RiskGM Trend#101
Beta is the metric used to the financial stress or solvency profile of the business.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
Slope of gross margin linear regression over 5 years
Description
Shows whether gross margin is improving or deteriorating over five years. A positive trend indicates the company is gaining pricing power or reducing production costs. A negative trend may signal increasing competition or rising input costs.
Interpretation
Positive (above 0) is ideal, meaning margins are expanding. Strongly positive trends combined with revenue growth indicate a business gaining competitive advantage. Negative trends in a mature business are a warning sign.
Related metrics: 52-Week Price Volatility, Maximum Drawdown 1Y (Max Drawdown). (Updated 2026)
Further Reading
- SEC EDGAR primary filings on Beta (Market Sensitivity)- Primary source filings used to calculate Beta (Market Sensitivity).
FAQ
How is Beta calculated?+
Beta uses the formula: Slope of gross margin linear regression over 5 years. compare against sector median on /screener with the Sector filter applied. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using SEC EDGAR balance-sheet + cash-flow statements.
What is a good Beta value by sector?+
There is no single 'good' value for Beta — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for Beta on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Beta?+
Howard Marks, Seth Klarman, Bill Ackman in distressed scenarios cite Beta as a key input to to flag solvency stress and avoid permanent capital loss. The academic anchor is Altman (1968) Z-Score and Piotroski (2000) F-Score. ValueMarkers weights this within the Risk pillar of the VMCI score (8% of total).
What are the limitations of Beta?+
Beta can mislead in asset-heavy industries where leverage ratios understate true risk. Pair Beta with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.
Where can I see live Beta data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Beta data, sector percentiles, and the VMCI composite score that integrates Beta with 119 other indicators across 100,000+ stocks. The free /screener exposes Beta as a filterable column.
Used in these guides
Related Risk Indicators
52-Week Price VolatilityNM Trend
52-Week Price Volatility measures the financial stress or solvency profile of the business.
Maximum Drawdown 1Y (Max Drawdown)ROIC Min 5Y
Maximum Drawdown 1Y expresses the financial stress or solvency profile of the business.
Free Cash Flow to Enterprise (FCF to Firm)EQ
Free Cash Flow to Enterprise captures the financial stress or solvency profile of the business.
Operating LeverageRev Growth Streak
Operating Leverage measures the financial stress or solvency profile of the business.
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