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NEW SITE FEATURE: 10-Year Median Scans

May 21, 2014 | About:
Ross Givens

Ross Givens

41 followers

GuruFocus has always delievered the most vast offering of equity research tools available on the market. Last year we introduced the All-In-One Guru Screener. It has been met with immensely positive feedback and has quickly become the go-to scanner for sophisticated investors.

To further improve its fundamental search capabilities, we have added 10-year median options to several of the scan metrics. Return on Assets (ROA), Return on Equity (ROE) and Joel Greenblatt (Trades, Portfolio)’s Return on Capital (ROC) have been existing features since inception. The easy-to-use drop down menus allow users to select minimum and/or maximum values by which to filter a list of qualifying securities.

Now GuruFocus Premium Members have the additional option of selecting 10-year median values. With this addition, investors can identify stocks that have consistently met their investment criteria over a multi-year period. Those that have only temporarily fallen in line will be dismissed if their median values have not consistently hit the mark.

In an effort to apply this formula to all applicable areas, we have also added it to the margin criteria under the Profitability tab within the scanner. Gross, operating and net margins can all be searched using 10-year median requirements.

Warren Buffett (Trades, Portfolio) has long been a proponent of quality companies with a “moat” – a premium brand quality that makes consumers choose a firm’s product or service over other comparable options. But how do you measure moat?

If a business has no moat, over time others will get into the same business, the business will be forced to lower its prices to remain competitive, and the profit margin will shrink. Therefore if a company can maintain or expand its profit margin while growing its business without incurring excess debt, it is reasonable to assume that the company possesses a moat.

The 10-year median has obvious advantages over trailing 12-month numbers in regard to company profit margins. Those with clearly identifiable moats will have a consistent track record of superior margins which we can now identify with the All-In-One Screener.

The point is further illustrated in the image below.

The GuruFocus Interactive Chart depicts the operating margins of two similar companies, CVS Caremark Corp (CVS) in green and Walgreens (WAG) in blue. As you can see, Walgreens has demonstrated far superior and more consistent operating margins over the last twenty years. Even though CVS is showing a higher rate today, its historical inconsistency is trumped by the stable rates generated by Walgreens.

And while both stocks will likely flourish under favorable economic conditions, the price chart below highlights the price premium placed on Walgreens' more stable enterprise during the “Lost Decade” of 2000 to 2010.

The GuruFocus All-In-One Screener is the most comprehensive fundamental stock screener available today. These new features only further its abilities and make it an even more powerful tool.

I encourage you to give it a try.

If you're not familiar with any of the more complex investment metrics, click the title and a definition will pop up.

Some of the features are for Premium Members only. So we invite you to take a FREE 7-DAY TRIAL to put it through the paces.

If you decide it's not for you, cancel and owe nothing. We even have a 30-day money back guarantee.

Click Here to Access The All-In-One Screener and All of the Premium Membership Features


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