Omega Stock Evaluation [OmegaTools]

Omega Stock Evaluation is a comprehensive, institutional-grade equity analysis framework designed to synthesize fundamental valuation, technical context, relative performance, risk metrics, volume behavior, and analyst sentiment into a single decision-support system. It is not a “signal generator” in the traditional sense: it is a multi-dimensional evaluation engine built to answer one question—how a stock is positioned in terms of value, trend, risk, and market behavior.

Purpose
This script is designed to provide structured, repeatable stock evaluation for investors and analysts who want more than isolated indicators. It consolidates multiple independent valuation models, long-horizon technical equilibrium measures, market-relative valuation (multiple normalization), risk diagnostics, and behavioral proxies into a single output that can be monitored over time.

What the indicator delivers
• A blended Fair Price derived from fundamentals, market multiples, and technical equilibrium
• A volatility-normalized Oscillator that expresses discount/premium positioning vs fair value
• A multi-factor Rating (Strong Sell → Strong Buy) designed for strategic positioning
• A real-time Dashboard with: Rating, VaR, Beta, Trend, Location, Fundamental status, Performance status, Institutional bias, and Analysts consensus
• Optional overlays: Fundamental fair value, Technical fair value, PE-adjusted fair value, individual fundamental models, and analyst target price bands

Data and robustness logic
The script uses TradingView Financial datasets and includes normalization / cleaning steps to keep metrics realistic across different sources and reporting formats. Percent-like fields are automatically converted when needed, missing values are handled gracefully, and extreme or unstable multiples (e.g., implausible EV/Sales or EV/EBITDA) are filtered out.

Risk-adjusted discount rate and growth constraints
A core design choice is to avoid “fantasy valuations.” The script defines a bounded required return r, adjusted by credit/financial risk using the Altman Z-Score when available. Growth assumptions are also bounded and constrained so that terminal growth remains below the discount rate, preventing mathematically explosive valuations and improving stability across sectors.

Fundamental valuation engine (multi-model)
The indicator computes up to seven independent fair value estimates, each based on a distinct valuation philosophy. These estimates are then aggregated into a robust fundamental fair price using filtering and averaging logic to reduce outlier impact.

Fundamental models included
M1 – Discounted Cash Flow (FCF)
Projects Free Cash Flow for a fixed horizon and discounts it using the required return, then converts enterprise value to equity value by adjusting for net debt and shares outstanding.

M2 – Peter Lynch / PEG-style implied price
Derives an implied target P/E from growth and dividend yield (bounded), then estimates fair price as EPS(TTM) × target P/E.

M3 – Economic Value Added (EVA)
Estimates firm value as invested capital plus the present value of EVA streams, where EVA is NOPAT minus the capital charge (r × invested capital).

M4 – EV/Sales normalized valuation
Uses the historical median EV/Sales multiple as a target and values the company using TTM revenue, adjusted to equity value.

M5 – Residual Income valuation (ROE fade)
Builds a residual income model where ROE advantage fades toward the required return over the horizon, adding the present value of residual income to book value.

M6 – EV/EBITDA normalized valuation
Uses the historical median EV/EBITDA multiple as a target and values the company using TTM EBITDA, adjusted to equity value.

M7 – Justified P/B (closed-form residual income)
Computes a justified price-to-book estimate from ROE, growth, and required return and derives a fair price from BVPS.

Fundamental fair price aggregation
Only valid, positive model outputs are used. The script sorts the valuation set, discards extreme tails when enough models are available, and computes a robust average to produce a stable Fundamental Fair Price suitable for continuous monitoring.

Technical fair value
To avoid relying solely on accounting-driven valuations, the script computes a Technical Fair Price from long-horizon market structure: it blends the 252-day high/low range with a long-term VWMA equilibrium. This acts as a market-derived anchor representing where price tends to revert across cycles.

Market multiple normalization (PE-adjusted valuation)
The script calculates a PE-Adjusted Fair Price by comparing the stock’s current P/E (from EPS TTM) to the S&P 500 average P/E series. This provides an immediate market-relative valuation signal: “what would this stock’s price be if it traded at the index multiple?”

Blended fair price
The final Fair Price is a composite average of:
• Fundamental fair price (multi-model)
• PE-adjusted fair price (market-relative)
• Technical fair price (market equilibrium)
This blend reduces single-model bias and improves usability across sectors and regimes.

Oscillator and location logic
Deviation from fair price is normalized by long-horizon volatility (standard deviation), producing a valuation oscillator that expresses where price sits relative to fair value in standardized units. The script defines three regimes:
• Discount (deep undervaluation vs fair price)
• Neutral
• Premium (overvaluation vs fair price)
Color gradients adapt dynamically to the oscillator level for fast visual interpretation.

Trend health and structural direction
Instead of using only price moving averages, trend is assessed using the slope of fair value itself (a structural measure). Rising fair price implies improving fundamentals/conditions; declining fair price implies deterioration. This supports a more “business-like” view of trend.

Performance and institutional behavior
Performance is evaluated relative to the PE-adjusted reference using ATR-scaled thresholds, classifying the stock as underperforming/overperforming vs market-normalized expectations.
Institutional activity is approximated using statistically significant volume expansions and short-term price direction during those expansions, producing a Buying / Selling / Neutral institutional bias proxy.

Composite rating system
The indicator converts multiple components into a unified Rating score: trend, valuation location, fundamental mispricing, relative performance, institutional bias, long-term MA regime, and RSI extremes. The rating is scaled by a volume factor so that high-conviction volume environments receive greater weight.
Final categories are mapped as: Strong Sell, Sell, Hold, Buy, Strong Buy, displayed both numerically and textually.

Risk metrics: VaR and Beta
The dashboard includes:
• Historical VaR (percentile-based on daily log returns) for downside risk awareness
• Beta computed from relative volatility and correlation vs SPY across a long window
These metrics provide critical context for comparing opportunities across different risk profiles.

Analyst consensus
Sell-side recommendations are aggregated into:
• A dominant consensus label (Strong Buy → Strong Sell)
• A weighted average recommendation score (%)
This allows you to identify alignment or divergence between market valuation, price behavior, and analyst positioning.

Visual options and overlays
The indicator is designed to be clean, modular, and presentation-ready. You can choose to display:
• Blended Fair Price
• Technical, Fundamental, and PE-Adjusted fair prices
• All individual fundamental model lines (M1–M7)
• Analyst target price bands (High/Low/Average), plotted forward from the official target price date
A compact, professional table summarizes the entire evaluation in one glance.

Recommended workflow
This tool is best used for:
• Long-term screening and rotation
• Valuation + trend confluence analysis
• Portfolio construction and risk-aware allocation
• Identifying discounted stocks with improving structure (or expensive stocks with weakening structure)
It is not intended as a standalone entry/exit trigger for short-term trading.

Disclaimer
Omega Stock Evaluation is an analytical tool and does not constitute financial advice. Financial datasets may vary in availability and update timing across tickers and exchanges. Always validate with primary sources before making investment decisions.

Omega Stock Evaluation does not try to predict. It tries to quantify context—value, trend, risk, and behavior—in one coherent system.