Hall of Fame football coach Vince Lombardi once said, “It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one. What you got to have is faith and discipline when you’re not a winner.” While it is doubtful that he was referring to stock selection, Lombardi’s words hold very true in that context as well.
When times are good and portfolios are increasing in value, investors are likely to sit back and enjoy the ride—making few changes to their overall investment strategy. However, when facing a market environment such as we are in now, the temptation may be to start “tweaking” your portfolio. For some, that may include chasing after the “next big thing” that they hear about from a friend, read about in the Wall Street Journal, or see on Jim Cramer. However, having the discipline to stay with an investment strategy, through good times and bad, offers the better possibility of investing success.
This leads to the question: To which investment methodology should you adhere? AAII studies the investing methodologies of numerous investment gurus, all of whom follow disciplined systems to guide their actions. We track and report on these methodologies at the Stock Screens area of AAII.com (www.aaii.com/stockscreens).
To create, test, and track these various screens, AAII uses its own stock screening software—Stock Investor Pro. Stock screening services can be an effective tool in a disciplined approach to investing. Whether you are a short-term trader or longer-term “buy and hold” investor, a defined system can help you overcome your emotions and provide a consistent framework for making investment decisions.
Stock screening services allow you to filter thousands of stocks based on various criteria almost instantaneously to identify a more manageable group possessing similar qualities that merit further analysis.
The particular characteristics that investors seek vary depending upon individual investment philosophy, risk tolerances, and even timeframe. A value investor may look for financially sound, large-cap stocks with valuation multiples—price-earnings, price-to-book-value, etc.—that are well below historical, sector/industry, or market benchmarks, that are also exhibiting solid expected growth rates and that have seen expected earnings recently revised upward. On the other hand, a growth or momentum investor may seek out smaller stocks with strong earnings and/or sales growth and increasing price momentum.
Beyond identifying potential investment opportunities, most screening systems also encapsulate company and industry data that serve as a framework to investigate any investment tips or ideas that come your way in an organized, consistent fashion.
This product comparison examines an array of free and fee-based on-line stock screening and analysis tools. The comparison grid lists information about subscription costs, program features, and basic database content. Table 1 details the financial statement elements—provided from the income statement, balance sheet, and statement of cash flows—that are found on each service. Individual ratings and system strengths and weaknesses are disclosed in Table 2. Reviews of each on-line screening service begin on page 18.
Today, the vast majority of stock screening services are Web-based, with only a handful of disk-based applications still in existence. In general, there is usually a trade-off between Web-based services and their disk-based counterparts: disk-based applications tend to be more flexible and powerful. However, Web-based services such as the ones discussed in this comparison often are able to provide more timely data and more frequent data updates.
Before using a screening system to mimic a given stock selection methodology, it is important to fully understand the approach and be comfortable with its risk level and aware of the time commitment required to adequately implement and monitor it.
Furthermore, be sure that any screening service you select allows you to screen on your desired variables. The screening systems we have assembled for this comparison vary widely in their emphasis and their screening flexibility. When comparing stock screening services, critical factors for you to consider include:
Of the 10 screening services in this comparison, five are free. As screening services have evolved over time to offer deeper data and more powerful screening capabilities, more and more come with a price tag for enhanced features. Some fee-based services offer unique features that attract users and justify the cost. For example, Stockworm offers backtesting capabilities not found with other on-line screeners, while Validea.com tests the methodologies of several well-known investment gurus.
However, just because a service charges a fee does not mean that it is necessarily superior to free screeners. The MSN Money Deluxe Screener, a CI editor’s choice, is one of the most complete on-line screening services available today and it is free.
Screening dictates that the search process begin with a broad universe of companies. Better screening systems cover a wide range of companies. Some offer substantial coverage that includes foreign stocks and NASDAQ Bulletin Board companies, which may be an important consideration if you follow micro-cap companies.
Among the services in this comparison, the Value Line Investment Survey Online covers the smallest universe, tracking only the 1,700 Value Line companies. In contrast, the CNBC.com Stock Screener, SmartMoneySelect Stock Screener, and Stockworm Screener databases are all in excess of 10,000 companies.
Screening services also vary in the depth of information provided. Some services, such as Investors.com by Investor’s Business Daily and Validea.com, provide fewer data items for each company and instead depend on summary statistics such as ratings and rankings when providing background data on individual companies. Other services, such as MSN Money, provide both summary statistics and the raw data behind these numbers.
In considering a data service, look not only at the number of variables but also specifically at which statistics are provided. Investors.com, Morningstar.com and Value Line have proprietary ratings for company growth, profitability, financial health, and valuation, which may be more important for some investors than the depth or completeness of the database. The majority of services highlighted here primarily offer fundamental data for analysis and screening. However, many of the screening variables found with the Yahoo! Finance Java Stock Screener focus on intraday price movement.
