StockSignal
How to use the screener to find companies exhibiting structural value characteristics through asset, earnings, and pricing signals.
The Question
How do I find structurally underpriced companies? Value investing begins with the observation that market prices sometimes diverge from underlying economic value. But "cheap" is not the same as "undervalued" — a stock can be cheap because the business is genuinely deteriorating. The screener approaches value structurally, looking for combinations of signals that suggest a company's price does not fully reflect its measurable characteristics, while also flagging the risks that often accompany apparent cheapness.
What Value Means Structurally
Structural value is not about predicting future prices. It is about identifying measurable gaps between what a company owns or earns and what the market currently pays for it. A company trading below its net asset value, or at earnings multiples well below its historical range, or with hidden assets not reflected in its market capitalization, exhibits value characteristics. Whether those characteristics lead to price appreciation depends on catalysts and business quality — factors that value signals alone cannot capture.
The screener's value stories combine different approaches to identifying these gaps. Asset-based value looks at the balance sheet. Earnings-based value looks at cash generation relative to price. Risk-adjusted value considers whether apparent cheapness might be warranted by deteriorating fundamentals.
Key Signals
Asset Play
What it measures: The degree to which a company's market capitalization is low relative to the value of its identifiable assets. When the market values a company at or below its liquidation value, the stock exhibits asset play characteristics — the market is assigning little or no value to the going-concern business itself.
Data source: Market capitalization compared to net asset value derived from balance sheet items.
Graham Number
What it measures: A valuation benchmark inspired by Benjamin Graham's framework, combining earnings per share and book value per share into a single fair value estimate. When a stock's price is significantly below its Graham Number, it meets a classical quantitative value criterion.
Data source: Calculated from earnings per share and book value per share using the Graham formula.
Valuation Compression
What it measures: Whether the company's valuation multiples have contracted over time. Valuation compression can indicate increasing market skepticism about the business — but it also creates potential value opportunities if the skepticism is excessive relative to the actual business trajectory.
Data source: Historical valuation multiples compared to current levels, measuring the degree of compression.
Stories That Emerge
Deep Value Position
Constituent signals: Asset Play, Current Ratio, Debt-to-Equity Ratio
What emerges: When a company trades at or below its asset value while maintaining adequate liquidity and manageable leverage, it occupies a deep value position. The inclusion of financial strength signals is deliberate — deep value that is accompanied by financial distress is a value trap, not a value opportunity. By requiring both cheapness and financial stability, this story filters for companies where the market discount appears structural rather than distress-driven.
Limits: Deep value positions can persist indefinitely. A company can trade below asset value for years if there is no catalyst to close the gap. The story identifies the structural condition, not the timing of any potential resolution.
Deep Value
Stock trading below tangible asset value with balance sheet safety
Graham Value Position
Constituent signals: Graham Number, Earnings Quality, Debt-to-Equity Ratio
What emerges: This story applies a classical value framework — is the stock cheap relative to the Graham Number — while validating that the earnings used in the calculation are reliable (high earnings quality) and the balance sheet is sound (low leverage). The combination prevents the Graham Number from being misleading due to inflated earnings or excessive debt.
Limits: The Graham Number is a simplified valuation model that does not account for growth, competitive position, or industry-specific characteristics. Companies may correctly trade above their Graham Number if their growth or quality justifies a premium. The story identifies stocks meeting a classical value criterion, not necessarily mispriced securities.
Graham Value
Stock with favorable Graham-style valuation and quality characteristics
Hidden Asset Value
Constituent signals: Hidden Asset, Retained Earnings Weight, Debt-to-Equity Ratio
What emerges: Some companies carry assets on their balance sheet at historical cost that may be worth significantly more at current market values — real estate purchased decades ago, intellectual property, or minority stakes in other businesses. When the hidden asset signal is strong, retained earnings have been accumulated over time, and leverage is low, the company may have substantial unrecognized value.
Limits: Hidden assets are hidden for a reason — they are difficult to value precisely and may never be monetized. A company with valuable real estate on its books at historical cost only realizes that value if it sells the property or is acquired. Hidden asset value is potential, not realized.
Hidden Asset Value
Company with potential unrecognized asset value
Valuation Compression Risk
Constituent signals: Valuation Compression, Earnings Reversion Risk, Growth Consistency
What emerges: This story serves as a counterweight to the other value stories. It identifies companies where valuation has been compressing and where the compression may be justified by earnings reversion risk or inconsistent growth. When valuation compression coincides with fundamental deterioration signals, the apparent "cheapness" may reflect legitimate market assessment rather than opportunity.
Limits: Not all valuation compression is warranted. Sometimes the market over-corrects, creating genuine value opportunities even in companies facing temporary difficulties. This story flags risk, not certainty — it identifies situations that warrant additional scrutiny.
Valuation Compression
Company showing conditions associated with potential valuation pressure
Using the Screener
Classical Value Screen
Select the Graham Value Position story to find companies trading below their Graham Number with validated earnings quality and manageable debt. This is the most rigorous quantitative value filter, grounded in the classical Ben Graham framework.
To find the most extreme value situations, use Deep Value Position instead or in combination. Companies passing both stories trade below both their asset value and their Graham Number while maintaining financial stability — the deepest structural value positions available.
Value with Risk Awareness
Select your preferred value story (Graham Value Position or Deep Value Position), then check the results against the Valuation Compression Risk story. Companies that show value characteristics without triggering valuation compression risk are more likely to represent genuine opportunity rather than value traps — though this remains a structural observation, not a prediction.
Boundaries
What This Cannot Tell You
Value signals describe the relationship between a company's price and its measurable financial characteristics. They do not determine whether a stock is a good investment. A stock can be structurally cheap and remain cheap, or become cheaper, for extended periods.
Value screening cannot identify catalysts — the events or changes that cause the market to reassess a stock's price. Without a catalyst, value characteristics are a structural observation with no timeline for resolution.
These signals also cannot distinguish between companies that are cheap because the market is wrong and companies that are cheap because the market correctly perceives problems that are not yet fully reflected in the financial statements. Qualitative judgment about the business, its management, and its competitive position remains essential for interpreting value signals.