Fundamental Analysis Software?

[pch]

I know that there are dozens of software packages out there for traders and TA exponents. Now maybe fundamentals is relatively boring and a much smaller market, (or perhaps the online brokers offer all you need). So I am wondering whether there are any packages out there that are fundamentals based first and foremost?

I'm also interested in what people would consider to be the key features that a FA based software tool would need to provide to be considered 'fully featured'.

regards

P

 

[123enen]

http://www.lincolnindicators.com.au/stockdoctor/

 

[bullmarket]

Hi pch

I've seen a demo and had a bit of a play with StockDoctor which is what 123enen posted the link for.

It's totally fundamentals based with some limited charting capabilities.

Imo it's definitely one software package worth considering if using fundamentals as part of your strategy.

Anyway, below is a copy of what I posted in another thread which describes what I do re fundamentals. It's a model based on similar concepts to StockDoctor that I built using an Excel spreadsheet but is mainly limited to industrial companies. I don't use it for financial (eg banks) or speculative stocks due to the limitations of the Altman-Z factor built into the model.

Below is a summary of what I do to try to determine whether a company is fundamentally good value or not.

Basically I go through a series of 5 tests and a company has to gain a score of 70%+ in these tests for me to rate it as ok to buy fundamentally. I've set up an Excel spreadsheet to model these 5 tests. Then I look at the company's price chart to help time buying points if the stock passes my fundamental tests.

1) I use the Altman-Z Factor to gauge whether a company is financially sound or not. For info on how the Altman-Z Factor model works, maybe have a look at http://www.nysscpa.org/cpajournal/old/16641866.htm if interested
This test has a 25% weighting to the final score.

2) I look at various financial ratios including, working capital ratio, Debt/Equity, Gearing, ROA, ROE, interest cover, dividend cover, EBIT margin etc
This test has a 22% weighting to the final score.

3) I then look at the PER and PEG ratios to make sure they are within reasonable limits.
PER and PEG each have a 10% weighting to the final score.

4) I then look at what total returns (cap gain + divs) I can expect in the next 2 years based on increased share price according to PER and EPS,DPS forcasts. I aim for at least 10%pa potential return.
This test has a 23% weighting to the final score.

5) I then discount that total return back to NPV to see if the current share price is above/below the NPV.
This test has a 10% weighting to the final score.

example:

Company XYZ

Current Share Price: $1.00
Forcast EPS in 2 yrs: 7.5 cps
Forcast Div in Yr 1: 3.0 cps
Forcast Div in Yr 2: 3.2 cps
'Fair' PER: 16.0
Long term 'Risk Free' Return: 5.5%

Therefore, potential price target = 0.075 x 16.0 = $1.20

Potential TOTAL 2 yr return = $1.20 + 0.03 + 0.032 = $1.262

Now I 'discount' this $1.262 total return back to NPV using a transposed compound interest formula:

NPV = TR/((1+I)^n)

Where

NPV = Net Present value of the $1.262 total return
TR = Total Return
I = Discount Rate
n = number of years
^ = to the power of

NPV = 1.262/((1+0.055)^2) = $1.13

Since the current share price at $1.00 is well below the $1.13 NPV of my total potential return then I would consider XYZ to be good value atm. But to pass my NPV test, the share price has to be at least 10% below the NPV. The current share price having to be 10% below NPV is my risk premium as compensation for buying the shares and not simply investing the funds at the 'risk free' interest rate.

So although all this above doesn't actually value the company, it does value my expected returns in terms of what those returns are worth today (NPV).

So after I have the results of the above 5 tests, the individually weighted test results need to add up to a score of 70%+ for the company to pass my fundamentals/valuation test overall. If the company passes then I look at the price chart to help time buying points.

cheers

bullmarket

 

[pch]

Thanks for that guys.. I use DCF/NPV myself. Currently, I persue forums like this one and every so often you get someone who posts good, tangible reasons on why they think a company is good. I usually then start by applying the above analysis to it.

But I was also thinking that it would be great to be able to do some decent data mining, like Comsec's advanced search tool on steroids..

regards

 

[Fab]

I am currently reading a book on technical analysis and it seems to mention 30 days MA everywhere nevertheless this is not something I can find anywhere on the stocks charts when I go to commsec. I am wondering if someone knows where I could find this information ?