An examination of both Table 1 and the comparison grid on pages 12-15 helps to give you a complete picture of the data emphasis of each service.
Custom data fields are ratios or figures you create on your own. Custom fields allow you to create ratios omitted by the program developers or enter valuation models that attempt to determine a fair market price for a stock. Once a user-defined variable is created, you can integrate it into your screening. This feature is more critical if your analysis tends to be specialized or specific.
Historically, the ability to create custom screening variables was left to disk-based screening applications. This feature is still fairly rare among Web-based services, although MSN Money’s Deluxe Screener, SmartMoneySelect, and Stockworm offer the ability to create custom fields and use them in screens.
GM = gross margin
NM = net margin
OM = operating margin
PM = profit margin
ROA = return on assets
ROE = return on equity
ROI = return on investment
P/E = price-earnings ratio
P/B = price-to-book-value ratio
P/S = price-to-sales ratio
P/CF = price-to-cash-flow ratio
P/FCF = price-to-free-cash-flow ratio
FCF/P = free-cash-flow-to-price ratio
PEG = P/E to earnings growth ratio
Company information consists of basic data such as the company’s Web address and phone number, so you can request financial statements or speak to the investor relations department for clarification. A basic company description is also usually given.
Other elements covered may include dividend reinvestment planinformation and industry grouping.
In the short term, expectations of future earnings and earnings growth drive stock prices. One measure of market expectations is the consensus earnings estimate. Consensus estimates are calculated by polling the analysts that track a given company. Services may also poll analysts to report their ratings on the overall attractiveness of stocks in an attempt to derive uniform consensus recommendations. These estimates and recommendations allow investors to directly gauge the expectations built into the stock price. Analyst forecasts of future quarterly and annual revenues are becoming increasingly popular and can also factor into short-term price movements.
Display of consensus buy/hold/sell recommendations is common as well, while some services attempt to differentiate themselves with proprietary ratings and valuations.
Changes to recommendations and earnings estimates can also move stock prices. Look for an indication of recent revisions or an earnings surprise, which may impact share price in the near future or, as research has shown, even for as long as a year.
Valuations try to measure the price attractiveness of a given stock. Some services provide numerical valuation ratings, while others provide price targets based on models or consensus price targets from analysts.
When using valuations, it is important to look beyond the actual valuation and determine the assumptions, rationale, and reasonableness behind the company’s rating or “fair price.” Some systems are qualitative in their approach, while others are quantitative. When available, the source of the valuation is listed.
The comparison grid indicates if a service provides a fundamental or technical rating/valuation. Since risk works in tandem with return, the valuation segment of the comparison grid also indicates if a risk rating or ranking measure is provided.
Ratios help you summarize financial statement data into a format that can be easily manipulated to compare year-to-year changes for a company, compare one company to another, or compare a company against sector, industry, index, or market benchmarks.
Leverage ratios examine the company’s use of debt in its financial structure. Effective use of debt can enhance shareholder profitability. However, it also increases the risk of saddling the company with an interest payment that must be made both in good times and bad. Common leverage ratios include debt to equity, liabilities as a percentage of assets, long-term debt as a percentage of capital, and interest coverage.
Liquidity ratios try to gauge a firm’s ability to meet its short-term obligations. While liquidity measures are of greater interest to creditors than equity investors, you may want to glance at these ratios if you are looking for high-yielding stocks, as they provide an indication of a company’s ability to sustain or increase its dividend payments. Typical liquidity ratios include the quick ratio, current ratio, and dividend payout ratio.
Profitability ratios benchmark company performance and highlight trends when examined over time, as well as indicate strong and weak performance when compared to other firms or when compared to sector or industry norms. Common profitability ratios include return on assets, return on equity , return on investment (invested capital) , gross margin (GM), operating margin (OM), and profit margin (PM).
Multiples form the cornerstone of many fundamental screens, especially those with a value slant. They relate the current stock price to a tangible company item such as earnings, sales, or book value per share. Multiples provide an indication of how the market values the company’s future prospects. Companies with brighter futures typically trade with higher multiples, but it is important to perform a complete company analysis. Look for a broad range of multiples covering items such as earnings, sales, book value, cash flow, and dividends. Historical ratios help indicate normal trading ranges and provide a base for comparison against current multiples. Therefore, historical average multiples are a key element when choosing a service.
