product participant guide

Participant Guide

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NAME OF PRODUCT

SCREENER

NAME OF AUTHOR Dept Name Date Contact details

Participant Guide

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Table of Contents

Table of Contents ........................................................................... 2

The PRODUCT .............................................................................. 3

Components of a Screen ................................................................ 4

Searching for Variables .................................................................. 5

Features of the PRODUCT ............................................................ 6

Working with Screens...................... Error! Bookmark not defined.

Client Case Studies ........................................................................ 7

Customer Requested Screens ....................................................... 8

Participant Guide

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The PRODUCT Alex is always looking for investment opportunities based upon certain criteria. He’ll typically look for securities that meet his specific requirements and are therefore good candidates to promote. To create a screen, the user must specify one or more ___________________ that are used to ‘test’ the securities that are applied to it. “expressions” Each expression will return a ____________ or ____________ value when a security is evaluated against it. True or False If the expression returns true, the security is included in the ‘screened’ list, if it returns false, it is excluded. The criteria used can include anything from an EV/EBITDA ratio to the country or region a company is based in.

What is the PRODUCT?

How can I use it to help me with my work?

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Components of a Screen

Define each of the following components of a Screen; EXPRESSION - ______________________________________________________________________

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An expressions is one or more logical formulas that return a true or false result when applied to the companies in a universe of symbols OPERATOR ______________________________________________________________________

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The arithmatic or logical functions of the expression. ( ) + - / * AND OR… VARIABLE- ______________________________________________________________________

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The data points to which the operators are applied (P/E, EBITDA, PRICE ….)

How many ways are there to search for a Variable? Explain;

Variables can be searched in 2 ways. First by searching for the Name of the vailable in the Enter Variable Filter. Second is to expand each Variable section until the variable that is needed is found. NOTE - The variables are grouped into folders of similar data

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Searching for Variables

In order to create the P/E ratio screen, you will need to find the variable “P/E Ratio”. The PRODUCT allows you to filter or search the list of available variables for “P/E Ratio”:via the variable filter:

Enter the words “Price and Earnings ratio” in the Variable Filter text box and press the Filter button. Did the Price and Earnings Ratio search work? If not then try words like “PE”, “Price” etc. What search works?

Best to try P/E and drill down to ratios.

Select the variable “Price to Earnings Ratio, Excluding Extraordinary Items.” Now you will have to specify your criteria, in this instance use the last 12 months (LTM) and click

as illustrated:

Explian the “Specify Criteria” function. Will the options available in this function be the same for all variables?

Specify Criteria is used to further define each variable used in the expression. The criteria will be different for the type of data point selected in the Variable Filter. A good example is to view the criteria for Country and P/E and compare the Specify Criteria section for each one.

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Features of the Product

One of the more powerful features of the PRODUCT is the ability to create your own variables that you can then use within expressions and reports. To improve the workflow for the users, Reuters Services Menu – Quick Access to Most Recently Used Screens, Portfolios and Advanced Searches. Clicking on the Reuters Services Menu will now allow users to directly select (run) screens, portfolios and Advanced Research Searches.

This feature works on a “Most Recently Used” basis rather than listing all available Screens, Portfolios and Searches. This approach has been taken in order to avoid deterioration in site performance as the requests to the back end services to request (and then display) all available screens, portfolios and reports is “costly”. Users have the option to define, via Preferences (see bottom section of the General Tab), the number of Most Recently Used Items to display in this menu and indeed the feature can be switched off by the user in order to alleviate performance-related issues.

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Client Case Studies

Following the descriptions provided create the Screens detailed below -

Value Screen Value investing is one of the best known stock picking methods. Famous value investors include Warren Buffet. The value investor looks for stocks with strong fundamentals including earnings, dividends, book value and cash flow that are selling at a bargain prices. The value investor seeks companies that seem to be incorrectly valued (undervalued) by the market and therefore has the potential to increase in share price when the market corrects its error in valuation.

