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Fundamental screening: filter documentation – Part 3

kengetallen2Have you missed the previous parts? : Part I and Part II.

Part III continues with the following filters in the stockscreener (click on the image below to go directly to the fundamental tab).


Revenue Growth 5Y

revenue_growthThis concept really needs little explanation. It is about the average revenue growth a company realizes over the last five years. This figure tells you more than just looking at the amount of revenue in one year.  Based on the revenue growth in the past, investors can get an idea of the potential future revenue growth of the company.

Return on Equity (ROE)

Return_on_equityThis refers to the ratio between the company’s profit and the company’s equity by which the profit has been achieved. The higher this figure, the higher the profitability of the company and the more attractive the business becomes for potential investors (debt). A high figure means that the company manages its own equity in a very efficient way. The value is expressed as a percentage and is derived by dividing the net profit (after tax) by the company’s own equity (* 100%). Sometimes, ‘net profit before tax’ is also used but our screenfilter only uses ‘net profit after tax’.

Return on Assets (ROA)

return_on_assetsThis refers to the ratio between the company’s profit and the total assets by which the profit has been achieved. The difference is in the nature of the assets. For the total assets, debt financing is also taken into account. The formula is calculated as follows: Profit for interest and taxes divided by total capital invested (* 100%). Here too, the higher the figure, the more efficient the total assets are used. If you want to compare the ROA between different companies, make sure you do it only with companies belonging to the same sector or industry.


debt_equityDebt / equity is used to determine the level of debt of a company. The total debt is compared with equity to understand the extent to which debt is used as a leverage to finance a company. A ratio higher than 1 means that more debt is used than equity while the opposite applies if <1. The higher the figure the more debt and thus the more risk for the company. The lower the figure, the more equity used and the lower the risk. In any case, it is important that when using more lending than equity, the resulting net profit is greater than the interest payable due to the debts. And remember, capital-intensive companies (for example, in the automotive industry) will usually have more need for foreign capital and, consequently, have a higher debt/equity ratio than companies in other sectors/industries. Be sure to take this into account when using this ratio.

The remaining filter options in ChartMill will be discussed in a following article (Part 4).

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