Growth rates paint a picture of past company performance and provide an easy way to compare companies. Some investors seek out quickly growing firms with the hope that growth will continue to fuel the stock price. Five-year growth rates are normally presented for sales, earnings, and dividends. The more robust sites have a wider range of growth rates for various time periods and data fields.
The comparison grid indicates which growth rates are provided by each Web site along with the time period covered and their presentation format. The grid also details if benchmarks are provided to help form reasonable comparisons and screens.
The price and share data describe various market-related aspects of the company’s common stock. The extent and detail of historical price data as well as volume data is listed in the comparison grid.
If you focus on price momentum, look for enough price data to examine price movement or look for summary statistics such as relative strength.
Other measures such as MPT statistics (modern portfolio theory measures—alpha, beta, etc.), relative strength, and market capitalization are also detailed.
Short interest is the total number of shares of a particular stock that have been sold short by investors but have not yet been covered or closed out. It can be expressed as a percentage (number of shorted shares divided by the number of shares outstanding) or as a ratio (the number of shares sold short divided by average daily volume). It is becoming difficult to find databases that allow screening on short interest data, as the exchanges that track short interest have significantly increased the cost of the data.
Holdings and actions by insiders and institutions are also noted in the comparison grid.
Industry comparisons are useful in identifying stand-out firms. Multiples, growth rates, and ratios give you an added measure of information when analyzed in the context of industry norms. Look for services that provide industry statistics or at least allow you to screen for companies in a similar industry and then analyze those firms as a group. Some sites even allow you to screen for companies outperforming industry norms.
The raw financial statement data serves as the basis for the calculation of ratios, growth rates, and multiples. Financial statement data is useful for analyzing a single firm to identify trends, but it is more difficult to use directly in screening and ranking. Nevertheless, the better sites include enough information from the income statement, balance sheet, and cash flow statement to judge whether the ratios and growth rates properly reflect the company’s prospects. Some sites offer practically no raw data, while others provide a rich history. Table 1 details the financial statement information provided by each site. For example, by examining the year-by-year earnings of a firm, you can gain a feel for performance consistency and earnings trends, which growth rates often mask.
|Software||AOL Money & Finance||CNBC.com||Investors.com||Kiplinger.com||MarketWatch.com||Morningstar.com||MSN Money||NASDAQ.com||SharpScreen||SmartMoney.com||Stockworm||Validea.com||Value Line||ValuEngine||Yahoo! Finance||Zacks.com|
|Sales||5Qs, 5Ys||4Qs, 5Ys||8Qs||4Qs, 4Ys||4Qs, 10Ys||12Qs, 10Ys||10Qs, 4Ys||15Qs, 10Ys||16Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Cost of Sales||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Gross Income||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Selling & Administrative Expenses||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Research & Development Expenses||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||4Qs, 3Ys|
|Depreciation, Amortization||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 10Ys||15Qs, 10Ys||10Ys||4Qs, 3Ys||5Qs, 5Ys|
|Operating Income||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Interest Expense (Non-Operating)||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Other Non-Operating Income/Expenses||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Pretax Income||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Taxes||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Extraordinary Items||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Net Income Available to Common||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||4Qs, 10Ys||5Qs, 10Ys||4Qs, 5Ys||15Qs, 10Ys||10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|EPS Basic||8Qs, 7Ys||4Qs, 4Ys||5Qs, 10Ys||15Qs, 10Ys||5Qs, 5Ys|
|EPS Diluted||4Qs, 4Ys||4Qs, 10Ys||5Qs, 5Ys||10Q||15Qs, 10Ys||16Qs, 10Ys||5Qs, 5Ys||5Qs, 5Ys|
|Dividends||5Qs, 5Ys||4Qs, 5Ys||4Qs||4Qs, 4Ys||10Ys||5Qs, 5Ys||10Q||15Qs, 10Ys||20Qs, 10Ys||4Qs|
|Cash & Equivalents||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||3Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Accounts Receivable||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||3Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Inventory||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||3Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Total Current Assets||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 10Ys||4Qs, 4Ys||15Qs, 10Ys||3Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Net Plant & Equipment||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Investments (Long-Term)||5Qs, 5Ys||5Ys||5Qs, 5Ys||4Qs, 4Ys||4Qs, 3Ys||5Qs, 5Ys|
