What Is Finviz Stock Screener And How Does It Work?

Finviz.com is a powerful, free (with a premium option) web-based platform that provides a wealth of financial information. At its heart lies a robust stock screener, a tool that allows investors to filter through thousands of stocks based on a wide range of criteria. Whether you're a seasoned day trader or a beginner looking to build a long-term portfolio, understanding how to use the Finviz stock screener can significantly improve your investment decisions. This post will break down what Finviz is, how its stock screener works, and how you can leverage it to find promising investment opportunities.

Think of Finviz as a digital research assistant that tirelessly sifts through market data, saving you countless hours of manual analysis. It's not a crystal ball, but it is a powerful tool for identifying stocks that meet your specific investment criteria.

Understanding the Power of a Stock Screener

Before diving into Finviz specifically, it's important to understand why stock screeners are so valuable. The stock market is vast and complex, with thousands of publicly traded companies. Manually analyzing each one to find those that align with your investment strategy is simply impractical. A stock screener automates this process, allowing you to quickly narrow down the field based on factors like:

  • Valuation: Price-to-earnings ratio (P/E), price-to-sales ratio (P/S), price-to-book ratio (P/B).
  • Growth: Earnings per share (EPS) growth, sales growth.
  • Profitability: Return on equity (ROE), return on assets (ROA), profit margin.
  • Technical Indicators: Moving averages, relative strength index (RSI), trading volume.
  • Fundamental Factors: Industry, market capitalization, dividend yield.

By defining your desired parameters, you can quickly identify stocks that match your investment profile, saving time and increasing the efficiency of your research.

Navigating the Finviz Stock Screener

The Finviz stock screener is located on the Finviz.com website under the "Screener" tab. The interface is intuitive and user-friendly, even for beginners. The screener is divided into three main categories:

  • Descriptive: Filters based on company characteristics like sector, industry, market capitalization, and country.
  • Fundamental: Filters based on financial ratios and metrics, such as P/E ratio, EPS growth, and dividend yield.
  • Technical: Filters based on technical indicators like moving averages, RSI, and volume.

Let's explore each category in more detail.

Descriptive Filters: Setting the Stage

The Descriptive tab allows you to narrow down your search based on basic company characteristics. Here are some key filters you might use:

  • Sector: Choose the industry sector you're interested in (e.g., Technology, Healthcare, Energy).
  • Industry: Refine your search further within a sector (e.g., within Technology, you might choose Software, Semiconductors, or Internet).
  • Country: Select the country where the company is based.
  • Market Cap: Filter by company size (e.g., Small-Cap, Mid-Cap, Large-Cap). This is crucial as different market caps have different risk/reward profiles.
  • Average Volume: Filter for stocks with a certain average daily trading volume. Higher volume generally indicates greater liquidity.

Example: If you're interested in investing in small-cap technology companies in the United States, you would set the Sector to "Technology," the Country to "USA," and the Market Cap to "Small (<$2B)."

Fundamental Filters: Digging into the Numbers

The Fundamental tab is where you can really start to analyze a company's financial health. Here are some important fundamental filters:

  • P/E Ratio: Filters based on the price-to-earnings ratio, a common valuation metric. A lower P/E ratio may indicate an undervalued stock, but it's important to compare it to the industry average.
  • EPS Growth This Year: Filters based on the expected earnings per share growth for the current year.
  • Sales Growth This Year: Filters based on the expected sales growth for the current year.
  • Return on Equity (ROE): Filters based on ROE, a measure of how efficiently a company is using its equity to generate profits.
  • Dividend Yield: Filters based on the dividend yield, the annual dividend payment as a percentage of the stock price.

Example: If you're looking for companies with strong growth potential, you might set the "EPS Growth This Year" filter to "Over 20%" and the "Sales Growth This Year" filter to "Over 10%."

Technical Filters: Spotting Trends and Patterns

The Technical tab allows you to filter stocks based on technical indicators, which are used to identify potential trading opportunities based on price and volume patterns. Here are some common technical filters:

  • Moving Average: Filters based on the relationship between the current price and a moving average (e.g., 50-day moving average, 200-day moving average).
  • Relative Strength Index (RSI): Filters based on the RSI, a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions.
  • Average Volume: As mentioned before, filtering by volume can help you find stocks with sufficient liquidity.
  • Performance: Filters based on price performance over different time periods (e.g., 1-week, 1-month, 1-year).

Example: If you're looking for stocks that are showing strong upward momentum, you might set the "Price > 200-Day SMA" filter to "True" (meaning the current price is above its 200-day moving average) and the "RSI (14)" filter to "Overbought (70)."

Putting It All Together: Creating a Powerful Screen

The real power of the Finviz stock screener comes from combining multiple filters across all three categories. This allows you to create highly specific screens that identify stocks that meet your precise investment criteria.

Example: Let's say you're looking for large-cap companies in the healthcare sector that are undervalued and have strong growth potential. You might set the following filters:

  • Descriptive: Sector = Healthcare, Market Cap = Large (>$10B)
  • Fundamental: P/E Ratio = Under 15, EPS Growth This Year = Over 10%
  • Technical: Price > 50-Day SMA = True

This screen would identify large-cap healthcare companies that have relatively low P/E ratios (potentially undervalued), are expected to experience strong earnings growth, and are currently trading above their 50-day moving average (indicating positive momentum).

Beyond the Screener: Finviz's Other Features

While the stock screener is the core of Finviz, the platform offers a wealth of other valuable features, including:

  • Stock Charts: Detailed charts with various technical indicators.
  • News: Real-time news headlines related to specific stocks and the overall market.
  • Financial Data: Key financial data, such as income statements, balance sheets, and cash flow statements.
  • Insider Trading: Information on insider buying and selling activity.
  • Portfolio Tracking: A tool for tracking your portfolio performance.
  • Maps: Visual representations of market performance by sector and industry.

Tips for Using the Finviz Stock Screener Effectively

  • Start with a clear investment strategy: Before you start screening, define your investment goals, risk tolerance, and time horizon.
  • Don't rely solely on the screener: The screener is a great starting point, but you should always conduct thorough due diligence on any stock before investing.
  • Experiment with different filters: Try different combinations of filters to see what results you get.
  • Backtest your strategies: Use historical data to see how your screening criteria would have performed in the past.
  • Consider the premium version: Finviz Elite offers additional features, such as real-time data, advanced charting tools, and more backtesting capabilities.

Conclusion: Empowering Your Investment Decisions

The Finviz stock screener is a powerful tool that can help you find promising investment opportunities. By understanding how to use the different filters and combining them effectively, you can quickly narrow down the vast universe of stocks to those that align with your specific investment criteria. Remember to always conduct thorough due diligence before investing, and consider using the screener in conjunction with other research tools and resources. With a little practice, you can leverage the Finviz stock screener to make more informed and profitable investment decisions. Happy screening!