustments

Why Growth carries the most weight

Growth has a 40% weight, so it has the largest influence on the Reward total. The factor blends historical growth with available forward-looking inputs. That weighting is a model-design choice, not a claim that Growth will predict a future return.

When Momentum uses a benchmark

When benchmark returns are supplied, the model subtracts them from the share's 1-year and 6-month returns. If a benchmark is unavailable, those periods are scored from the share's absolute returns. The 3-month return is scored on an absolute basis.

Why Valuation carries the least weight

Valuation contributes 15% of the Reward total, so it can influence the result without dominating it. P/E, EV/EBITDA and EV/revenue are scored relative to sector reference values where the relevant data exists. Financial companies use price/book in place of EV/EBITDA. PEG and price/free cash flow use rule-based bands, and leverage, accruals and free-cash-flow growth can adjust the result.

Common Mistake

Expecting a Size bonus in the Reward score

There isn't one. Small companies do not receive a Reward uplift for being small. Size appears only in the Risk score, where a lower reported market capitalisation receives a higher factor score. If you are looking for a small-cap premium, this model does not grant one on the Reward side.

How the Risk Score Works

The Risk score asks a different question: what level of modelled risk do the available price, financial, operational and size inputs indicate? It does not estimate the probability or size of a future loss.

Factor	Weight	What it looks at
Volatility	45%	Annualised volatility (35%), maximum drawdown (35%), beta vs the market (30%)
Financial Solvency	30%	Interest cover (25%), net debt/EBITDA (20%), current ratio (20%), free cash flow vs debt (20%), 3-year debt trend (15%)
Operational Quality	15%	Net margin, free cash flow margin, cash return on assets and gross-margin stability (25% each)
Size	10%	Market capitalisation band

Why Volatility carries the largest weight

Volatility contributes 45% of the Risk total. Its factor combines annualised volatility and maximum drawdown from up to the latest 252 price observations with beta. Beta is calculated from stock and benchmark data where possible, with a provider value used as a fallback.

There is a second mechanism worth knowing about. When volatility data has actually been measured, the volatility factor can set a floor under the overall Risk score:

A Volatility factor of 55–69 sets a minimum overall Risk score of 45.
A Volatility factor of 70–84 sets a minimum of 56.
A Volatility factor of 85–100 sets a minimum of 72.

The floor is not applied when volatility data is unavailable. It prevents lower Financial Solvency, Operational Quality or Size results from fully offsetting a strong measured volatility signal.

The Size factor

Size is scored in market-cap bands — large cap 20, mid cap 35, small cap 50, micro cap 65 and nano cap 80, with higher numbers contributing more modelled Risk. It is a size-related proxy, not a direct measurement of liquidity or business quality.

Reading the Numbers

The presentation bands differ slightly between the two scores:

Reward score	Reward band	Risk score	Risk band
66–100	High	70–100	High
35–65	Moderate	55–69	Medium-High
0–34	Low	30–54	Moderate
—	—	0–29	Low

The rule: for Reward you want a high number; for Risk you want a low one.

A share scoring Reward 75 / Risk 30 has a High Reward result and a Moderate Risk result. The factor breakdown and coverage tell you which inputs produced those totals. Neither number is a recommendation or a forecast.

How the Scores Are Calculated

Collect — the model receives financial statements, price history and, where available, market, benchmark and analyst-estimate data.
Score — each input is converted into a rule-based sub-score. Gross and net margins, P/E, EV/EBITDA and EV/revenue use sector reference values; 1-year and 6-month Momentum can use benchmark returns. Other inputs use fixed bands or direct adjustments rather than a general peer ranking.
Combine — sub-scores form the four Reward and four Risk factors. The top-level factors use the fixed weights above, and the measured Volatility factor may then impose the Risk floor.

Missing data and why Data Coverage matters

Missing data does not follow one universal rule at the individual-input level.

Each top-level factor starts at a neutral 50. If the model cannot calculate that factor, 50 remains its contribution to the fixed-weight overall score.
Inside several factors, unavailable sub-inputs are omitted and the weights of the available inputs are normalised. Growth and Momentum also use neutral or historical fallbacks in some branches of their calculations.
Data Coverage counts how many of the four top-level factors were marked as calculated with sufficient data. It therefore appears in 25-point steps: 25%, 50%, 75% or 100% (and can be 0%). It is not a count of every underlying field.

Always read the coverage figure and factor breakdown alongside the headline score. A neutral contribution caused by missing data is not evidence that the company is average on that factor.

How to Use These Scores

They are a compass, not a map.

Use them to

Narrow a list. Screen a few hundred companies down to a dozen worth reading properly.
Compare like with like. Two companies in the same sector, side by side.
See the drivers. Open the factor breakdown and ask why a score is what it is. "High Reward, but almost all of it is Momentum" is a very different proposition from "High Reward, driven by Growth and Profitability."
Spot a mismatch. A high Reward score paired with a high Risk score is a flag to look harder, not a contradiction.

Don't use them to

Make a decision on their own. A score of 90 is not a reason to buy.
Predict returns. The scores describe a company's current statistical profile. They do not forecast anything.
Replace judgement. They do not directly ingest considerations such as management quality, brand strength, regulatory risk or competitive dynamics.
Skip the reading. Nothing here substitutes for the annual report.

Common Mistake

The prediction trap

The commonest misuse is treating a score as a forecast. It isn't. A Reward score of 90 says the available inputs produced a high result under today's rules. It does not say what the share price will do next, and the result can change when prices, accounts or estimates change.

Summary

Reward (higher is better) — Growth 40%, Momentum 25%, Profitability 20%, Valuation 15%.
Risk (lower is better) — Volatility 45%, Financial Solvency 30%, Operational Quality 15%, Size 10%.
Measured Volatility has the largest Risk weight and can set a 45, 56 or 72 floor at defined factor thresholds.
Data Coverage counts calculated top-level factors, not every underlying input. Missing factors remain at a neutral 50 in the overall calculation.
These are screening and comparison tools, not advice.

Full technical detail: the Openbook methodology page.

This lesson is for educational and informational purposes only. It is not financial advice, a recommendation, or an endorsement of any security or strategy. Investing involves risk, including the loss of capital invested. The scores described are calculated from historical and current data and do not guarantee future results. Quantitative analysis cannot capture every relevant qualitative factor. Always do your own research and consider taking advice from a qualified financial adviser before investing.

Understanding Risk & Reward Scores

Common questions about Understanding Risk & Reward Scores