Creating Basic Custom Screens

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Stock screening is the process of applying a set of quantifiable criteria to a universe of stocks to isolate those stocks that match the criteria. The way programs such as Stock Investor Pro perform this task is by using filters—a collection of comparison statements that are applied to the entire universe of stocks or to a subset such as a portfolio. Arguably the most difficult task for new users of Stock Investor Pro is setting up a custom stock screen with their own filters. This issue of Stock Investor News provides an in-depth discussion of creating custom stock screens using the Screen Editor and explores the features and functionalities you have at your disposal.

Screen Editor Overview

Users create new stock screens or edit existing screens using the Screen Editor. To get to the Screen Editor, select Tools from the main menu and then select Screen Editor (Tools – Screen Editor). You can also select the funnel icon from the toolbar or use the Alt and S shortcut keys (Alt + S). Following any of these methods will launch the Screen Editor window. At the top of the Screen Editor window, next to Name:, is the pull-down menu where you will find the preinstalled screens (those screens marked with an asterisk) as well as those that you have created yourself and saved. Selecting a screen from this menu will load the criteria that make up the screen into the Screen Editor so that you can either modify the criteria or apply the screen.

If a screen has already been applied to the active set of companies, its name will appear in the dialog box and its criteria will be visible in the Screen Editor. To the right of the screen name pull-down menu is the New button. Clicking on this button will clear any existing criteria from the Screen Editor. If you have created a new screen or have been editing an existing screen, you will be prompted to save the screen before it is cleared away.

The Description window displays a brief description of a saved screen if one was entered at the time it was saved. Below the description area you will find the actual “editor,” which looks like the cells of a spreadsheet and consists of eight columns. It is here that you enter the comparison statements that make up a screen criterion. Below this area are 12 buttons: Insert, Duplicate, Move Up, Move Down, Delete, Save, Delete All, Save As, Print, Close, How Many and Apply.

  • The Insert button is used when you wish to insert a new line of criteria in between two lines within the Screen Editor. To insert a line, click in the line of criteria below where you want to insert a new line and press Insert.
  • The Duplicate feature allows you to make an exact copy of a line of criteria that already exists in the screen. This is useful if you wish to create a series of statements where only a portion is altered. Highlight the line you wish to duplicate and click on the Duplicate button. The new line will appear as the last line of the screen.
  • To move a criterion’s position up or down in the editor, you can use the Move Up and/or Move Down buttons. As you may guess, the Move Up function moves a selected criterion line up one line at a time. Click on the criterion you wish to move up and click on the Move Up button until the line is in its desired location. Conversely, the Move Down feature allows you to move a selected line within a screen down one line at a time. Again, click within the criterion you wish to move down and click on the Move Down button until it is where you want it.
  • If you wish to delete a single criterion from a screen, use the Delete button. Click on the line you wish to delete and then click on the Delete button. Clicking on the Delete All button will delete all of the criteria in the screen you are working on.
  • The Print button allows you to print out the criteria of the current screen.
  • The next two buttons create some confusion among users: How Many and Apply. Clicking the How Many button simply tells you how many companies from the active set (the entire portfolio or the contents of a loaded portfolio) pass the current screen. The How Many button does not load the results of the screen into the Stock Notebook. To actually view the passing companies in the Stock Notebook, you must click on the Apply button.
  • After creating or modifying a screen, you have two options for saving it—Save or Save As. Clicking on the Save As button allows you to name the screen you are working on and, if you wish, provide a brief description of it. The Save function saves the screen you are working on under its current name, if it is an existing screen (has already been saved), or prompts you to name the screen before saving it.

Creating a Stock Screen

Let’s walk through the creation of a simple screen that makes use of some of the unique features of Stock Investor Pro. This screen excludes companies whose stock trades as American depositary receipts (ADRs, shares of foreign stock traded on American exchanges), requires an annualized growth rate in earnings per share from continuing operations over the last five fiscal years of at least 10%, requires a price-earnings ratio that is less than or equal to half the median price-earnings ratio for the company’s industry, and requires that a company’s relative price strength over the last 26 weeks rank in the top 90% of the entire stock universe.

To begin, you will need to open the Screen Editor using one of the methods outlined earlier. If you are already in the Screen Editor, click on the New button at the top of the editor window to reset the editor. You are now ready to enter the first line of criteria.

In the Screen Editor, click on the first open cell (box) in the Field column. This will bring up a list of the data categories found in the program. Locate the Company Information category and click on the + sign next to Company Information. This will expand the category to show all the data elements within it. Scroll down the list until you find ADR/ADS Stock (the fields are in alphabetical order), and double-click on it. Next, click in the first cell in the Operator column and double-click on Is False. The first line of criteria is now complete.

To begin the second line of criteria, click in the next cell down in the Field column. Scroll down the list of data categories until you come to Growth Rates. Click on the + next to Growth Rates, scroll down to EPS Cont-Growth 5yr, and double-click on it. Moving to the right, click in the cell in the Operator column and double-click on >= (the greater than or equal to sign). To complete this line of criteria, click in the cell of the Compare To column in this row (skip the Factor column, which we will discuss later). Click on the cell again so that you see a blinking cursor instead of the drop-down box, and type in the number 10. Since the program recognizes growth rates as percentages, you do not need to enter the % sign (doing so would render the screen invalid).

