If you're unsure what screener criteria to use, you can use Scrab's saved screener criteria.
To load Scrab's default screener, click the drop-down button at the top right and choose 'Default Screener. You should then see all the preset criteria present. If you're ready and don't want to adjust anything else, click 'Run.' You'll see the results at the bottom and toggle through the results page at the top right corner of the companies table list.
Making Sense of Scrab's Predefined Criteria
Here's our take on what defines a top-notch company according to our standards and why we chose the criteria.
- Market Cap: Companies worth over $5 billion are typically more stable and better covered by analysts, which ensures more reliable data. However, you can choose to analyze smaller companies if you prefer.
- Profitability: We look for companies expected to increase their earnings by at least 7% annually over the next two years. This growth in earnings per share (EPS in next 2 years) indicates profitable future operations.
- Revenue Growth (Revenue Avg in next 3 years): Similarly, we target companies with at least a 5% annual increase in revenue over the next two years to ensure they are growing their operations.
- Long-Term Growth (EPS long-term): For long-term investments, we prefer companies with a consistent EPS growth of over 7% across five years.
- Debt Management (Debt-to-assets): We avoid heavily indebted companies by selecting those with a debt-to-assets ratio under 50%, ensuring they have more assets than debts.
- Cash Flow (CFO to Debt): A strong cash flow is essential; we look for companies that generate at least 10 cents of operational cash for every dollar of debt.
- Interest Coverage: Companies should be able to cover their interest expenses for at least two years using their last year's profits.
- Liquidity (Current Ratio): A current ratio over 1 indicates good short-term financial health, meaning the company can cover its short-term liabilities with its short-term assets.
- Financial Stability (Ohlson Score Default Probability): The Ohlson Score helps predict a company's bankruptcy risk within the next year; we look for a score indicating less than a 10% risk. Read more about The Ohlson Score on Wikipedia.
These guidelines can help you find strong companies that fit your investment strategy and risk tolerance. If you're hesitant to modify the existing criteria directly, simply duplicate the predefined set, rename it, and then make any changes you want to the new set without affecting the original settings.
Alternatively, you can also set your own criteria from scratch, which is always recommended since it best suits your investing approach.