Fundamental Stock Screener

A fundamental stock screener helps investors filter and sort through companies based on their financial metrics. By using this stock screener, investors can identify stocks based on various fundamental and technical indicators. For example, if an investor is looking for stocks with low P/E ratios, they can use a stock screener to identify companies with the desired ratio.

Moreover, the fundamental stock screener can help investors perform in-depth research on individual stocks, allowing them to make informed investment decisions. Investors can compare a company's financial performance and metrics against other companies in the same industry, identify trends, and track the stock's historical performance.

What Is a Fundamental Stock Screener? 

When investing in the stock market, an investment strategy is vital to profit from and avoid losing the investment value. Investors analyse their capital amount, investment horizon (period), current market trend, volatility, etc., to curate an investment strategy based on which they explore the stocks to determine if they are investment worthy. 

Investors execute stock analysis in two forms: Fundamental Analysis and Technical Analysis. While fundamental analysis predicts the future price movement based on the company fundamentals, technical analysis uses past market data such as price and volume to predict future price outcomes. 

A screener fundamental analysis allows investors to filter thousands of Indian stocks and curate a list of stocks that match the entered fundamental variables by the investors. The fundamental screener renders results by analysing the fundamentals of all the companies listed on the stock exchanges without studying the affecting technical indicators. 

The results that the screener fundamental analysis delivers as a list of stocks are based on fundamental factors such as companies’ annual or quarterly revenue, cash flow, market capitalisation, etc. 


How To Analyse Fundamental Stock Screener?

A fundamental analysis screener uses filters and analyses stocks based on fundamental factors such as financial statements, market trends, and industry comparisons. Here are the steps to examine stocks using the fundamental analysis screener: 

1.    Define Your Criteria: It is foremost to define the criteria you want to use for the fundamental stock screening. Some common criteria include the P/E ratio, P/B ratio, EPS growth, dividend yield, and market capitalisation.

2.    Result Analysation: Once you have defined the criteria and entered the fundamental variables of your investment strategy, you must review the list of stocks generated by the screener. You can review the list of stocks through trends and patterns, such as high P/E ratios or low dividend yields.

3.    Individual Research: Once the fundamental screener for individual stocks has delivered a stocks list, you must conduct further analysis to research the stocks individually. The analysis will provide a deeper understanding of the company and its financial performance and help you choose the best stock to allocate your capital. 

4.    Make A Decision: Once you have analysed all the stocks in the list provided by the fundamental stock screener, decide whether to invest in a single stock or allocate your capital to multiple stocks.


What Does A Fundamental Stock Screener Indicate?

Investors can use the stock screener for fundamental analysis to identify undervalued or overvalued companies based on their financial ratios by sorting them through earnings and revenue growth. It can also help investors identify companies with strong financial fundamentals, such as consistent earnings growth, high return on equity, and low debt-to-equity ratios. 

Additionally, investors can use the screener to filter companies based on their industry, sector, or market capitalisation. However, there are numerous parameters that the screener fundamental analysis indicates. They are mentioned below in detail: 

●    Market Capitalisation
Commonly known as market cap measures a company’s total market value based on outstanding shares. It is calculated by multiplying the total number of outstanding shares by the current market price of each share. Investors use market capitalisation to compare companies within the same sector. 

In case the screener delivers results containing two companies within the same sector, you can compare them based on their market capitalisation. Generally, investors consider a company with a higher market capitalisation to be more stable and with a high-profit potential than companies with a lower market capitalisation. 

●    Revenue
Also known as  a company’s turnover, is the total amount of money a company earns from its business operations in a fiscal year. It is the income that a company generates from selling its products or services to its customers. 

Revenue is also a key metric indicated by the fundamental stock screener, as it provides valuable insights into how the company is performing when it comes to selling its products and services. Although, revenue is not the same as the profits made by a company, as it is the total amount of money the business generates before subtracting the total expenses. Revenue is an important metric for investors to compare companies, as it calculates ratios such as gross profit margin, operating profit margin, and net profit margin.

●    Cash Flow
An important metric indicated by the screener fundamental analysis, it allows investors to analyse the company and predict its stock’s future price direction. Cash flow is the total amount of cash and cash equivalents that comes and goes out of a company. 

Cash received is called inflow, while money spent on expenses is outflow. Investors consider cash flow critical as it is the one factor that represents a company’s ability to create value for the shareholders. Hence, investors prefer to invest in a company with a higher cash flow. 

●    Debt
Every business needs constant capital to either cover current liabilities or spend on expanding the business. Most entrepreneurs avail of business loans to raise adequate capital for which they are legally bound for repayment. Furthermore, some listed companies also raise funds by issuing debt instruments such as bonds, where they are legally liable to pay regular interest and repay the principal to the holders.

Stock screener and fundamental analysis done through a fundamental share screener indicate the debt portion of a company. Investors prefer to invest in a company that has lower debt. 

●    Institutional Investment
Big fund houses such as mutual fund houses or private equity investment firms invest in stocks of good companies to provide returns to their investors. A screener fundamental analysis indicates the percentage of institutional investments in the company made by big financial entities such as banks and hedge funds. 

Investors prefer to invest in companies that have a high percentage of institutional investments as such big financial entities only invest in companies after extensive analysis and only if they are safe to invest. 


What Are Some Examples Of Fundamental Stock Screeners?

There are numerous types of fundamental stock screeners to match the variables included in the investment strategy of an investor. Here are some examples: 

●    Stocks From Nifty 50 Screener: Nifty 50 is an Indian stock market index representing the weighted average of India’s top 50 largest companies listed on the National Stock Exchange. The stock screener analyses and filters these 50 companies to compile a short list of companies rated five stars with the highest profit-making potential based on their fundamentals. 

●    High Growth Stocks Screener: High growth stocks are those that are expected to grow earnings and sales faster than other companies. A high-growth stock screener identifies such companies by analysing the fundamentals of all the companies listed on the stock exchanges. Using the list compiled by the screener, investors can invest in high-growth companies to make quick profits. 

●    Undervalued Small Cap Screener: Small cap companies have a small market capitalisation, and the share price is generally below Rs 100. Investors looking to take on a high risk for a high reward investment in such companies. However, most investors want to explore such small-cap stocks to see if they are unvalued, positioning them to increase in price in the short term. Such a screener filters and creates a list of undervalued small-cap stocks. 

A screener fundamental analysis is a powerful tool to filter and analyse stocks based on a wide range of fundamental indicators. It helps investors identify potential investment opportunities based on specific investment criteria and provides a way to analyse a company's financial health and performance. However, you must do thorough research and analysis of individual companies before making any investment decisions. 

It includes examining a company's financial statements, earnings reports, analyst reports, and industry trends. Hence, you can use the screener as a good starting point to narrow your search based on company fundamentals and conduct further research to make informed investment decisions. 

Frequently Asked Questions

How do you screen fundamentally strong stocks? 

Screening fundamentally strong stocks is vital for ensuring good profits. You can use a fundamental screener to screen stocks based on their fundamental variables. 

Which indicator is best for fundamental analysis? 

Numerous indicators are included in fundamental analysis, such as earnings, revenue, dividends, and market capitalisation. However, choosing an indicator at par with your created investment strategy is essential.

Which is the most powerful indicator?  

Most investors see Earnings Per Share (EPS) as the most powerful indicator. However, the decision depends on the investment strategy created by the investors which is an indicator that provides the best insight into the company fundamentals.  

Which is the most effective indicator? 

Every fundamental indicator provides insight into the company’s performance based on which the investors can predict the future stock price direction. Since numerous indicators can match a specific investment strategy, you must investigate each and determine the most effective one.