How to Create a Value Investing Screener From Scratch

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Finding undervalued stocks in a market of thousands of companies is like searching for diamonds in a quarry—without the right tools, you'll waste countless hours and likely miss the gems hiding in plain sight. This is why successful value investors rely on stock screeners—systematic filtering tools that help identify potential opportunities matching specific investment criteria.

As Warren Buffett's partner Charlie Munger wisely noted, "The first rule of fishing is to fish where the fish are." A well-designed value investing screener helps you fish in waters teeming with potential bargains, dramatically improving your odds of investment success.


This guide will walk you through creating your own custom value investing screener from the ground up—no prior technical experience required.

Why You Need a Custom Value Screener

While many financial websites offer basic screening tools, creating your own customized screener offers several advantages:

  • Focus on metrics that truly matter for value investing (not just popular indicators)
  • Adapt to changing market conditions by adjusting your filters
  • Avoid following the crowd by developing unique combinations of criteria
  • Apply your personal investment philosophy to the screening process
  • Systematically eliminate emotional biases from your stock selection

"A good stock screen is like a metal detector on a beach—it helps direct your attention to areas worth investigating further," explains one seasoned value investor.

Step 1: Define Your Value Investment Philosophy

Before building your screener, clarify what "value" means to you. Possible approaches include:

Classic Graham-Style Deep Value

  • Focus on stocks trading below intrinsic value with a significant margin of safety
  • Emphasis on companies trading below book value or with very low P/E ratios
  • Higher emphasis on the balance sheet and current assets

Quality Value (Buffett Approach)

  • Seek wonderful businesses at fair prices rather than fair businesses at wonderful prices
  • Focus on competitive advantages, return on capital, and management quality
  • Willing to pay reasonable multiples for businesses with durable advantages

Contrarian Value

  • Target out-of-favor sectors or temporarily distressed companies
  • Focus on mean reversion principles
  • Look for sentiment indicators showing excessive pessimism

Your philosophy will guide which metrics take priority in your screener.

Step 2: Choose Your Screening Platform

Several options exist for building your value screener:

Free Options:

  • Finviz: Offers good basic screening with useful visualization
  • Yahoo Finance: Provides fundamental screening capabilities
  • Google Sheets: Create custom formulas and connect to financial APIs

Paid Options:

  • Stock Rover: More sophisticated screening and portfolio analysis but complicated to use
  • Bloomberg Terminal: Professional-grade but expensive
  • ViA Atlas Case Study Membership: Curated directory of pre-qualified companies that are suitable and simple for retail investors to use


For beginners, start with a free platform and upgrade as your needs evolve.

Step 3: Select Your Primary Value Filters

Every effective value screener should include these fundamental filters:

Valuation Metrics

1. Price-to-Earnings (P/E) Ratio: Start with companies trading below the market average P/E or below their historical average.

  • Example Filter: P/E < 15

2. Price-to-Book (P/B) Ratio: Identifies companies trading below or near their accounting value.

  • Example Filter: P/B < 1.5

3. Price-to-Free Cash Flow: Often more reliable than P/E as it's harder to manipulate.

  • Example Filter: P/FCF < 12

4. Enterprise Value to EBITDA (EV/EBITDA): Accounts for debt levels unlike P/E

  • Example Filter: EV/EBITDA < 8

Financial Strength Indicators

5. Debt-to-Equity Ratio: Excessive debt increases risk during economic downturns.

  • Example Filter: Debt/Equity < 0.5

6. Current Ratio: Measures ability to meet short-term obligations.

  • Example Filter: Current Ratio > 1.5

Profitability Metrics

7. Return on Equity (ROE): Shows how efficiently a company generates profits from shareholders' equity.

  • Example Filter: ROE > 10%

8. Operating Margin: Indicates pricing power and operational efficiency

  • Example Filter: Operating Margin > Industry Average

Step 4: Add Quality and Moat Filters

9. Dividend History: Consistent or rising dividends often signal financial stability

  • Example Filter: 5-Year Dividend Growth > 0%

10. Earnings Stability: Consistent earnings reduce investment risk

  • Example Filter: 5-Year Earnings Growth Standard Deviation < 25%

11. Return on Invested Capital (ROIC): Indicates presence of competitive advantages

  • Example Filter: ROIC > 10% and > WACC (Weighted Average Cost of Capital)

12. Insider Ownership: Aligns management interests with shareholders

  • Example Filter: Insider Ownership > 5%

Step 5: Incorporate Catalyst or Momentum Filters

Value investments often need a catalyst to realize their potential:

13. Relative Strength: Slight positive momentum can indicate the market is beginning to recognize value.

  • Example Filter: 3-Month Price Change > 0% but < 20%

14. Recent Analyst Upgrades: Sign that professional analysts see improving fundamentals

  • Example Filter: Analyst Upgrades > Downgrades in Last 3 Months

15. Share Repurchases: Management buying back stock suggest they believe it's undervalued

  • Example Filter: Share Count Decreasing Year-over-Year

Step 6: Set Minimum Size and Liquidity Requirements

To ensure you can actually buy the stocks your screener identifies:

