RiskMax DD 1Y#116
Operating Expense Ratio captures the financial stress or solvency profile of the business.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
Largest peak-to-trough decline in stock price over 1 year
Description
The largest percentage decline from a peak price to a subsequent trough within the past year. This measures downside risk in a way that volatility statistics can miss. Large drawdowns are psychologically difficult to endure and can trigger forced selling by leveraged investors.
Interpretation
Ideally above -20% (meaning the worst decline was less than 20%). Drawdowns beyond -30% often take years to recover. Compare to market drawdowns during the same period to determine if the decline was stock-specific or market-wide.
Related metrics: Beta (Market Sensitivity), 52-Week Price Volatility, Maximum Drawdown 1Y (Max Drawdown). (Updated 2026)
Further Reading
- SEC EDGAR primary filings on Operating Expense Ratio (Opex Ratio)- Primary source filings used to calculate Operating Expense Ratio (Opex Ratio).
FAQ
How is Operating Expense Ratio calculated?+
Operating Expense Ratio uses the formula: Largest peak-to-trough decline in stock price over 1 year. 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 Operating Expense Ratio value by sector?+
There is no single 'good' value for Operating Expense Ratio — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for Operating Expense Ratio on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Operating Expense Ratio?+
Howard Marks, Seth Klarman, Bill Ackman in distressed scenarios cite Operating Expense Ratio 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 Operating Expense Ratio?+
Operating Expense Ratio can mislead in asset-heavy industries where leverage ratios understate true risk. Pair Operating Expense Ratio 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 Operating Expense Ratio data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Operating Expense Ratio data, sector percentiles, and the VMCI composite score that integrates Operating Expense Ratio with 119 other indicators across 100,000+ stocks. The free /screener exposes Operating Expense Ratio as a filterable column.
Related Risk Indicators
Beta (Market Sensitivity)GM Trend
Beta is the metric used to the financial stress or solvency profile of the business.
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.
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