|Deferred Charges||5Qs, 5Ys||5Ys||4Qs, 4Ys||4Qs, 4Ys||4Qs, 3Ys||5Qs, 5Ys|
|Intangible Assets||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Total Long-Term Assets||4Qs, 4Ys||5Qs, 5Ys||15Qs, 10Ys|
|Total Assets||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs||4Qs, 4Ys||15Qs, 10Ys||3Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Accounts Payable||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Accrued Expenses||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||5Qs, 5Ys||5Qs, 5Ys|
|Notes Payable||4Qs, 4Ys||10Ys||5Qs, 5Ys||5Qs, 5Ys||5Qs, 5Ys|
|Current Portion of Long-Term Debt||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Total Current Liabilities||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 10Ys||4Qs, 4Ys||15Qs, 10Ys||3Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Long-Term Debt||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 10Ys||4Qs, 4Ys||15Qs, 10Ys||10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Total Liabilities||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Preferred Stock Equity||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||5Qs, 5Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Total Common Equity||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Retained Earnings||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Qs, 5Ys|
|Total Liabilities & Owner's Equity||5Qs, 5Ys||4Qs, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs||15Qs, 10Ys||5Qs, 5Ys||5Qs, 5Ys|
|Statement of Cash Flows|
|Net Cash From Operations||5Qs, 5Ys||1Q, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Ys|
|Capital Expenditures||5Qs, 5Ys||1Q, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Ys|
|Net Cash From Investing Activities||5Qs, 5Ys||1Q, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Ys|
|Net Cash From Financial Activities||5Qs, 5Ys||1Q, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Ys|
|Cash Flow (Net Change in Cash)||5Qs, 5Ys||1Q, 5Ys||4Qs, 4Ys||10Ys||5Qs, 5Ys||4Qs, 4Ys||15Qs, 10Ys||5Qs, 5Ys||4Qs, 3Ys||5Ys|
|Free Cash Flow||10Ys|
|Access to Full EDGAR Filings||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes||No||Yes|
Table 1 also indicates if the site provides direct access to financial statement data through company SEC filings.
The core feature of any screening system is its set of screening capabilities. The comparison grid includes several categories that describe the screening features provided by the services. When designing screen criteria, the system should allow you to screen against a constant value or another field. Some services even allow you to compare a value against industry and/or index norms. Services such as Yahoo’s Java-based screening tool and the SmartMoneySelect stock screener provide benchmark figures for fields to help you construct reasonable screening criteria.
One useful feature often lacking in Web-based screeners is tracking the number of companies that pass each criterion (each individual filter). With such functionality, users can identify the most stringent criteria in a screen should they wish to increase the overall number of passing companies. Among these services, only CBNC and Morningstar’s Premium Stock Screener track line-by-line screening results.
Most simple Web-based tools do not allow you to save a set of screening criteria for use in a later session. This will force you to recreate the entire screen every time you wish to apply it. However, all of the services in this comparison except Morningstar’s Free Stock Screener do allow you to save your custom screens for future use. In addition, the comparison grid indicates those services that offer their own predefined stock screens.
Most of the services list the companies passing a given screen in a table, some with links to additional data. A single company report will typically detail all of the information provided by the database for a company. Tabular reports allow you to compare specific data items for a group of companies. Less common, but still useful, is a report that lists summary statistics for the set of passing companies or for a particular sector or industry.
When working with fundamental screening services, data errors can and will exist. There is no such thing as a perfectly “clean” or error-free database. However, the wider the usage of the data, the more likely it is that data errors will be identified and quickly corrected.
Also, it is important to realize that stock screening is only the first step in the stock selection process. The companies passing any filtering process do not represent a “recommended” or “buy” list. It is important to perform due diligence to verify the financial strength of the passing companies and to identify those stocks that match your investing tolerances and constraints before committing your investment dollars. A good screening service is intended to help point you in the right direction.
