What is stock screening?
Stock screening is a process of filtering stocks based on certain criteria used by investors and traders to screen better stocks from the pack of stocks/sectors. Most Screeners provides ratings, metrics and even rule based scanning which eases out the investing decisions. While taking a investing decision some prefer fundamental screener , some prefer technical screener and the rest prefers using both in a combo to filter out better stocks that met their criteria. This article explores the popular fundamental screeners used widely in Indian markets actively by Indian traders and investors.
Stock screening doesn’t helps a user to predict the movement of the stock in any direction instead it helps in identifying good stocks and the ability to compare a stock with its peers. One was doing screening manually before,but now stock web based screeners helps the users a lot and plays a major role in taking buy/sell decisions.
Generally stock screener has three basic components:
- database of companies
- set of variables/rules
- screening platform to find the companies that satisfies the variables/conditions
Let us see about the top five fundamental stock screeners
MoneyWorks4me provides Value Indicators,Promoters stake and price pointers as type of screeners, Compeer and MoneyWorks4me Filter.Selection is indicated in color codes.They are as follows:
- Green : Very good
- Yellow : Somewhat good
- Red : Not good
Value Indicators – screens stocks with highest & lowest value creation index as Value generators and value destroyers respectively with respect to their capital for the past .
The above figure illustrates Colgate Palmolive, Hindustan Unilever, Castrol India from the large cap are the three which tops the value generators list
For Tata power,DLF & JP associates value creation index falls in negative taking past three years into account.
Movers & shakers – screens stocks with respect to the promoters stake in the last quarter compared to the previous quarter as promoters expand(increase in stake) and promoters diminish(decrease in stake)
From the above figure let us take vaibhav global as an example, we can find there is 13.15% increase in promotors stake.
In the above figure Balaji Hindustan Sugar met a decline in promotors stake of 21.9% compared to the previous quarter
Price pointers – Screens stocks with respect to their P/Es and price. When stocks have low P/Es and sounds well it is filtered as Healthy & Affordable and if stocks have high P/Es weak it is filtered as Weak & Pricey
For Indian bank P/E ratio ends up with a good and healthy value of 6.61
The above figure shows stocks which are fundamentally weak & having high P/E ratios.
MoneyWorks4me Filter – Helps to analyse stocks fundamentally in each and every aspect. MoneyWorks4me Filter reveals whether a stock chosen by a user is a right stock,right price and right timing with respect to the 10 year X-ray report.
The figure tells us about whether one can choose a particular stock on 10 years report,valuation and research reports with the help of latest financials.
Capital Cube,one of the largest providers of company analysis is the research platform from AnalytixInsights covering more than 40,000 global equities. Analysis includes the following major factors such as fundamental research, corporate actions, earnings quality, dividend quality and equity screening solutions. Capital Cube helps customers to spent less time in tracking down the data and gathering information and valued time on investment potential and opportunities.
The below figure shows how telecommunication stocks are screened with the fundamental analysis score between 10-84 and one month price performance upto 33.06%.
Let us make a study on ICICIBANK under BSE exchange
Figure above shows the overall summary with chart
Trends of ICICI Bank w.r.t to price
Characteristics and Price history
Screener.in is a stock analysis and a screening tool to see all the information of a company on a single and customizable page. The Bull Cartel, Growth Stocks, Loss to Profit Companies, Magic Formula, Piotroski Scan and Highest Dividend Yield are the featured screens given by screener.in. Apart from the featured screens users can design their own screens based on their standard and strategy. Email alerts are also enabled for the customer screens. If customer’s criteria is met they will get an Email.
The Bull Cartel : screens stocks of best quarterly results. The figure reveals ICICI bank performed well in the recent quarter.
Growth Stocks : Helps to find stocks with high growth potential and strong financials
From the figure one can choose BN Rathi securities, as it shows a growth factor of 9 & P/E ratio of 4.92
Loss and Profit Companies : Helps to screen companies which showed a good turnover and quarterly results from loss to profit. Ashok Alco-chemicals produced 927.08% of YOY quarterly profit growth
Magic Formula : Helps to screen stocks which beats the market’s average annual returns. Applying magic formula, Sagar cements earnings yield has been declared as 50.41%.
Piotroski Scan : Piotroski score between 0-9 will be decided from the nine criteria to determine the company’s financial position. A stock is said to be a best stock if it holds piotroski score of 9. Piotroski score is determined under the three major categories:
- Leverage,Liquidity and source of funds
- Operating Efficiency
Piotroski score for Tata Communication Limites, Zenith Exports & Siyaram’s Silk Mills Limited are 9 which in turn reveals that these are best stocks with strong financial positions
Highest Dividend Yield : Helps to screen stocks based on dividend paid out on highest yield. Indiabulls Ventures Limited tops the Highest dividend yield shares with 10.22% dividend yield.
Stockflare helps to find the stocks for investor’s portfolio. Through hundreds of metrics for more than 40,000 stocks globally and every stock is rated. Stocks are rated on certain factors such as Market Value, investing style, Business Metrics and valuation. Checkout our review on stockflare fundamental screener
Market Value : Here stocks are rated as market value high to low, low to high, Price value high to low and viceversa as well star rating.
Investment Style : Investment style based on factors – good value,high growth, high quality, market sentiment, momentum, 52 week high-low.
Business metrics : Business metrics are decided by the factors such as company’s capitalization, profit, Growth, dividends paid to shareholders, cash & investments.
Valuatoin : Valuation is estimated with the factors like PE Ratio under 10x, Dividend yield over 4x, trading below book value, less than 1x sales, less than 7x operating profit.
The above figure shows the five star rated Indian stocks
Stocks which possess positive momentum i.e. trading above 10 day average are shown in the above figure
Let us see how Tata Power has been rated
Equity Boss is an investment discovery and analysis platform that makes investment decision simple for investors.Equity Boss gives grades after using a accurate indicator to know whether the stock outperforms the market consistently, backtested for years and proved to be good correlation, quantitative comparison among financials.
Stock ratings or EB Grades:
- Excellent – potential outperformer
- Good – market performers
- Poor – underperformers
Let us see Motherson sumi’s performance according to the Equity Boss in the following figures:
Equity Boss grade for Motherson Sumi
Equity Boss gives excellent for Motherson sumi after some actionable insights, backtesting and powerful screening.
Momentum of Motherson Sumi
The figure shows motherson sumi is in bullish mode according to EMA and also the price zone
Shari’ah of Motherson Sumi
From the above figure Motherson sumi made a YOY net profit of 143.35% for the financial year Mar 2014.
Hope you get useful insights about the popular fundamental screeners for Indian Markets. Next time do catch you up with interesting insights.