Apr. 2, 20248 min read

What Is a Fundamental Stock Screener and Why Do You Need One?

Tim BohenAvatar
Written by Tim Bohen

A fundamental stock screener is software that filters stocks based on fundamental criteria. They’re really useful for examining stocks based on various financial metrics and data points that relate to the company’s intrinsic value.

An understanding of fundamental analysis is essential whatever your trading strategy. Most swing traders and day traders don’t need to get too deep into the weeds of fundamental analysis, but we still need to understand it. A little poke around a company’s fundamentals can reveal the differences between a shady stock you shouldn’t hold overnight and a solid stock you’ll keep on your watchlist for a long time.

If you’re an investor, you need to dive deeper. Fundamental stock screeners can help you a lot in your research.

How essential is fundamental analysis — and how can a fundamental stock screener help you with it? Let’s dive in!

Stock Screener and Fundamental Analysis

Here’s a quick refresher about stock screeners: stock screeners are awesome tools that let you sort through thousands of listed and unlisted stocks according to your preferred criteria. 

Stock screening is one of the bedrock tactics in any trading strategy. Whether you’re screening to build your watchlist, check out new strategies, or just see what’s moving in the market, a stock screener is a trader’s best friend.

The main connection between stock screeners and fundamental analysis is that screeners can filter stocks based on the company’s fundamentals. 

A screener will do the heavy lifting for you. You build a set of criteria, and search the entire market to find stocks that meet them.

What Is Fundamental Analysis?

Fundamental analysis is a way to measure a stock’s intrinsic value and strength by analyzing its underlying metrics. This means you don’t just look at the price. Fundamental analysis takes everything into account — from how the company is doing to current market conditions.

What do you use fundamental analysis for? You do it to learn about the company’s growth prospects. You’ll also learn whether the company’s stock is correctly valued or not. An undervalued stock’s price might eventually rise, while an overvalued stock’s price might eventually drop. 

The other method for analyzing stocks is technical analysis. In technical analysis, traders study a stock’s trading volume and historical price movements to get a good feel of how the prices behave. Knowing how prices behave means you can properly react to price movements down the line.

Technical analysis is much more common for day trading and swing trading because it concentrates on short-term movements. But it never hurts to learn fundamental analysis — it’s always good to build your knowledge account.

Key Fundamental Analysis Parameters

So, what data points and indicators should you look at? Here’s what I examine when doing fundamental analysis:

  • Sales: No sales means you can’t pay the bills — it’s that simple. You’re trading or investing in a company’s future prospects, so look for a company that has a good amount of sales. This is especially important if you’re holding a stock over a longer timeframe.
  • Profit & loss (P&L): Checking the company’s P&L gives you an idea how sales income translates to actual earnings. Be wary when you’re holding stocks for companies bleeding money — they might do a stock offering or just go bankrupt.
  • Product or service: Ultimately, it all comes down to what the company is selling. A killer product in the pipeline can signal value that hasn’t yet translated to share price.
  • Price/earnings (P/E) ratio: P/E ratio compares how much the company is making with its stock price. A high P/E ratio indicates that the market thinks the stock has a good amount of future upside.
  • Employee count and office building: This sounds kinda funny, but I always check the company’s employee count and headquarters. If a publicly-traded company only has a handful of employees and a sketchy office in someone’s house, that tells you something about the company. 

Those are the five factors I look to the most when doing fundamental analysis. They’re important for short-term trading as well as longer-term moves.

What Is a Fundamental Stock Screener?

A fundamental stock screener is a screener platform that filters for fundamental metrics. Depending on who they’re made for, some stock screeners may have little to no fundamental analysis capabilities.

Examples of Fundamental Stock Screeners

What is the best stock screener for fundamental analysis? I can’t answer that because everybody has different needs, and there are many options out there. 

That said, here are some examples of fundamental stock screening tools I like:

  • StocksToTrade — Best Fundamental Screener for Traders
  • Zacks Stock Screener — Most Versatile Fundamental Screener
  • TC2000 — Best Fundamental Screener for Research
  • Seeking Alpha — Best Fundamental Screener for Intermediate and Advanced Investors
  • Stock Rover — Best Customizable Fundamental Screener

Different stock scanners cater to different kinds of traders. For instance, Seeking Alpha is better for thorough fundamental analysis thanks to its fundamental charting feature. Meanwhile, StocksToTrade is better for day traders because of its customizability, beautiful charting, and other useful trading tools.

How do I choose the best stock screeners? Check out my post about the best stock screener criteria.

StocksToTrade isn’t overly specialized in fundamental analysis. This killer screener is primarily geared toward technical analysis, which is what day and swing traders should be looking for.

Like the great Brian Shannon says, “Only price pays.” If growth isn’t reflected in the chart, it isn’t really growth.

StocksToTrade was built by stock traders for stock traders. It’s got beautiful charts, trader-built screens, and a great news scanner. Try it yourself — sign up for a 14-day StocksToTrade trial for only $7 now!

Importance of Fundamental Analysis in Trading

Fundamental analysis can help traders “read between the lines” and discover a stock’s deeper value. If you know whether a stock is undervalued, overvalued, or accurately valued, you can better gauge its profit potential.

Essentially, fundamental analysis reveals a stock’s nuts and bolts. It helps you get a better idea of the company’s potential and where it’s likely headed.

Fundamental analysis and technical analysis examine different aspects of a stock’s value. Day traders usually focus more on technical analysis because it examines short-term price fluctuations. 

Still, fundamental analysis is an essential trading skill. Knowing multiple ways to research expands your arsenal… and it ensures you won’t get caught overlooking something as “fundamental” as terrible financials!

There’s another way for you to learn how to navigate the markets: the Small Cap Rockets chat room. This is where millionaire traders Matt Monaco and Bryce Tuohey break down their trading plans and watchlists every trading day. Test drive StocksToTrade and Small Cap Rockets for 14 days — just $18!

Why Do You Need a Fundamental Stock Screener?

You need a fundamental stock screener to cover all of your bases. If you’re only scanning for technical criteria, you’re missing out on half of the picture.

Different screener apps cater to different needs. Check out my list of the best screeners for swing trading and day trading. For beginners looking to get their feet wet, read my list of the best free stock screeners.

Advantages of Using Fundamental Stock Screeners

The main advantage of using fundamental stock screeners is that it helps in-depth research. The more you learn about a stock’s fundamentals, the more likely you are to understand the stock better — which leads to you trading better.

Fundamental stock screeners can also compare stocks between companies. This means you can examine multiple companies side-by-side and choose which one is more worth trading or investing in. 

Final Thoughts

Fundamental stock screeners help users save time when performing fundamental analysis. 

Technical analysis is better for day and swing traders because it focuses on short-term price fluctuations. But that doesn’t mean you should ignore fundamental analysis. Both types of analysis employ different approaches, so they’re good for different situations. 

Good fundamental analysis should start with a GREAT stock screener. Choose one that fits your trading preferences and suits your needs.

Looking for a different kind of stock screener? Former software engineer and current millionaire trader Matt Monaco has just come out with one that mirrors his profitable trading style. It’s called the Alpha Scanner.

It’s full of trade alerts, live mentoring, and more. Can Matt’s life’s work be your edge in trading? Check out his presentation to find out…

Sign up to join the next Alpha Scanner LIVE broadcast!