|Service||Performance||Ease of Use||Price||Pros|
|CNBC.com||3||4||0||5||free||+Screen on indus & mkt norms||–No documentation for screener|
|www.cnbc.com||+Earnings surpr 14 qtrs./7 yrs.|
|+Unique view of institut’l own|
|Investors.com||3||2||4||5||$45.75+/mo.||+Tailored to CAN SLIM and IBD||–Can’t screen indus/sector/index|
|www.investors.com||or $499+/yr.||+Criteria selection guidance||–Company research for additional fee|
|–Research weak on fundamentals|
|Morningstar.com—Free||3||4||5||5||free||+Proprietary Stock Grades||–Can’t screen indus/sector/index|
|www.morningstar.com||+Detailed financials & Stock data||–Can’t save custom screen criteria|
|+Interesting predefined screens|
|Morningstar.com—Premium||4||5||5||4||$16.95/mo.||+Proprietary appraisals & styles|
|www.morningstar.com||or $159/yr.||+Detailed financials & Stock data|
|+Interactive & powerful module|
|MSN Money||4||5||5||5||free||+Diverse set of Screen factors||–Screen limited on Mac systems|
|www.investor.com||+Very flexible Screen system|
|+Detailed financials & valu’n rating|
|SmartMoney.com Select||4||5||3||5||$5.95+/mo.||+Interactive & powerful|
|www.smartmoney.com||or $59+/yr.||stock screen module|
|+Create custom variables|
|+custom company reports|
|Stockworm||4||3||5||3||$44.50/mo.||+In-depth documentation||–Screening is complex & takes time|
|www.stockworm.com||+’Blended’ ranking||–Lacks data for detailed co. analysis|
|+Create custom variables||–Solely fee-based|
|Validea.com||3||1||3||5||$29.95/mo.||+Guru ranking and Screen||–Lacks data for detailed co. analysis|
|www.validea.com||or $269.95/yr.||+Industry rankings on gurus||–Solely fee-based|
|+Model portfolios||–Unsaved screen criteria lost|
|Value Line||5||3||4||3||$598/yr.||+Access to Value Line reports||–Screen module takes time|
|www.valueline.com||+Detailed financials by Industry||–Limited screen universe|
|+Proprietary rankings & ratings|
|Yahoo! Finance||3||4||4||4||free||+Detailed financials & Stock data||–Can’t screen indus/sector/index|
|finance.yahoo.com||+Strong analyst consensus data|
|+Interactive Screen module|
|Zacks.com||3||4||5||5||free||+Detailed financials & Stock data||–Can’t screen indus/sector/index|
|www.zacks.com||+Time series data for analysis||–Subscribers only save custom screens|
|+Large collection of predefined screens||–Weak collection of consensus EPS data|
Typically, the more feature-rich the service is, the more “difficult” it is to learn how to operate it. The pure HTML-based services often offer little more than boxes to input minimum and maximum values for a given criterion. While these services are easy to use once, repeated screening and fine-tuning can be arduous since they typically lack the functionality to save custom screens. The individual program reviews and ratings in Table 2 address this issue, among others.
The CNBC Web site is a newcomer to this year’s comparison. The site has experienced a resurgence with a more robust collection of tools for individual investors, including one of the more advanced stock screeners available on the Web. The site has data from Reuters/Thomson Financial (which recently merged) and FirstCall. As mentioned, it also boasts a screening database of over 10,000 companies.
The screener has 82 data fields for screening, which places it in the middle of the pack among the other services in this comparison. When building a screen, users can specify whether a field is greater than/equal to, less than/equal to, or just equal to a chosen value. In addition, many fields allow you to specify whether a company is in the top or bottom 20th, 60th, or 80th percentile within its industry or the overall market. Another useful feature is the ability to see how many companies pass each line of criteria. Compared to other services discussed here, the CNBC screener offers extensive screening based on earnings revisions—you can screen based on the number of upward or downward earnings revisions over the last seven, 30, or 90 days. Also, you can save you custom screens for future use.
CNBC.com contains some of the most extensive quarterly earnings estimate data, with up to eight quarters. However, for the current fiscal year it only has annual estimates.
For comparative analysis, the site offers sector and industry averages for a variety of valuation, financial strength, turnover, and profitability measures. Earnings growth projections are also reported for industries, sectors, and the S&P 500.
The site provides detailed financial statement data (income statement, balance sheet, and cash flow statement) for each of the last four fiscal quarters and five fiscal years.
The institutional ownership data given is some of the more detailed found on the Internet today. Beyond offering percentage ownership statistics, there are turnover ratings for the top institutional shareholders, and breakdowns of institutional ownership by investment style (index, growth, yield, etc.) and geographic location.
The Investors.com Web site is operated by Investor’s Business Daily and offers screening and research tools focused on the CAN SLIM system of investing in common stocks. CAN SLIM is an acronym for seven common characteristics of winning stocks that William O’Neil identified prior to their big market moves. Investors.com offers a number of subscription-based tools, including a custom stock wizard, premium stock graphs, industry groups, and daily graphs for stocks, funds, and options.
The custom stock wizard offers access to 72 screening criteria strongly geared toward the CAN SLIM system. The screening tool uses eight categories of fields to filter its database of 7,000+ stocks, including IBD SmartSelect ratings, earnings, sales, industry and sector, shares and holdings, price and volume, margins and ratios, and general. SmartSelect ratings present the custom IBD ratings for such items as earnings per share, relative strength, profitability, accumulation/distribution, and industry strength. Additional unique criteria include a sponsorship rating filter that looks for companies that are owned by the better-performing mutual funds. Most of the criteria are geared toward seeking out growth-oriented stocks, which is the hallmark of the CAN SLIM approach.
However, screens can also consider price-earnings ratios, price-to-book ratios, and dividend yield. Suggested values for screening comparison are available wherever a light bulb icon is displayed. Clicking the light bulb will add a suggested value that follows the CAN SLIM method.
