The investment research process is not complete until the company under scrutiny has been compared to its sector and industrial peers.
I am of course assuming that you will go onto read the financial statements, including footnotes for at least the past five years (10 years is better), the proxy statements as well as the annual reports.
Don’t take my word for it, check out what legendary investor Christopher H Browne said about the investment research process:
Part of the ‘wading through the publicly available information’ includes sector and industry analysis.
The most obvious reasons for comparing a company to its sector and industrial peers are that:
- The company’s entire sector or industry may be depressed
- Valuation ratios for the sector/industry such as price to tangible book or price to earnings may be either high or low in general
- The company you are researching may be priced higher or lower than its sector/industry peers
Wouldn’t you like to know if the the company you are researching has a low or high price to book ratio compared to its peers?
Not conducting sector and industry comparisons would be like buying a house without finding out what other similar (and not so similar) houses are worth in the local vicinity and beyond.
Fortunately, ADVFN makes sector and industry comparisons simple; by building a screener (yes I know, another screener, but hey they work!) you can quickly get a sense of where your company sits in the value stakes against members of the same sector or industry.
I feel that I must warn you at this point: the US screener has 26 inputs, so it may take you a while to set up. The UK screener has one more at 27.
Today’s post will show you how to set up screeners for the UK and US markets.
Building each screener is a one time process. Your upfront time investment will pay you back in the future by saving you a chunk of time the next time you are valuing a potential investment – which should be cut down to about 5 minutes.
Let’s get to it.
How To Build An Industry And Sector Comparison Screener In ADVFN
After you first log into ADVFN, click the charts and research drop-down menu as shown and select US screener.
You will be presented with the next screen. Click start screener.
The next screen as shown below is the screen on which you input the data parameters:
I have provided a list of the data parameters below for the US and UK stock market screeners I use including the name of the drop down menu under which you will find each input 🙂
I suggest that you input them in the order that they appear in the list to start with. You can always change the order, remove or add parameters at a later date.
Don’t forget to save your screener as you go along.
No Name Drop Down Menu
1 Industry Identification & Quote Information
2 Sector Identification & Quote Information
3 Close Identification & Quote Information
4 Market Cap Key Figures
5 Shares Outstanding Key Figures
6 Net Revenue Income Statement
7 Net Income - Total Operations Income Statement
8 EPS ($) Key Figures
9 % Change in 12 Month EPS v 1 Year Ago Key Figures
10 Basic EPS 5 Year % Change Income Statement
11 Current Ratio Deeper Analysis
12 Quick Ratio Deeper Analysis
13 Price/Tangible Book Key Figures
14 Total Debt/Equity Key Figures
15 PE Ratio Key Figures
16 PE Ratio (5 Y Avg) Deeper Analysis
17 PE Ratio as % of 5 Y Avg Deeper Analysis
18 Dividend Per Share Key Figures
19 Net Profit Margin Deeper Analysis
20 Net Profit Margin (5 Y Avg) Deeper Analysis
21 ROCI % Deeper Analysis
22 ROCI (5 Y Avg) Deeper Analysis
23 ROE % Deeper Analysis
24 ROE (5 Y Avg) Deeper Analysis
25 ROA % Deeper Analysis
26 ROA (5 Y Avg) Deeper Analysis
No Name Drop Down Menu
1 Industry Key Figures
2 Yesterday's Close Key Figures
3 Market Cap Key Figures
4 Shares In Issue Key Figures
5 Turnover Fundamentals
6 Retained Profit Fundamentals
7 EPS - Basic Deeper Analysis
8 EPS 5 Yr Growth Deeper Analysis
9 EPS 10 Yr Growth Deeper analysis
10 No Of Earnings Drops More Than 5% in Last 10 Years Deeper Analysis
11 Total Assets Fundamentals
12 Intangibles Fundamentals
13 Total Liabilities Fundamentals
14 Current Ratio Deeper Analysis
15 Quick Ratio Deeper Analysis
16 Price/Tangible Book Value Deeper Analysis
17 Debt To Equity Excl Int Deeper Analysis
18 PE Ratio Key Figures
19 PE Avg Deeper Analysis
20 PE As A % Of PE Avg Deeper Analysis
21 Avg Year in PE Deeper Analysis
22 Dividend Yield Deeper Analysis
23 ROCE Deeper Analysis
24 Return On Assets Deeper Analysis
25 ROE Deeper Analysis
26 ROI Deeper Analysis
27 Net Profit Margin Deeper Analysis
You’ll notice that the UK screener has no sector analysis included. This is because ADVFN does not convert the raw data that The London Stock Exchange uses to describe UK sectors using codes into sector names. Codes instead of sector names are no use to anyone. If you have a list of the codes and what the sectors are, please provide them in the comments below 🙂
Thanks for staying tuned and I hope that this post helps make your investment research process more efficient.
ADVFN allows you to export the he UK screener into excel via a CSV file. I do this to make the data look more structured which helps me to focus my attention on the physical process of comparing a company under scrutiny with its industry peers. With the US screener I simply copy and paste the data into excel.
Thanks for taking the time out of your day to read this article.
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Wishing you all the best with your stock market endeavours.