Build Powerful Stock Screeners
Stock screeners for value investors
Investing in stocks can feel overwhelming with thousands of companies to choose from. That’s where stock screeners come in handy — they help you filter out the noise and find stocks that meet your specific criteria. In this post, I’ll walk you through how to build effective stock screeners using Morningstar and TipRanks, two popular tools, explaining every filter in easy terms.
Morningstar Screener: Focus on Value and Growth
Morningstar provides tons of financial data and analyst insights. We created two screeners: one for value stocks (bargains with solid fundamentals) and one for growth stocks (companies expected to grow faster).
Key Filters and What They Mean:
| Filter | What It Means in Simple Terms |
|---|---|
| Price / Earnings (P/E) | How much you pay for $1 of the company’s earnings. Lower is usually cheaper. |
| Price / Book Value (P/B) | Price compared to the company’s net assets. Low can mean undervalued. |
| Price / Sales (P/S) | Price compared to sales revenue. Lower can mean better value. |
| Free Cash Flow Yield (%) | How much cash the company generates relative to its price. Higher means better cash flow returns. |
| Return on Equity (ROE) | How efficiently a company uses your invested money to generate profit. Higher is better. |
| Dividend Yield (%) | Percentage of share price paid back as dividends. Good for income seekers. |
| PEG Ratio | P/E ratio adjusted for expected growth. Lower means you pay less for growth. |
| Economic Moat | How strong the company’s competitive advantage is. Wider moats mean the company can defend profits better. |
| Capital Allocation | How well management invests the company’s money. Exemplary means smart use of funds. |
| Fair Value Uncertainty | How confident analysts are about the stock’s fair price. Low uncertainty is preferable. |
| Morningstar Rating | Overall quality score based on multiple factors. 5 stars is best. |
What You Get:
- Value stocks tend to have lower P/E, P/B, and P/S ratios, solid cash flow, decent dividends, and a narrow or wide moat.
- Growth stocks may have higher valuations but score high on return metrics and have strong competitive advantages.
Here’s the complete updated table including Price/Earnings (P/E) and Price/Book Value (P/B) filters for both screeners:
| Filter | Value Stocks Screener | Growth Stocks Screener |
|---|---|---|
| Price/Earnings (P/E) | < 18 | < 30 |
| Price/Book Value (P/B) | < 2 | Not required |
| Price/Sales (P/S) | < 4 | < 10 |
| Free Cash Flow (FCF) | > 0 (positive cash flow) | > 0 (positive cash flow) |
| Free Cash Flow Yield (%) | > 4% | Positive or no filter |
| Return on Assets (Normalized) | > 4% | > 8% |
| Return on Equity (Normalized) | > 10% | > 15% |
| Return on Invested Capital (Normalized) | > 8% | > 12% |
| Dividend Yield (%) | > 2% | Not required |
| Total Yield (%) | Optional (>3%) | Optional |
| Price/Fair Value | < 0.85 | < 1.2 |
| Morningstar Rating for Stocks | 3 or 4 Stars | ≥ 3 Stars |
| Economic Moat | Wide or Narrow | Wide only |
| Fair Value Uncertainty | Low or Medium | Medium |
| Performance – Return (%) | 1-Year Return > -5% | 3-Year Annualized Return > 15% |
| Capital Allocation | Optional (Exemplary or Standard) | Optional (Exemplary or Standard) |
TipRanks Screener: Analyst Sentiment Meets Numbers
TipRanks is great for blending analyst recommendations, insider activity, and financial data. Here’s how we set it up:
Key Filters and Their Meaning:
| Filter | Explanation in Simple Terms |
|---|---|
| Market Cap | Company size by total market value. Bigger means usually safer and more stable. |
| Smart Score | TipRanks’ overall rating combining analyst views, insider buys/sells, and news. Higher is better. |
| Price Target Upside | How much analysts expect the stock price to rise. Higher means more potential gain. |
| Analyst Consensus | Majority analyst recommendation (Buy, Hold, Sell). We focus on Buy and Strong Buy. |
| Sector | Industry group, to help focus on preferred sectors. |
| P/E Ratio | Same as Morningstar: how cheap or expensive earnings are. |
| Dividend Yield (%) | Dividend percentage, good for income investors. |
| PEG Ratio | Adjusted P/E for growth. Lower is better value for growth. |
| EPS (TTM) | Earnings per share in the last 12 months. Positive EPS means profitable company. |
TipRanks Screener Table: Value vs Growth (with EPS)
| Filter | Value Stocks Screener | Growth Stocks Screener |
|---|---|---|
| Market Cap | > $1B (Mid to Large Cap) | > $1B (Mid to Large Cap) |
| Smart Score | ≥ 70 (strong fundamentals + sentiment) | ≥ 80 (higher confidence) |
| Price Target Upside (%) | > 10% | > 20% |
| Analyst Consensus | Moderate Buy or Strong Buy | Strong Buy or Buy |
| Sector | Defensive/stable sectors preferred (Consumer Defensive, Utilities, Healthcare) | Growth sectors preferred (Tech, Healthcare, Industrials) |
| P/E Ratio | < 18 | < 30 |
| Dividend Yield (%) | > 2% | Optional |
| PEG Ratio | < 1.5 | < 2.0 |
| EPS (TTM) | > 0 | > 0 |
| Forward P/E | < 15–18 | < 25–30 |
Why EPS matters here:
- Positive EPS (TTM) filters out unprofitable companies, which helps reduce risk in both value and growth screens.
- You can adjust the EPS threshold if you want to require stronger earnings (e.g., EPS > 1 or > 2 for higher quality).