Screening results are displayed in a table with a fixed set of data columns. Users may save up to 10 screens for future use and the screening results can be exported to Excel. There is also a printer-friendly format. Links are provided to additional stock research through the Daily Graphs Online module, which is available at an additional cost.
Ideally, we would like to see additional company research available to subscribers of the custom screen wizard directly, without the need to also subscribe to the Daily Graphs module. Even the research available through Daily Graphs is not enough for in-depth company analysis beyond the scope of CAN SLIM.
Morningstar.com is a full-featured investment Web site providing portfolio tracking, market monitoring, stock and mutual fund screening and research, educational articles, and message boards. Visitors will find a good amount of free content at the site, while additional portfolio analysis, analyst research, and screening is available through the premium service for $16.95 per month.
Research on the site consists of stock screening coupled with research reports. Morningstar provides ratings and analyst reports on 2,000 stocks in over 100 industries. These reports are restricted to premium subscribers, but all users can screen for stocks with high grades.
Free screening covers 18 basic elements on a database of over 8,000 stocks, while the premium screening module covers over 470 criteria. Free screening is limited to performing comparisons against preset constant values, and users cannot save the screens for later use. There are also nine predefined screens, which are accessible to anyone. The premium screening tool has considerably more flexibility. Subscribers may screen against sector and index benchmarks and save their custom screens.
Comprehensive stock reports start with an overview snapshot and lead to a detailed company profile; financial statements and ratios; charting; stock price performance statistics; stock, industry, and market multiples; earnings estimates and analyst opinions; industry snapshot; insider and institutional shareholder activity; SEC filings; and news. The financial statements provide 10 years of income statement, cash flow, and balance sheet data in total dollar, per share, and even common size formats. The only knock on their data set is that it does not include detailed quarterly statements. The premium reports add details including Morningstar ratings and analyst research.
Morningstar.com is a well-organized Web site that provides a broad collection of tools for the stock investor. With the demise of the Reuters PowerScreener services, Morningstar’s premium screening module is once again a CI editor’s choice.
The MSN Money Web site offers a complete personal finance and investing resource. The investing section offers portfolio tracking, charts, news, and stock and mutual fund research. Access to articles, news, screens, company and mutual fund data, and portfolio tracking is free to all Internet users.
For many years, the research and screening module on MSN Money has been our benchmark for rating all other on-line services. As the comparison grid shows, the company coverage is both broad and deep. The site pulls together the content of Gradient Analytics, Reuters/Thomson Financial, Zacks and ComStock into a comprehensive company report. Navigation between the various modules is seamless and well planned.
Screening flexibility is well above average among Internet services—free or fee-based. The screening editor is an applet, or program, that we were able to run on Windows-based systems using both Internet Explorer and Netscape browsers. On Mac systems, however, MSN displays a more basic Web-based screening module, as the technology used to build the screener is only Windows-compatible. Furthermore, the site only supports Windows version 2000 or later (not Windows 98).
The Deluxe Screener has a database of over 8,000 companies and over 190 screening elements. Screening is interactive, with passing companies displayed as criteria are added. The criteria encompass a full spectrum of elements ranging from basic company information, such as market capitalization, to changes in analyst recommendations and proprietary stock ratings provided by Gradient Analytics. Criteria can be compared to constants, other fields or even other companies, and index or industry norms. It is even possible to create custom fields in the screening editor, a rare feature among on-line services. However, given its complexity, it is unfortunate that the screener does not indicate the number of companies passing each line of criteria. Furthermore, you can only display the top 200 results of any screen. However, you can save custom screens and can select from over 30 predefined stock screens.
A research wizard offers a step-by-step process of analyzing factors to consider when examining a stock, including its fundamentals, price history, valuations, catalysts, and competition. StockScouter ratings provide risk/reward recommendations for stocks. This proprietary quant-driven system provides fundamental, ownership, valuation, and technical grades. A separate graph displays the projected risk versus return profile of a given stock. MSN Money continues to be one of the strongest research and screening services on the Web and, for that reason, is once again a CI editor’s choice.
The SmartMoney Web site combines the editorial content of its magazine with a rich array of useful investment tools and research. The free portion of site covers the essentials—portfolio management, market news and updates, charting, company and mutual fund research, mutual fund screening, as well as educational articles on financial planning and investment analysis. However, the screening module is only available with a SmartMoneySelect subscription, which begins at $5.95 per month.
The site features a unique set of analytical tools that goes beyond the standard set of repackaged data found at most investment Web sites. For example, the charting module covers a wide range of technical and fundamental factors. The Smart?
