How to Use Deep Value Stock Screener for Better Investment Decisions [Tutorial]
A deep value stock screener helps you find stocks trading at extreme discounts to their intrinsic value without reading hundreds of financial statements by hand. The deep value stock screener approach filters a universe of thousands of stocks down to 20-50 candidates in minutes, using metrics like price-to-book, earnings yield, and net current asset value ratio. This tutorial walks through the exact filters to set, how to interpret the results, and what to check before committing capital to any name that clears the screen.
Key Takeaways
- A deep value stock screener automates the first step of Benjamin Graham's process: identifying stocks where the market price is far below fundamental value.
- The three primary deep value filters are: price-to-book below 0.8, earnings yield above 12%, and current ratio above 1.5.
- Adding a minimum market cap ($20 million or higher) removes illiquid shell companies that pass the filters but cannot be traded at reasonable cost.
- The ValueMarkers screener tracks 120+ indicators per stock and combines them into a VMCI Score so you can rank results by overall investment quality rather than single-factor cheapness.
- Screening is the first step, not the last. Every name that passes the screen requires a manual balance sheet check before you invest.
- Deep value screens generate more false positives in bull markets (when everything looks expensive) and more genuine opportunities in bear markets and sector corrections.
Step 1: Choose Your Screening Universe
Before setting filters, decide which universe to screen.
U.S. equities (NYSE + Nasdaq) is the most common starting point. You get good data quality, liquid markets, and regulatory transparency. The tradeoff is that genuine deep value is rarer because institutional investors and arbitrageurs close discounts faster.
International markets can offer better opportunities for deep value investors. Japan historically has 200-400 net net stocks at any given time due to the corporate governance environment. South Korea, Germany, and the UK also produce deep value candidates. The ValueMarkers screener focuses on U.S. equities, so international screening typically requires a dedicated international data provider.
Sector restrictions are worth considering. Some sectors rarely produce genuine deep value. Technology companies often have high fixed assets in the form of intangible capital that does not appear on the balance sheet, making P/B a misleading metric. Financial companies carry complex debt and derivative structures that make book value hard to interpret. The cleaner deep value hunting grounds are industrials, consumer staples, healthcare (especially medical devices and generic pharma), and specialty retail.
Step 2: Set the Price-to-Book Filter
Price-to-book (P/B) compares the stock price to the company's net book value per share. A P/B below 1.0 means you are paying less than the accounting value of assets minus liabilities. A P/B below 0.75 starts to approach classic deep value territory. Below 0.5 is extreme and typically signals either genuine distress or a material mispricing.
Set your initial P/B filter at below 0.8. This will capture true deep value candidates while excluding companies that are merely "fairly valued" by balance sheet standards.
Note that P/B has limits in sectors with large intangible assets. A software company with a P/B of 2.0 might be cheaper in real terms than an industrial company with a P/B of 0.9 if the industrial's book value consists of aging equipment worth less than stated. This is why P/B works best for asset-heavy businesses where the balance sheet reflects tangible reality.
Step 3: Set the Earnings Yield Filter
Earnings yield is earnings per share divided by price per share, expressed as a percentage. It is the inverse of the P/E ratio. An earnings yield of 12% corresponds to a P/E of 8.3x. An earnings yield of 8% corresponds to a P/E of 12.5x.
Deep value investing typically targets earnings yields above 12%, which ensures you are buying earnings at a substantial discount to the broader market. As of early 2026, the S&P 500 earnings yield sits near 4.5%. A stock with a 12%+ earnings yield is offering roughly 2.7 times the earnings return of the index.
Set your earnings yield filter at above 10% as a minimum. If you want to apply a stricter Graham-style filter, use 14%+ to capture only the most deeply discounted earners.
One caution: trailing earnings can be temporarily depressed by one-time charges, restructuring costs, or cyclical downturns. If the earnings yield looks extremely high because of a bad year rather than persistent cheap pricing, the screen result can be misleading. Always check at least 3-5 years of earnings history to distinguish cyclical troughs from permanent deterioration.
