Alpha Spread Review – How Does This Platform Compare?

About Alpha Spread

Alpha Spread is a fundamental analysis platform that makes it easy to run discounted cash flow (DCF) and relative value valuation models. The platform offers pre-made models that enable you to quickly check whether a stock is overvalued or undervalued. You can also create your own models and run in-depth analyses of a company’s profitability.

This is a very powerful platform for fundamental investors. In our Alpha Spread review, we’ll explain everything this platform can do and help you decide if it’s right for you.

Alpha Spread Pricing Options

Alpha Spread is free to use to analyze up to three stocks per week. The Free Plan does not include access to Alpha Spread’s stock screener.

If you want to analyze an unlimited number of stocks and use the platform’s stock screener, the Unlimited Plan costs $25 per month or $180 per year. You can try out the Unlimited Plan free for 7 days.

There’s also an Enterprise Plan, which provides access to Alpha Spread’s API, for $2,400 per year.

Alpha Spread Features

Valuation Models

Alpha Spread makes it easy to calculate the intrinsic value of any US stock using two different valuation models: discounted cash flow (DCF) and relative value.

DCF modeling attempts to calculate the value of a stock today based on how much money the company will generate in the future. For each stock, Alpha Spread offers a pre-made DCF model with base, worst case, and best case scenarios. You can enter any ticker and quickly see how the valuations from these three scenarios stack up against the stock’s current price.

Alpha Spread also enables you to create your own custom DCF model using the platform’s pre-made model as a template. You can change a stock’s predicted discount rate or growth rate or modify forward estimates for revenue and operating cash flow. Sensitivity analysis enables you to see which of your modifications has the greatest impact on your DCF valuation estimate. There’s no limit to the number of custom models you can save for each stock.

Relative value modeling calculates the value of a stock based on valuation ratios like price-to-earnings, price-to-book, and price-to-free cash flow. Alpha Spread calculates base, worst case, and best case scenarios by applying different weights to each valuation ratio. However, you cannot create your own custom weights.

Alpha Spread takes the average of its base case DCF and relative value models to calculate an intrinsic value for every stock. On each stock’s summary page, Alpha Spread offers a table showing the intrinsic value and the current price for both the stock you’re researching and its peers in the same industry.

Analyst Estimates

Alpha Spread also provides an in-depth look at what Wall Street analysts think about a company. You can see the full range of 12-month price targets as well as revenue, operating income, and net income forecasts. This data can be especially useful if you want to build a custom DCF model.

Fundamental Analysis

Alpha Spread offers detailed fundamental analysis so that you can dig deeper into a company’s financial performance and profitability.

You can quickly see changes in operating margins and cash flow over time, and Alpha Spread assigns a profitability score for each stock on a scale of 0-100. One especially helpful feature is that the platform compares margins and return on capital to its competitors in a table, making it simple to see whether peers in the same industry might offer a better fundamental investment.

Alpha Spread also offers data about companies’ debt. Each stock is assigned a solvency score on a scale of 0-100, and a series of charts highlights how a company’s debt, interest payments, and cash-to-debt ratio have changed over time.

You can also dive into a company’s income statement. What’s nice about Alpha Spread’s take on the classic income statement table is that it shows the year-over-year change for each metric with color-coding according to whether the change is positive or negative.

Stock Screener

The Alpha Spread stock screener is a fundamental screener that makes it easy to find undervalued stocks. You can filter for stocks that are undervalued by X% or more based on the base, worst-case, or best-case scenarios from Alpha Spread’s pre-made DCF or relative value models. You can also add filters based on Wall Street price targets, valuation ratios, operating margins, or debt-related ratios.

Alpha Spread Platform Differentiators

Alpha Spread offers slightly more detail than many competing fundamental stock research platforms, like Finbox or Simply Wall St. You can not only view details about profitability, operating margins, and debt, but also quickly pull up stock valuations based on DCF and relative value models.

Alpha Spread makes it incredibly simple to modify the DCF model with your own growth or discount rates. It’s not nearly as customizable as a dedicated modeling platform like Old School Value, but it’s a lot simpler to use if you’re new to financial modeling.

One major advantage of Alpha Spread is that it displays peer comparisons for most key metrics. This makes it easier to determine whether the stock you’re currently researching provides the best value of stocks within an industry.

What Type of Investor is Alpha Spread Best For?

Alpha Spread is designed for fundamental investors who want to invest in undervalued stocks. The screener makes it simple to find stocks that are undervalued based on pre-made DCF and relative value models. Once you find an undervalued stock, Alpha Spread provides all the profitability and financial data you need to decide if it’s a worthwhile investment.

Alpha Spread’s DCF model is only moderately customizable, making this platform relatively beginner-friendly. If you want more control over your valuation models, you might be better served by a platform like Old School Value or by creating your own valuation models in Excel.