All stocks, excluding utility and financial stocks.Finally, I can drill down on the company to see the reports we already discussed in the section above for Altria.įor the template screen, we implemented the following filters On top of that, you can also see other factors, such as the Piotroski F-score. In the screenshot, you can see the magic formula score, the ROC and the earnings yield. Or I might need to increase the minimum market Cap.Īnother way is to use the ValueSignals stock screener.Īs you can see in the screenshot above, you can run this screen on the US alone, but I also included Canada. For instance, looking at the US, I might want to exclude the pink sheets or look at Nyse. You don't get the magic formula score, the earnings yield, the ROC, or any other information. As you can see in the screenshot above, you get the company name, the ticker, the market cap, the stock quote price, and the date of the most recent quarter. The site is just a companion to sell more books and has not been updated for quite a long time. This site has been compromised, and all users have been asked to change their passwords. Just select whether you want the top 30 or 50 companies, and the list pops up in seconds. You can use Joel's stock screener, which is available at. How can I find more magic formula companies? Only very well-run companies can achieve results like these. The company is in excellent financial health and did not need any additional capital to cover its short-term obligations.įor every dollar Altria spent, it generated 6 dollars.Altria only needed 2 billion dollars in cash to purchase fixed assets to conduct its business over the same period.For the last 12 months, the company generated 11bn. We already used Operating income in the earnings yield.To calculate ROC, we divide the operating income by the sum of net fixed assets and net working capital. It's at the top of the histogram, and only a few companies do better.
Let's have a look if Altria excels in this area.Īs you can see, Altria is very good at making money. To find companies that excel at making money, we use the Return on Invested Capital (ROIC), more commonly known as ROC. Enterprise value is the closest measure of the value of a company's total value. Operating earnings or EBIT is a much cleaner way of looking at the company's earnings.Ĭompanies have different levels of debt, which is not considered when looking only at market capitalization. Companies are taxed at different levels, so we have to look at pre-tax earnings to compare them.We could have used the more popular and available price-to-earnings ratio, but there are very good reasons why Greenblatt doesn't use rely on it: Why earnings yield instead of Price/Earnings?Įarnings yield is not widely available and you have to use a paid service like ValueSignals to get reliable numbers. Out of 3228 companies, only about 100 of them have a higher earnings yield. Altria's earnings yield is 9.98%, which puts it in the red bar. In the chart above, you can see all US companies excluding utilities and financial companies. To find companies that are trading at bargain prices, we look at the earnings yield. Altria performs particulary well on 2 ratios: Earnings Yield Let's take Altria, the holding with subsidiaries that include Philip Morris USA. You can purchase the shares at a bargain price.Ĭan you give an example of a magic formula company?.The strategy looks for companies with the following characteristics: His bestseller ' The little book that beats the market'. Joel Greenblatt introduced the magic formula in 2005, in
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