MoneySelect Stock Screener has a database of over 10,000 NYSE, NASDAQ, and Amex stocks. Its screener is interactive and provides access to over 140 data variables.
Subscribers can compare screening criteria against fixed variables and, while the module does not handle comparisons against index and industry norms in the same way other services do, it does provide the values of various index norms that you can use for screening. Furthermore, the screener allows you to enter in custom formulas and screen using them.
Users can also save custom screens and there are 27 predefined screens from which to choose. Once you run a screen, you can create a spreadsheet and download a report on the passing companies with the data fields you want.
With the Market Map 1000, you can view 1,000 U.S. and international stocks all at the same time. The map is color-coded to show those companies whose price is up or down and the magnitude of the move. Stocks can also be viewed in a similar fashion for fundamental variables such as price-earnings ratio, estimated earnings per share, growth, and analyst rating. The map’s “visual screening” allows you to filter these 1,000 stocks using seven criteria. From the map, you can also link to charts, financial data, and news for each company.
Smart Money, by far, has the deepest set of financial statement data of any of the sites in this comparison—15 quarters and 10 years of income statement, cash flow statement, and balance sheet data.
The site also offers tools to compare companies and plot figures. Put all together, SmartMoney.com is one of the more complete sites for stock screening and company analysis and is a CI editor’s choice.
Stockworm, which is new to this year’s comparison, is a fee-based site offering sophisticated investors and traders stock valuation, advanced stock sorting and filtering, custom expressions, portfolio trading systems, and detailed portfolio management.
The Stockworm Web site allows users to either sort or filter its database of stocks. For those looking to perform “traditional” screening, you can establish a set of “rules” that will winnow the database down to only those companies meeting your investment criteria. Screening variables cover both fundamental and technical criteria. You can screen based on industry or market medians, as well as median values of user-defined stock groups. Users can also create their own custom expressions for screening. Be aware that most of the screener’s data fields are geared toward valuation, price momentum, technical indicators and trading signals, and earnings estimates.
Alternatively, you can use the system’s “sort” rules to rank a selected group of stocks. However, Stockworm performs ranking in a unique manner. Most screening services only allow you to sort a group of companies on a single data field, but Stockworm lets you create a sort strategy that blends multiple criteria and ranks the database in order by the “best fit.” For example, you can sort the universe of small-cap stocks to find the 25 most undervalued stocks based on a combination of Stockworm’s valuation models.
For those looking to act on the results of a stock screen, there are “autoinvestor strategies” that do just that. The autoinvestor automatically issues customized buy/sell/hold recommendations for a Stockworm portfolio on an ongoing basis. Stockworm even offers a simulation tool, which allows subscribers to backtest a strategy by managing a simulated portfolio in past markets using their custom strategy.
For individual stock analysis, Stockworm provides “fair value” estimations based on proprietary valuation models. You can also view a variety of company fundamentals along with industry and market medians for comparison.
The Stockworm Web site offers some of the most advanced screening capabilities found in this comparison, for those willing to pay a premium price for it. Ultimately, this site is most attractive to active investors or traders looking to test screening strategies and design trading systems based on those strategies.
The Validea Web site is unique among these services in that it places greater emphasis on its predefined screens than it does on its ability to allow users to create their own filters. It, too, is solely subscription-based.
The cornerstone of Validea.com is its collection of “guru” stock screens, which are interpretations of the stock-picking methodologies of such well-known investors as Benjamin Graham, William O’Neil and Peter Lynch. In all, the site tracks 11 guru strategies.
The Guru Stock Screener attempts to measure how a stock rates using Validea’s 11 guru screens. With the guru screener, users can identify companies passing a given number of guru screens with either strong or some interest or they can focus on only one screen and see the companies that match its criteria.
The Advanced Guru Stock Screener combines the screening capabilities of the “basic” guru screener with the ability to use your own fundamental criteria. Users can choose from 31 variables for screening using upper and lower limits for each filter. Once you have created your own screen, you can save it for future use.
The Top Industries Report highlights the industries that have the largest number of stocks passing the guru strategies. Industries are then ranked using Validea’s proprietary Industry Index, which identifies industries with both growth and value characteristics. The Validea Industry Growth and Value indexes can range from one to 99 (99 being the best). Users can then click on an individual industry name to see the top-ranked stocks within a specific industry according to the gurus.
Given the site’s overall focus on its guru screens, it is perhaps not surprising that its company-specific data is heavily geared toward the various guru screens. By entering a company ticker, users can see how well an individual stock matches the various guru criteria. Detailed analysis is also available that discusses how a stock is behaving within the context of the individual guru screens. The site only provides cursory fundamental company data.