For the third line of criteria, click in the next cell down in the Field column. Scroll down the list of data categories until you come to Multiples. Click on the + next to Multiples, scroll down to PE, and double-click on it. Moving to the right, click in the cell in the Operator column and double-click on <= (the less than or equal to sign). For this criterion, we make use of the Factor column next: In order to screen for companies with a PE that is less than half (50%) of their industry’s PE, click in the third cell of the Factor column and type in 0.5. (A more detailed discussion of using factors is presented later in this article.) To complete this line of criteria, click in the cell of the Compare To column or in this row. Click on the + next to Medians and double-click on Industry.

To create the last line of criteria for this screen, begin by clicking in the fourth cell of the Field column. Click on the + next to % Rank, scroll down to % Rank-Rel Strength 26 week and double-click on it. Moving to the right, click in the cell in the Operator column and double-click on >= (greater than or equal to). Finally, click in the cell of the Compare To column of this row (skip the Factor column). Click on the cell again so that you see a blinking cursor and type in 90. The sample screen is now complete. To save this screen, click on the Save button at the bottom of the Screen Editor. You are prompted to name the screen and, if you want, to provide a brief description for it. Once you have done this, click on Ok and you will return to the Screen Editor.

Once you have created and saved a screen, it is time to apply it to the entire database. To make sure that you have no portfolios loaded, look to see that None appears in the Portfolio pull-down menu on the toolbar. The top right of the Screen Editor also tells you whether a portfolio has been loaded.

To apply our sample screen to the database, click on the Apply button at the bottom right of the Screen Editor. Depending on your system speed, it may take a few moments for the screen to run. Dialogue boxes appear letting you know the screen is running and that the companies that pass the screen are being loaded into the Stock Notebook. Also as the screen is running, numbers appear in the Count On column in each line of screening criteria. This shows you the number of companies that passed each individual criterion. For example, the criterion count for the sample screen shows that 9,555 companies passed the ADR/ADS Stock Is False filter as of December 2, 2011. Knowing how many stocks pass a specific filter is useful, especially when you create a screen that does not generate any passing companies. You are able to see which criteria are most restrictive so that you can decide whether to relax the constraints to allow (more) companies to pass.

When the screen is finished running, a number will appear in the box next to the How Many button—this is the total number of companies that passed the entire screen. As of December 2, 2011, the number of companies passing the sample screen is 31. To view the results of the screen, you can either close or minimize the Screen Editor to view the Stock Notebook.

Finding the Data Category of a Field

One of the most common questions we receive from users is how to find out which data category a particular data field resides in when creating a screen. This information is available in the Help System: Click on Help from the main menu and select Contents and Index (Help – Contents and Index). From the left side of the window, select the Contents tab and double-click on Field Definitions.

As an example, to locate the data category for PE, double-click on Alphabetical Listing of Field Definitions and again on the “P” (for PE). This will show in alphabetical order all of the data field names in the program that start with the letter “P.” Double-click on PE from the list to bring up its field definition window. The field definition window tells us that the PE field is in the Multiples data category. Furthermore, we see that the value is displayed in decimal format and that percent rank and industry/sector medians are calculated for the field. You are also given a definition of the ratio.

Using Factors

When you are creating a screen, there are times when it may be useful to compare a variable against a fraction or multiple of another variable. This is done by using the Factor column in the Screen Editor.

In our example, the filter is looking for companies whose current dividend yield is greater than or equal to 150% of (1.5 times) the median yield for the firm’s industry. Whatever value is in the Factor cell is multiplied by the field or value entered in the Compare To cell. It is important not to enter values that are intended for the Compare To column into the Factor column. Doing so will create an invalid screen, as you are, in essence, multiplying the value in the Factor column by a null value. If you create a screen and are not able to Apply it, chances are you have entered a value in the Factor column that belongs in the Compare To column.

The Percentile Rank Feature

In the sample screen we created earlier, we used the percentile rank feature. Percentile ranks are useful when you want to see how a company’s results in a certain area, in this case 26-week relative strength, compare with those of the entire universe of companies. In this sample screen, we were interested in those companies with relative strength in the top 10% of the database. This translates into the 90th percentile or better; thus, 90 was entered in the Compare To cell for the relative strength criterion.

No matter what data field you are applying percentile rank to, the higher the value, the higher the percentile rank. A stock with a price-earnings ratio of 100 will have a higher number in the % Rank-PE field than a stock with a price-earnings ratio of 10.

Medians & Averages

You can compare a field to a sector, industry, or universal median as well as to the average for the entire database. Medians are the midpoint values of a data set—there is the same number of values above and below the median value. This is different from an average where the values of a numbered set are added together and then divided by the number of values. Medians are often preferred for financial values as they are not skewed by outliers—extreme data points that can impact the average value.

Sector and industry medians are the median values for those companies in a specific sector or industry group. Only selected data fields in the program offer industry and sector medians; you can find out if medians are calculated for a data point by referring to the field’s data definition in the Help System. Most data fields can be screened using the universal average or median, which is the average or median value, respectively, for all companies in the database. The obvious exceptions are date fields and text fields, such as company name.