16. Market Capitalisation: Filters out extremely small, risky companies

  • Example Filter: Share Count Decreasing Year-over-Year

17. Average Daily Volume: Ensures you can buy and sell without moving the price significantly

  • Example Filter: Average Daily Volume > 100,000 shares

Step 7: Create Industry-Specific Screeners

Different industries require different evaluation metrics:

Banking and Financial Services

  • Price-to-Book ratio
  • Net Interest Margin
  • Loan Loss Reserves
  • Tier 1 Capital Ratio

Manufacturing

  • Price-to-Sales ratio
  • Inventory Turnover
  • Fixed Asset Turnover
  • Gross Margin

Technology

  • EV / Sales
  • R&D as Percentage of Revenue
  • Recurring Revenue Percentage
  • Operating Margin

Advanced Screening Strategies

Once you've mastered the basics, consider these advanced approaches:

Piotroski F-Score Integration

The Piotroski F-Score is a 9-point system that evaluates financial strength. Research has shown portfolios of high F-Score, low P/B stocks significantly outperform the market.

Include these criteria from the F-Score:
  • Positive net income
  • Positive operating cash flow
  • Cash flow from operations > net income
  • Decreasing debt ratio year-over-year
  • Increasing current ratio year-over-year
  • No new shares issued
  • Increasing gross margin
  • Increasing asset turnover

Magic Formula Inspired Screening

Joel Greenblatt's "Magic Formula" combines:
  • Return on Capital: EBIT / (Net Working Capital + Net Fixed Assets)
  • Earnings Yield: EBIT / Enterprise Value


Set these as your primary filters for a simpler but effective screener.

Multi-Factor Models

Combine value metrics with:
  • Quality factors (ROE, ROIC, margin stability)
  • Momentum indicators (relative strength)
  • Low volatility measures (beta, earnings stability)


Research shows this approach can enhance returns while reducing risk.

Common Screening Mistakes to Avoid

1. Setting Too Many Filters
Using too many criteria can eliminate all potential candidates. Start with 5-7 key filters and refine from there.

2. Not Adjusting for Industry Differences
A "cheap" P/E ratio in utilities might be expensive in technology. Either screen by industry or adjust your metrics accordingly.

3. Failing to Update Your Screener
Market conditions change, requiring periodic adjustments to your screening parameters.

4. Not Verifying Data Accuracy
Financial databases sometimes contain errors. Verify key metrics against company filings before investing.

5. Investing Without Further Research
Remember that screeners only identify potential candidates. Always conduct thorough analysis before investing actual capital.

How to Use Your Screener Effectively

1. Run Screens Regularly
Market conditions change constantly—run your screen at least monthly to identify new opportunities.

2. Create a Watch List
Not every screening hit deserves immediate investment. Build a watch list of promising candidates and monitor them for better entry points.

3. Compare Against Benchmarks
Track how companies identified by your screener perform against market indexes to refine your approach over time.

4. Maintain a Research Journal
Document why each stock passed your screen and your subsequent analysis—this creates a valuable learning tool.

From Screening to Detailed Analysis

Remember that a screener is just the first step in the investment process. Once you've identified potential candidates, you'll need to:
  1. Read recent annual and quarterly reports
  2. Analyse competitive positioning
  3. Evaluate management quality and capital allocation
  4. Calculate intrinsic value using discount cash flow or other methods
  5. Determine an appropriate margin of safety

Take Your Value Investing to the Next Level

Building an effective value investing screener is an important step, but it's just one component of a comprehensive investment strategy. To truly master the art of value investing, you need a systematic approach to analyzing the companies your screener identifies.

Ready to see how professional investors analyze potential investments after screening? Join our upcoming webinar on "Step-By-Step Company Analysis" where you'll learn:
  • A deep dive into a fast-growth company case study.
  • The key financial metrics used when evaluating whether a stock has strong growth potential
  • Step-by-step guide on how to apply the Value Investing Methodology on real-life companies
  • The exact criteria that successful investors use when evaluating any company
  • How to determine the intrinsic value of a stock so you will know exactly when to enter or exit the market
  • How ViA Atlas Intrinsic Value (IV) Directory can get you started on building your own portfolio of superhero stocks, even for busy professionals without much time to spare.


Your value investing screener is the fishing net that helps you find potential opportunities—but knowing how to evaluate those opportunities is what ultimately determines your success. Don't miss this chance to refine your analytical skills and take your value investing to the next level.

Scroll down below to register for the webinar.

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See Value Investing in Action

In this live session, you'll see a step-by-step company analysis demonstrated by Cayden Chang, founder of Value Investing Academy. 
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Presented by Cayden Chang

Founder of Value Investing Academy and Award-Winning International Speaker, Lifelong Learner Award 2008, Personal Brand Award 2017


You will learn:

  • A deep dive into a fast-growth company case study.
  • The key financial metrics used when evaluating whether a stock has strong growth potential
  • Step-by-step guide on how to apply the Value Investing Methodology on real-life companies
  • The exact criteria that successful investors use when evaluating any company
  • How to determine the intrinsic value of a stock so you will know exactly when to enter or exit the market
  • How ViA Atlas Intrinsic Value (IV) Directory can get you started on building your own portfolio of superhero stocks, even for busy professionals without much time to spare.


Click the button below to reserve your spot now.