Stock Screening DIY

The SharePad programme is accessed over the internet through a web browser, such as Internet Explorer or Firefox, and it can therefore be run on whatever device you happen to have to hand, whether Apple, PC, desktop, laptop or tablet. Tim Clarke, general manager of Iconic, makes the useful distinction between the highly customisable SharePad package being "web-accessed", as opposed to "website-based", which can be more static. While multiple devices can be used to open up SharePad, however, users can only have the tool open on one device at a time.

Existing ShareScope users should find SharePad easy to use. While I have used ShareScope in the past, I have not done so with any real regularity. Nevertheless I still found SharePad easy to get to grips with and was greatly assisted in my initial forays by a very concise step-by-step 'filters' help section, available from the top menu bar. The SharePad helpline, which I called three times while assessing the product, was also very useful. The Iconic staff I talked to were all clearly very well informed about the product and were always patient and polite - even when dealing with some of my very rudimentary enquiries.

The screening process in SharePad starts with the creation and naming of a new filter. From there, criteria are added through an 'Add Criteria' window, and then parameters are entered against those criteria for maximum and/or minimum values. Visually, I was impressed by the filter tool and thought the use of small histograms to illustrate the spread of the data on offer was very helpful. That said, some of the histograms could do with having the most extreme data readings left out as the odd graphic appears as one big spike of data around the middle of the graph, suggesting most of what was being mapped is outlying bits of data.

Once a screen has been created and saved, it can immediately be applied to different indices at a click of a button. As well as the main FTSE indices, several US indices are on offer, as well as funds, investment trusts, ETFs, bonds, foreign exchange and commodities. It is also easy to turn screening criteria on and off using a tick box system, which allows you to explore, amend, adapt and understand the results from a screen in more depth. Turning individual criteria on and off can be used to effect an either/or function, which the screen otherwise does not have (for example, I wanted to screen for companies that either had gearing of less than 50 per cent or net-debt-to-cash-profits of less than two).

Small differences in the interpretation of data can have a noteworthy effect on a screen's results and I personally find it is important to know as much as possible about the nature of the data I am dealing with. SharePad is helpful on this front, offering a concise description of all its data items whenever they are selected in its 'Add Criteria' window - the description appears at the bottom of the window. And there are a lot of criteria to choose from. As well as all the ratios and data items you'd expect, the tool also offers many more esoteric, but extremely useful, fundamentals. For example, SharePad's valuation ratios include the Neff total return ratio, debt-adjusted PEs and Graham numbers. Meanwhile, ratios measuring corporate quality include the Piotroski F-score and the Altman Z-score. And there are a number of technical indicators that can be used too, such as golden crosses, the RSI and MACD.

While there is a lot on offer, it is still relatively intuitive to find what you need. The quickest way to find something, if you know what you're after, is to simply use the search option at the top of the 'Add Criteria' window. But criteria can also be selected from a range of different menu titles along the top of the 'Add Criteria' window. When a menu is selected the data options are displayed in a side panel that is broken down into sensible sections. For example, the sections that appear when you select the 'Financials' menu title are 'Income Statement', 'Balance Sheet', 'Borrowings', 'Cash Flows' and 'Other'. Most of the criteria menu titles are fairly self explanatory; but one that is very useful for screening is the 'Ranking' menu, which allows you to compare data for a company relative to the market as a whole or its sectors (for example, this allows you to screen for the lowest quarter of forecast PE ratios in the market).

The Funds and Bonds menu is also of note, as this allows you to tailor screens specifically towards ETFs and investment trusts, among other things. One thing lacking from the current criteria for investment trusts is a z-score, which measures a company's discount or premium to NAV relative to its historic range. I am particularly fond of this metric and use it in my 'undervalued and outperforming' investment trust stock screen. However, any omissions are not necessarily permanent in nature, as Iconic is looking to add to its new product all the time. "Everything that is suggested to us gets considered," says Mr Clarke. "If it's something easy to do it will just get done. If something is a good idea or is in Iconic and isn't in SharePad yet, we will add it." Mr Clarke says a lot of the risk metrics from ShareScope, such as the sharpe ratio, will soon be making their way on to SharePad. Aside from the z-score, which Mr Clarke is looking into adding, the only other blank I came up with during my extensive search for criteria was data for 'beta'.

The data available on SharePad can be selected in several different ways depending on how you want to use it in your screen. For example an EPS figure is available as a simple value, or as a growth rate, either historic or forecast and annualised or total. Other highly useful options include data on the number of years of growth over a given period, the average EPS level over a given timeframe and the option to adjust results for inflation. It is also easy to select historic data items and historic growth rates and there is a wide selection of timeframes on offer.

An innovative feature newly developed for SharePad is the ability to combine ratios. I found this useful to create a net-debt-to-cash-profits ratio, which wasn't available as a pre-set criteria. This tool cannot yet be used to combine more than two criteria and once criteria are combined they cannot be ranked, but it is nevertheless a very welcome addition for screening. And for real screening nerds, like myself, who want to monkey around with formulas, there is always the option of downloading everything into Excel, through the 'sharing' menu, and manipulating the data there.

My personal test drive of SharePad involved recreating three of my favourite and quite complicated screens using the 'filters' tool: a Neff screen, a contrarian value screen based on the approach of Ken Fisher and a screen for 'safe' high-yielding stocks. Comparing the results of the SharePad screen with the Excel-based screens I monitor for my Investors Chronicle column, which uses data from S&P CapitalIQ, there is a good amount of consistency. The screen results were not the same but, although screening is often considered a straightforward mechanical process, this is actually to be expected.

Part of the reasons for differing results from what ostensibly is the 'same' screen comes down to the fact that different data sources often interpret financial data in different ways. For example, when screening for underlying EPS figures I felt happy using SharePad's so-called 'normalised' EPS figures, which remove a number of items in an attempt to make data more easily comparable between companies and from one year to the next. But I am not prone to using S&P CapitalIQ's 'normalised' figures because, unlike SharePad, that data service 'normalises' tax rates. While both approaches to 'normalisation' are perfectly valid, I personally feel that applying the same tax rate to every company's earnings goes a step too far in trying to present things on an easily comparable basis.

So slightly differing results are to be expected, and in general screens are best regarded as pointing investors in a general direction rather than suggesting specific 'must-buy' stocks. US star hedge fund manager Joel Greenblatt likened the use of stock screens to hunting with a shotgun that would hit everything in a given radius, compared with hunting with a rifle that needed to be very well aimed and only deployed a single bullet.

SharePad is a product that should meet, and will probably far exceed, the requirements of most private investors. What's more, Iconic is keen to keep improving the product and adding new data where they believe it will improve the service. That said, the quantity and depth of fundamental data on offer is very impressive. For anyone thinking of giving the product a go, SharePad has a good cancellation policy, which means users are never locked in to the product for more than a month. Currently new users are being offered the service with delayed prices for £5 a month for the first three months, but the normal cost is £25 a month or £250 for a year.