Tips & Tricks

Using a Stock Screener for the first time can seem daunting. This is why we advise first timers to start with our Screening Wizard, or try out some of the strategies we have already set up.

If you want to try your hand at building your unique strategy, you will need to understand the criteria you select as well as what figures to be using. We have prepared a short summary of the key fields with sample values to get you started.

Key Fields explained

Market Capitalisation - The market value of a company, calculated by taking the number of shares available to buy, and multiplying that by the company's current share price. To screen for bigger companies, try using a minimum Market Capitalisation of £350 million.

Turnover - Monies produced from sales of goods and services after trade discounts, VAT, etc. A healthy level of turnover is £500 million.

Operating Profit / Loss - A company's profit (or loss) after deducting the cost of running their business from the gross profits they have made. A healthy operating margin is £500 million.

P/E Ratio - A measure of how highly a company is valued, sometimes referred to as its rating. A very high P/E ratio can sometimes indicate a company that is overvalued, and therefore investors expect its share price to fall. Try searching for stocks with a P/E ratio that is no greater than 25.

PEG Ratio - A stock's P/E ratio divided by its yearly growth rate. Value investors look for a PEG ratio that is less than 1, indicating that the stock's P/E ratio will go down year on year. Try setting the maximum at 1.

Price/Sales Ratio - The share price as a ratio of revenue per share. As with the P/E ratio, a very high Price/Sales Ratio can sometimes indicate a company that is overvalued. As a starting point, try looking for companies that have a Price/Sales Ratio less than 1.

Beta - A measure of the volatility of a given company relative to the overall market. To look for more conservative companies, try setting the Beta value to a maximum of 1.

Dividend Yield - The percentage of the share price that a company pays out as dividends over a year. For investors who seek regular income, try looking for companies with a Dividend Yield of at least 8%.

Dividend Growth - The percentage change from the previous year in the dividend paid. As with Dividend Yield, if regular income is important then you should look for a consistent or growing level of dividend being paid. Try setting the minimum Dividend Growth at 1% to see companies who continue to pay higher dividends.

EPS Growth - EPS Growth shows the relative growth of a company's earnings (i.e. profits) over the last year. For the investor who is looking for quickly growing companies, try screening for a minimum EPS Growth of at least 10%.

Operating Margin - Operating Margin is profit as a percentage of sales. Healthy companies will have a strong enough Margin that they can still be profitable in lean times - i.e. if they have to slash their prices due to competitors in the market place, or costs rise. Try looking for companies with a minimum Operating Margin of 25%.

ROCE - Return on capital employed measures the return from invested and borrowed capital. A good value to start with is a minimum of 25%.

Broker Recommendation - A stockbroker's opinion of the investment quality of a company's shares, relative to its peers in the same sector and industry. To screen for only companies that Brokers are rating as 'buy', enter a minimum value of 6.

Other Information

• If you are screening historically by sector (for example, Banking) or by Index (for example, FTSE 100) you will be restricted to current sector or index constituents.
• The % Performance of your strategy is based on Total Shareholder Return - which simply means that it includes dividend payments. Note that FTSE indices do not include dividend payments.
• If you are screening on companies using the Financial Strength ratios this will produce constituents of the FTSE 350 exclusively.