Cheers

 

[grumpee boi]

You might enjoy these links

Portfolio Managers based on FA
http://www.activeinvesting.com
http://www.validea.com/home/home.asp

Software
http://www.paritech.com.au/AU/products/software/metamarket.asp
http://www.stockval.com.au/

(I read on the stockval site that it is now associated with Clime which I think is Roger Montgomery. Don't know if that is good for it or not)

 

[RichKid]

...........
http://www.stockval.com.au/

(I read on the stockval site that it is now associated with Clime which I think is Roger Montgomery. Don't know if that is good for it or not)

If you search the www.ASX.com.au education section you'll find some articles by him explaining his approach, might even have screen shots of his software.

 

[TjamesX]

Thanks for that guys.. I use DCF/NPV myself. Currently, I persue forums like this one and every so often you get someone who posts good, tangible reasons on why they think a company is good. I usually then start by applying the above analysis to it.

But I was also thinking that it would be great to be able to do some decent data mining, like Comsec's advanced search tool on steroids..

regards

Here's a little gem for you;

http://www.australian-economy.com/

Just below the submit and reset buttons is the csv data that you can do whatever you like with...

TJ

 

[NettAssets]

Fundamental Analysis Software

Hi All

Have just seen an ad. for Hubbs new FA software.

Like all their gear they want an arm and leg for it (A$5000 at the moment and they recon that is half price!)

http://www.valuegain.com/

Just for interest sake as the stockval thread seems to have died.

NA

 

[Fugazi]

Re: FA - Software

I have trouble reconciling F/A with any software. I'm a total noob at this whole thing, but my take so far is that F/A is a far more subjective thing than T/A. Computers ain't that good at subjective.

What can it do other than regurgitate PE ratio's etc, which are in all sorts of publications.

 

[DT_Futures]

Re: Fundamental Analysis Software

do fundamentals matter???

nope, the markets all about technical analysis...

the odds are like 70% of all trades on the nyse are computers, fundamentals mean nothing...

if your into investing in shares, just buy bluechips. if your trading, technicals are the way to go

 

[Knobby22]

Re: Fundamental Analysis Software

Even if you get the software, it won't help you much with F/a and $5000 is ridiculous. You need to learn to do it yourself.

 

[nizar]

Re: Fundamental Analysis Software

lololololololol $5Gs??!!

the most amazing thing is - some people will actually buy it and the people that buy it are those that think it is the golden ticket to investing success - big mistake

but theres alot of gullible people out there - which is why people like henry kaye do alright - until they get caught that is

 

[Sultan of Swing]

Re: Fundamental Analysis Software

Even if you get the software, it won't help you much with F/a and $5000 is ridiculous. You need to learn to do it yourself.

Dumb question maybe, but can you point to any good threads on FA?

 

[Realist]

Re: Fundamental Analysis Software

do fundamentals matter???

nope, the markets all about technical analysis...

the odds are like 70% of all trades on the nyse are computers, fundamentals mean nothing...

if your into investing in shares, just buy bluechips. if your trading, technicals are the way to go

You better email Buffett now and tell him to give back his $60,000,000,000 he was obviously mistaken.

 

[StockyBailx]

Re: Fundamental Analysis Software

You better email Buffett now and tell him to give back his $60,000,000,000 he was obviously mistaken.

You must have blue chips im-planted in your brain if you believe all that.

But funderments are deafinantly the key to the back door.

 

[das46]

Fundamental analysis software

Are there any good software available for fundamental analysis out there the anyone has got going or been looking at

 

[luutzu]

Re: FA - Software

I have trouble reconciling F/A with any software. I'm a total noob at this whole thing, but my take so far is that F/A is a far more subjective thing than T/A. Computers ain't that good at subjective.

What can it do other than regurgitate PE ratio's etc, which are in all sorts of publications.

Yes and No, mainly No.

FA does lend itself to some interpretation - based on nature of business, on certain adjustments of accounting items/definition etc. That's one of the many reasons it's hard to programme properly for the masses... that and the masses are either trading and so don't need it, or hard at work pretending to have their own secret formula so won't use it.