For those wishing to leave the portfolio creation process up to someone else, Validea has created a collection of model portfolios based on the guru screens. There is also the biweekly Validea Hot List newsletter that is a model “consensus” portfolio of stocks that are highly rated by multiple guru screens.
The Validea Web site provides unique information for those who want to invest based upon the strategies of investment gurus. However, be prepared to look elsewhere if you wish to perform individual stock analysis, especially for the stocks that pass the guru screens, or if you want to screen well beyond the parameters of these gurus.
Value Line Investment Survey Online provides screening and data access to Value Line’s in-depth reports on common stocks. The service gives you access to the 1,700 companies tracked in the paper-based Value Line Investment Survey, making it the smallest database in the comparison. However, as the comparison grid reveals, the Investment Survey provides a rich database, including proprietary Value Line rankings. On-line screening provides access to a series of predefined screens and a wide range of data fields—over 260 in all; however, the interface is not as user-friendly as some of the other Web sites highlighted here. The amount of financial data available is relatively light, with only selected income statement and balance sheet items, and no cash flow statement data. Screening is limited to using upper and lower limits for a particular data field.
As a research tool, the program is above average when judged on the depth of its database; however, as mentioned earlier, it only covers 1,700 stocks. Those looking to screen for and analyze smaller stocks will need to seek out a different service.
The ability to access and print the paper-based Value Line reports is a valuable option. In addition, analyst write-ups, when available, provide insight into a company’s operations and future prospects. The screening tool is somewhat lacking, but overall the system remains a good general-purpose screening and research tool for larger, widely followed companies.
The Yahoo! Finance Web site is a comprehensive investing and personal finance portal that brings together a variety of free tools and is able to leverage its linking expertise to bring together a reasonable collection of news and research data.
Yahoo! Finance’s stock screening tool is an interactive Java-based module that allows users to construct screens from a list of over 140 data variables, over half of which are geared toward price activity. However, the site still offers more fundamental screening variables than many of the sites in this comparison. One nice feature the screener provides is S&P 500, Dow Jones industrial average, and NASDAQ 100 averages for each piece of criteria to help you when deciding on screening values. The site also offers 19 predefined stock screens.
For company analysis, Yahoo! Finance offers broad news and analysis from such sources as The Wall Street Journal Online, Investor’s Business Daily, Associated Press, Reuters, Motley Fool, TheStreet.com, BusinessWeek, CBNC, MarketWatch, Business Wire, FT.com, Fortune, and SmartMoney.com. Fundamental stock data comes from Hemscott, Capital IQ, EDGAR Online, Vickers, and Thomson. There are four quarters but only three years of detailed financial statement data. The site also lacks comparative historical, industry or market data.
Beyond offering screening, comprehensive investment news and data, Yahoo! Finance also offers some of the most popular investing message boards on the Internet. Not only does this site have boards for over 8,000 stocks, but it also boasts boards devoted to brokerage firms, IPOs, options, and short-term trading. The message boards in the stock area are divided into industry groups such as basic materials, energy, financial, and utilities.
Overall, the Yahoo! Finance Web site’s strength lies in its ability to pull together news and analysis from a broad collection of sources. It also offers company-specific data and screening capabilities that would satisfy the average investor.
Zacks.com offers a wide range of investment information and screening options. Users have access to daily E-mail alerts covering items such as analysts’ changes, detailed company financials, brokerage research reports, predefined screens, and custom screening. Much of the site is free, including the stock screener. However, access to Zacks premium research—recommendations, industry rankings, analyst reports, etc.—does require a subscription, which begins at $24.95 a month.
Zacks offers 24 free predefined screens along with nine Profit Tracks screens for Premium subscribers. The predefined screener allows you to further break down the database into market-cap ranges. Profit Tracks are backtested screens that have performed well in the past and are expected to continue to do so going forward. Subscribers can access the current list of companies passing the Profit Track screens as well as performance data.
Custom screening offers over 130 variables covering the usual range of screening options, including brokerage recommendations, earnings estimates and revisions. Premium subscribers can also screen based on Zacks rankings and recommendations. Screening is only based on absolute values for a given field. Premium subscribers can save custom screens for later use.
Zacks provides detailed reports on a company’s financials, ratios, industry comparisons, consensus earnings estimates, and analyst recommendations. Some fundamental ratios also have time series for the last three quarters. Premium subscribers have access to additional data, including detailed analyst reports (when available).
Overall, Zacks offers a wide range of useful tools for those with a stock portfolio. Screening and research are above average, although one would expect more detailed consensus earnings data given Zacks’ historical mission.