Research Filter
The Research Filter performs Fundamental Analysis by statistically ranking each company against 30 financial performance indicators to identify stocks in the strongest financial position through to the weakest.
Research Filter Screen Shot
(Click to pop-up)
The screen shot above shows a number of ratios and growth rates calculated from each company’s reported Income Sheet financial results. The Income Sheet assessment is one of seven components (see the dot point list below) of a company’s financial health that allow value investment decisions to be made based on current and historical financial performance. Results are presented alongside each other to allow direct comparisons to be made between companies.
Research Filter Inputs and Fundamental Analysis Stock Assessment Criteria
The Research Filter performs Fundamental Analysis on a custom list of stocks selected from the First Class Trader stock market analysis database. The database contains over 5,000 companies listed on stock exchanges of Australia, China and United States (Dow Jones, NYSE, NASDAQ, S&P). The screen shot above shows an example of selecting the top 20 companies from the Australian ASX All Ordinaries Index. Selecting a custom list of stocks with the Stock Search tool is easy as you can instantly obtain a full stock market index of companies and then filter down by the different Sectors or Industries as required.
The Research Filter fundamental stock analysis compares financial statement historical growth rates over the last 5 years and also the latest reported results for each company. To obtain a comprehensive assessment of each company’s financial health the fundamental analysis criteria are divided into the following components:
- Income Sheet Assessment
- Balance Sheet Assessment
- Cash Flow Assessment
- Efficiency & Profitability
- Institutional Holdings
- Debt Ratios
- Dividends
For each of the above components, the key growth rates and ratios are calculated which result in a total of 30 financial performance indicators used in the Research Filter. There are hundreds of different business valuation ratios that could be applied however First Class Trader is focused on the key criteria to obtain a comprehensive assessment of each company’s financial health. The ratios and growth rates used are also based on common and easy to understand financial sheet items such as earnings, sales and assets so if you are not familiar with stock analysis from financial reported results it is easy to understand plus all the hard work in obtaining the information has been done for you!
Research Filter Fundamental Analysis Criteria Ranking
The Research Filter allows you to make value investment decisions by statistically ranking each company’s financial health against 30 financial performance indicators. Each financial performance indicator (growth rate or ratio) is assessed by sorting results from lowest to highest and then statistically ranking companies (initially) according to the 25, 50 & 75 percentile bands. Depending on whether a high ratio (Sales growth) or low ratio (Price to Sales ratio) is desirable, each company will be ranked with a Green, Yellow, Red or Black cursor (see screen shot below for Return on Equity). Results are then tallied for financial performance indicator and included in an algorithm to determine each company’s financial health on a scale of 0-100.
Fundamental Analysis Criteria Customization
The Research Filter has an Edit Cursors button which allows a graphical representation of each growth rate and ratio to be displayed. A plot of a typical growth rate curve is shown below, in this case return on equity (ROE) of the top 20 companies from the Australian ASX All Ordinaries Index. The x-axis contains the 20 companies sorted based on their current ROE results from lowest to highest with ROE percentages displayed on the y-axis. The shaded regions (black, red, yellow, green) represent the percentile bands (25%, 50%, 75%) that are used to rank company financial performance. The 50 percentile line represents the median (similar to average) of the current Research Filter stock list which can easily be configured to show an Index, Sector or Industry median so it is easy to highlight company’s that are outperforming their competitors.
The Fundamental Analysis criteria customization is achieved from the ability to shift the cursor percentile bands which can be performed with a click and drag of the mouse. Depending on your chosen investing style you can shift the cursors to:
- Set more stringent criteria (eg 15%, 50%, 85%)
- Find companies performing consistently above average (eg 20%, 60%, 80%)
- Manually adjust each ratio to focus on particular requirements
Research Filter File Storage
Research Filter lists are able to be saved to your hard drive as shown below.
Disclaimer
It is recommended that any potential investments identified by the Research Filter tool undertake additional research such as company news, management review and historical price evaluation before investing.
