Stock Screening
The process of filtering a universe of stocks using quantitative financial criteria to identify investment candidates.
What is Stock Screening?
Stock screening is the process of filtering a universe of publicly traded equities — sometimes thousands of stocks — down to a manageable shortlist using quantitative criteria aligned with an investment strategy. Common screening criteria include valuation metrics (P/E ratio, price-to-book, EV/EBITDA), growth metrics (revenue growth, EPS growth), quality metrics (return on equity, debt-to-equity), income metrics (dividend yield, payout ratio), and technical indicators (moving averages, relative strength). Free and premium screeners are offered by platforms such as Finviz, Yahoo Finance, Morningstar, and brokerage tools. Stock screening is the first stage of fundamental analysis — it narrows the universe but does not replace the qualitative research required before making an investment decision.
Example
A dividend-growth investor might set a stock screen with these filters: dividend yield > 2.5%, dividend growth rate (5-year CAGR) > 7%, payout ratio < 60%, P/E < 25, debt-to-equity < 1.0, and market cap > $5 billion. Applying these filters to the S&P 500 typically yields 20–40 candidates — a far more manageable list than 500 stocks — which the investor then researches qualitatively for competitive moat, management quality, and business model sustainability.
Source: Investopedia — Stock Screener