Fundamental Criteria

Last modified 10:26, 5 Nov 2012

Fundamental Criteria

mrktscan_srchcrtyp_funexp.gifOver thirty Fundamental scan criteria types are available for use in ValueGain scans.

The Fundamental scan criteria allows users to identify stocks whose fundamental performance meets the criteria defined in a scan.

Any number of different fundamental criteria can be included in each scan, and the criteria's parameters can be set in a wide number of different ways.

Note that the Fundamental Experts scan criteria also relies heavily on fundamental criteria, but most of the parameters are predefined according to the objectives of each Expert. For more information, go to the Fundamental Experts Scan Criteria topic.

Available Fundamental Criteria

Click on the blue Fundamental bar in the Available Criteria list to open the list of Fundamental data types available as scan criteria.

Select a Fundamental criteria from the Available Criteria list and click the Add button.

A new line containing the selected criteria and its default parameters will be added to the Selected Criteria list. The new row will be highlighted and the Search Criteria Parameters dialog for it, containing its default settings, will be open in the lower right of the work page.

The default Parameters can now be edited.

As the values and settings are changed in the parameters entry boxes, the plain English description in the Parameters section of the Selected Criteria list will be updated.

When all criteria is defined, click the save icon butn_save.gif in the Scanner function bar to save the new setting for the scan.

Criteria Definition

Select a Fundamental criteria from the Available Criteria list and click the Add button.

This will add the criteria to the Selected Criteria list, and open the Search Criteria Parameters dialog for it in the lower right of the work page.

The following dialog is used to set all of the Fundamental scan criteria:

mrktscan_funcrit_exmpl1.gif

Criteria Description Table

All Selected Criteria, and their current Parameters settings, will be listed in a table at the top of the dialog.

The Criteria type and name will appear in the Selected Criteria column, and a 'plain English' description of the current Parameters settings will follow, see above.

As with other market scans, more than one criteria can be added, or the scan can be run using a single criteria.

To delete a Selected Criteria from the table, select the criteria's row and click the Remove button located below the Available Criteria list.

To Edit an existing Selected Criteria, select the criteria's row. When it is highlighted in dark blue, its parameters will appear in the Search Criteria Parameters section, and its values can be edited.

Search Criteria Parameters

When a criteria is initially added to the Selected Criteria table, its default settings will populate the entry boxes in the Search Criteria Parameters section. Users can change the values and settings and then save them in the scan.

Current Value Criteria

Some of the Fundamental scan criteria types can use fundamental data that is calculated using current market values. This means that the ratios are calculated using the reported financial data and the current market price data to produce the ratio's value.

For these criteria types, users have the option of using the ratio calculated using Current Values, or using reported values.

For the criteria types that only have reported Fundamental values this option is not available.

Go to the Available Fundamental Criteria Type list for Current Data and Reported Data to see which group a particular criteria belongs to.

Operator

mrktscan_funcrit_operator.gifAn Operator setting will act to qualify the value of the selected fundamental data (the primary value) with reference to the Second Value defined by the user in the next section of this dialog.

There are three different types of Operators:

  • Is Less Than /Equal To/ Greater Than (and the possible combinations) the Second Value
  • Has Increased / Decreased relative to the Second Value
  • Is Any Value in relation to the Second Value (meaning, in effect, that the Operator function is turned off)
Second Value

Then the user nominates the Second Value to compare against the selected fundamental data (the primary value) using the Operator.

There are two value types available:

Numeric Value...

When users are familiar with the benchmarks for a particular Fundamental Ratio in a particular industry, a numeric value can be set to be used by the Operator to scan the fundamental data.

For example, if a market's average P/E Ratio is 15, a scan can be set to find all companies with a 'P/E Ratio Greater Than or Equal To 15'.

Sector Average

The Fundamental Data supplied by HUBB also includes Sector data, specifically Sector Averages.

Sector Averages are displayed in the Ratio Analysis SSA, Reported Data SSA, and other Fundamental data work pages.

Selecting Sector Average allows each company's fundamental data to be compared, using the selected Operator, to the Sector Average for the same fundamental data.

mrktscan_funcrit_2nvalu.gif

The criteria can be defined as being within a specified percentage.

Qualifiers

The result using either value type can be further qualified by the following additional parameters:

On Average

This will average the score over the past number of years set in the Over the Past setting and then apply the criteria.

Every Year

This requires that the criteria be met for every year for the period that is set in the Over the Past setting.

Over the Past

Effectively this means (assuming it is the only qualifier selected) that the scan be detect stocks for which the criteria was "met in any year" in the specified range. For example, setting the Over the Past setting to 4 Years means if at any time in the past four years the criteria was met, then that stock will be returned as a scan result.

Include Negative Values

The default is to ignore negative values.

In some instances, users may want to scan for negative values. For example, this setting could be used in conjunction with the previous setting to identify companies that had negative income over a number of years.

Note - If all of these check-boxes are unchecked, the scan will be performed on current data only.

Available Fundamental Criteria Types - Current Data

The following Fundamental scan criteria types use fundamental data that can be calculated using current market values.

For these criteria types an additional parameter is available:

mrktscan_funcrit_curntvalu.gif

The Use current value parameter is selected by default.

When checked on, the criteria will use fundamental data that is calculated using the most recent market price.

When Use current value is un-checked, the criteria will use the fundamental data values calculated at the time when each company's financial data were last reported.

The following criteria has the Use current value parameter:

  • Dividend Yield
  • Earnings Yield
  • Market Cap
  • PEG Ratio
  • Price/Book Value Ratio
  • Price/Cash Flow Ratio
  • Price/Earning Ratio

Available Fundamental Criteria Types - Reported Data

The following Fundamental scan criteria types use reported fundamental data, the Use current value parameter is disabled:

mrktscan_funcrit_histvalu.gif

Reported fundamental data are the results of ratios calculated when each company's financial data is reported. It is not referenced to the current stock price.

The following criteria types are available:

  • Beta
  • CapEx/Sales
  • CapEx/Total Assets
  • Current Ratio
  • Debt/Assets Ratio
  • Debt/Equity Ratio
  • Dividend Growth
  • Dividend Payout Ratio
  • Earnings Growth
  • Gross Profit Margin
  • Inventory Turnover
  • Net Income
  • Net Margin Growth
  • Net Sales/Revenues
  • Net Sales/Revenues Growth
  • Operating Profit Margin
  • Price/Sales Ratio
  • Quick Ratio
  • Return on Assets
  • Return on Equity
  • Return on Invested Capital
  • Total Investment Return
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