Is APP a high-quality business?

AlphaMadera's AlphaQuality grade scores AppLovin Corporation on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how APP compares to a Buffett-style quality bar.

What is AppLovin Corporation's AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to APP based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes APP a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

APP - AppLovin Corporation

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $652.20 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Platform & Compounding FCF

AlphaQuality — archetype-weighted quantitative grade

A 89.8 / 100 composite

Composite Grade

Composite of six pillars weighted for platform & compounding fcf businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 25%

A+ 95.9

5yr Avg ROIC 21.3% 94/100
Operating Margin Trend +20.17 pp/yr 100/100

Capital Efficiency

Weight: 15%

A 88.1

5yr Avg ROE 47.9% 100/100
5yr Share-Count CAGR -0.1% 66/100

Growth Quality

Weight: 25%

A+ 94.6

5yr Revenue CAGR 18.4% 97/100
5yr EPS CAGR 220.0% 100/100
Revenue-Growth Years (5) 4/5 80/100

Cash Generation

Weight: 20%

A- 84.2

5yr FCF Margin 44.4% 100/100
5yr FCF/NI Conversion 3.91x 65/100

Balance Sheet

Weight: 10%

A+ 96.7

Net Debt / EBITDA 0.24x 93/100
Interest Coverage (EBIT/Int) 20.09x 100/100
Altman Z-Score 22.05 100/100

Stability

Weight: 5%

C- 46.7

EPS Volatility (σ/μ) 1.31 0/100
Piotroski F-Score 8 89/100
Negative-Revenue Years (5) 1/5 80/100

5 of 7 gurus held; 3 added; 2 trimmed; 3 full exits.

Holders: 5 -2
Avg Δ position: +13.7%
New buys: 0
Full exits: 3

Halvorsen sold -100%
Dalio sold -100%
Laffont sold -100%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (25%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (25%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (20%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (10%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (5%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.