Expressions

Description Formula PRODUCT Expression

Stock price should be no more than tangible book value

Price to Book Ratio < 1 {Pr2TanBkQ} < 1

There should be no more debt than equity

Debt to Equity Ratio <= 1 {DbtTot2EqQ} <= 1

Current assets should be two times current liabilities.

(Current Assets * 2) < current liabilities

({TotCurA_RQ} ) < {TotCurLiab_RQ}

Dividend yield should be at least 2/3 the long-term AAA bond yield.

Dividend yield > 2/3 of the AAA long government bond (currently yields about 4.3).

{Yield} > 3.78

Growth Screen Unlike value investors who are interested in the here and now; growth investors are concerned with the future potential of a company, with much less emphasis on the present value. Growth investors like young companies. The theory is that growth in earnings and/or revenues will directly translate into an increase in the stock price. Growth stocks are primarily found in industries that are expanding rapidly. Growth companies rarely pay dividends but instead reinvest their earnings to promote further growth.

Expressions

Description Formula PRODUCT Expression

Industry in growth area – for example, communications or genetic research.

Industry in communications or biotechnology

Is In Set( {IndCode}, [COMEQP,BIOTRX] )

3 year EPS growth rate > 200%

EPS Growth Rate > 200 {EPS3YCGr%} > 200

Return on Equity should be increasing

Annual ROE should be better than prior 12 month ROE

{ROE%TTM} > {ROE%PTM}

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Customer Requested Screens

Following the descriptions provided create the Screens detailed below – these screens have been requested by customers in the past.

Technology Bargains

Just about everybody has an opinion on areas such as technology. Many are obsessed with it. Others avoid it. This screen is for those who are attracted by the prospect of powerful growth

(as new technologies come into being and gain widespread acceptance), but want to stay clear of the riskiest stocks in this group. The screen uses the following tests.

The stocks must be in the technology sector.

The Price/Earnings-to-Growth (PEG) ratio must be less than or equal to 2.00.

Share purchases by corporate insiders, net of sales, must be greater than or equal to zero.

The company must have achieved a positive rate of year-to-year EPS growth in the

latest quarter and in the trailing 12 month period.

The stock must have coverage by more than one analyst, and the average recommendation score must be less than or equal to 2.5 (1.00 = best, 5.00 = worst).

01 Select Company List US Companies 02 Is In Set({IndDescr},[BIOTRX,COMSRV,CMPSRV]) 03 {FY1PE_M}/{LTG_CM}<=2 04 {InsNetTrans}>=0 05 {EPS%ChgTTM}>0.AND.{EPS%ChgPYQ}>0 06 {FY1EPS#An_C}>1.AND.{ConsRec_C}<=2.5

Dividend Payers

It's seems so easy to find income stocks. Just sort by yield, from highest to lowest. But that's not necessarily the best way to go. We need to determine whether companies can afford to continue paying dividends and maintain a respectable pace of dividend growth in the future.

This screen addresses such quality issues by checking to see that historic dividend growth has not significantly outstripped EPS growth, that the payout ratio is at least tolerable, and that the company's recent capital spending has been reasonable (thereby diminishing the probability of pent-up future cash needs). The screen uses the following tests.

The current dividend yield is at least two percent.

Over the past three years, dividends grew at an annual rate of at least three percent

and at a rate that is no higher than 15 percent above the three-year EPS growth rate.

The trailing 12 month payout ratio is no greater than 95 percent.

Over the past five years, the rate of capital spending growth was no less than 85 percent of the five-year rate of sales growth.

01 Select Company List US Companies 02 {Yield}>=2 03 {Div3YCGr%}>=3.AND.({Div3YCGr%}<={EPS3YCGr%}*1.15) 04 {PayRatioTTM}<=95 05 {CapSp5YCGr%}>({Sales5YCGr%}*.85)

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