Screening for Domestic Utilities Stocks

In this instructional video, we show how to use the YCharts Equity Screener to:

Hi everyone and thank you for tuning in to this month’s screener newsletter my name is ko janaki and i’m a member of the customer success team with the recent trade war between the us and china heating up investors are moving their money to safer assets or sectors such as the utility sector which outperformed the s&p 500 this past month sectors with high

Revenue exposure to underperforming companies may take a larger hit as a trade war escalates many of these firms are centered around the technology sector the utility sector is a traditional trade insulated sector as it tends to be domestically focused and non cyclical alleviating some of the risks from adding these investments into shareholder portfolios today

We are jumping into the equity screener to create a universe of domestic stocks in the utility sector we will add symmetric filters to evaluate growth and leverage and finish with a scoring model to rank valuations now let’s get started first we’re going to hover over tools and click on equity screener next let’s modify the equity universe all modifications

The universe will be qualitative if we click on modify equity universe will click on exchanges will then choose us exchanges and select all major us exchanges next we’ll modify the equity universe again and then choose sectors we are going to intersect the utility sector and select all four industries within this sector this will quickly reduce our universe to

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Domestic stocks within my sector of interest next we’re going to add some quantitative filters i’m going to add a metric filter and utilize an equation i’m going to use revenue five-year growth and select the drop-down to greater than and insert 0 since the utilities market is heavily regulated it is difficult for companies to raise utility prices to increase

Revenue so finding companies with any growth is crucial the next metric filter i’m going to use will be another equation i’m going to use dividend growth ttm and select the drop down to greater than an input 0 the long-term stability of the utility sector typically offers a consistent in high-yield the last metric filter i’m going to use is a range i’m going to

Use debt to equity ratio annual for my metric annual refers to the fiscal year ends value my range is going to be between 1 and 1 point 5 this is typically viewed as a healthy debt to equity ratio as companies will not be as highly leveraged or perma primarily financed with debt we are going to finish off this screen by creating a scoring model to give a rank

To my universe if i click on scoring models and then create a new scoring model i’ll name my score utility score we’re going to leave our scoring system as a rank with 1 being the best score based upon our weighted metrics the first metric i’m going to add is relative p/e ratio ttm sector relative calculations compare the metric of the security to that of the

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Sector depending upon the metric below or above 1 will be what we are aiming for for this particular metric we want a lower value as better than no values to mean the second metric we will add is relative ps ratio ttm sector we want a lower value is better than no values to mean we want emphasis on securities that are not overvalued the last metric we’ll add is

Relative gross profit margin quarterly sector we want a higher value as better than null values to mean we want emphasis on companies who are bringing higher profits relative to the cost of producing goods i will uncheck the fixed box so this evenly weights all three metrics once we select add score column we go ahead and organize our universe based upon the

Scores given you can see here that the stock and w/e ranks in first accord in these specifications if you have any questions regarding the screen i’ve created a feel free to reach out to support contact for more information thank you all for watching and stay tuned for further screen or newsletters

Transcribed from video
Screening for Domestic Utilities Stocks By YCharts