December 11, 2008

Building a Simplified Graham Value Stock Screener

I did a search and could not for the life of me find a link to a prebuilt Google screener for Graham's value investing system. So lets quickly build one:

Through the Graham series we said we would only consider companies that:
  1. Had a P/E of less than or equal to 15.
  2. A book value of greater than or equal to 0.01.
  3. A price to book value of less than or equal to 1.5.
  4. A current ratio of more than or equal to 2.
  5. Earnings Per Share Growth rate on average of greater than or equal to 33% over 10 years.
  6. Revenue of greater than $100M ($555M)
  7. A history of consistent dividend payment.
  8. A dividend yield of greater than or equal to 3.5%.
  9. Some earnings for the common stock in each of the past ten years.
Putting that all together 1, 3,4,5,8 are a piece of cake.

2. Google doesn't provide a book value option, but if we recall Book Value is (Total Assets – Intangible Assets (Goodwill) – Total Liabilities) So if a company has a Current Ratio of 2 that means they have 2 times as many assets as they have liabilities so therefore they have a book value greater than 0. Also having a P/E ratio over 0 indicates there are some earnings.

6. Google doesn't have a revenue option, you could go with Market Cap but that does not really express what we are after here.

7. Google doesn't have dividend history so more research would be necessary based on the candidates.

9. Google doesn't have a 10 year P/E ratio yet- hopefully they will add it in soon so we can set to 0.

So that leaves us with this:
Graham Google Stock Screener

As you will see it chops the list of viable candidates down a fair bit though. Remember showing up on the scanner does not indicate you should buy, it means you should look at it :)

Happy hunting!


Ethan Bloch said...

"Remember showing up on the scanner does not indicate you should buy, it means you should look at it :)" Spot on.

This is great by the way. Thanks for sharing.



Anonymous said...

I think you have the criteria for P/B and Current Ratio backwards. Shouldn't it be "less than or equal to" for P/B, and "greater than or equal to" for Current Ratio?

value investor said...

Thanks for the catch, I had it correct in the link but missed it in the text. Corrected now!

Eric J. Fox said...

No companies found when i ran the screen

value investor said...

Hi Eric, thanks for the note. The google screener is based off of moving market numbers some days no companies show up at all, other days there are a bunch of companies to choose from. Keep checking back in! Thanks for reading.