Step 4: Add Liquidity and Quality Filters
Raw deep value screens produce many distressed candidates with serious risks. Three additional filters improve the quality of results without eliminating genuine opportunities.
Minimum current ratio of 1.5. The current ratio (current assets / current liabilities) measures near-term liquidity. A ratio below 1.0 means current liabilities exceed current assets, and the company may struggle to meet obligations without asset sales or new financing. A minimum of 1.5 removes the most stressed candidates from your screen.
Minimum market cap of $20 million. This removes shell companies, almost-bankrupt micro-caps, and names with so little market cap that you cannot build a meaningful position without owning a significant percentage of the float. For larger pools of capital, set this higher, at $50-100 million.
Positive operating cash flow. A company with positive operating cash flow is at least generating real cash from operations, even if net income is distorted by accounting adjustments. This filter removes companies that are hemorrhaging cash and will burn through their asset base before any catalyst appears.
| Filter | Conservative Setting | Moderate Setting | Aggressive Setting |
|---|---|---|---|
| Price-to-book | Below 0.66 | Below 0.8 | Below 1.0 |
| Earnings yield | Above 15% | Above 12% | Above 10% |
| Current ratio | Above 2.0 | Above 1.5 | Above 1.2 |
| Min. market cap | $50 million | $20 million | $5 million |
| Operating cash flow | Positive last 3 years | Positive trailing 12 months | Any |
Step 5: Check the NCAV Ratio for Net Net Candidates
The NCAV (net current asset value) ratio is the most conservative deep value metric. NCAV per share equals current assets minus total liabilities, divided by shares outstanding. Any stock with a price-to-NCAV below 1.0 qualifies as a Graham-style net net.
Set a price-to-NCAV filter at below 1.0 to add a separate sub-screen for net net candidates within your results. Stocks passing both the P/B screen and the NCAV screen are the deepest-discounted names in the universe and deserve close attention.
The ValueMarkers screener includes NCAV per share and price-to-NCAV as pre-calculated fields, so you can add this filter directly without manually pulling balance sheet data for each candidate.
Step 6: Sort Results by VMCI Score
Once your filters return a list of candidates, sorting by quality improves your selection. The VMCI Score at ValueMarkers combines five pillars: Value (35%), Quality (30%), Integrity (15%), Growth (12%), and Risk (8%). For deep value screening, the Quality and Risk pillars are especially informative.
A stock with a VMCI Quality score above 55 has above-average return on equity, return on invested capital, and earnings consistency relative to its peer group. A VMCI Risk score above 60 has manageable debt levels and stable revenue. A deep value stock with both scores above 55 is statistically less likely to be a permanent capital loss than one scoring below 40 on both metrics.
Sort your screen results by VMCI Score descending and work through the top 20-30 names first. This is not a substitute for manual analysis, but it ensures you spend your time on the better-quality subset of an already filtered list.
Step 7: Manual Verification Before Investing
Every stock that clears the screen needs three manual checks.
Balance sheet quality check. Open the most recent 10-Q or annual report. Look at the composition of current assets. If receivables have grown faster than revenue over the past year, the company may be booking revenue it has not collected. If inventory has grown while sales are flat or declining, obsolescence risk is present.
Recent news and filings. Screen results reflect the last reported financial statements, which may be 3-6 months old. Check for any earnings releases, regulatory filings, management changes, or litigation news since the last balance sheet date.
Insider transactions. Check whether insiders are buying or selling. A deep value stock where insiders are consistently buying shares over 6-12 months is a stronger signal than one where insiders are selling despite the cheap price. Form 4 filings at the SEC, or the insider transaction data in the ValueMarkers screener, provide this data.
Further reading: SEC EDGAR · Investopedia
Why value stock screener Matters
This section anchors the discussion on value stock screener. The detailed treatment, formula, and worked examples appear in the body of this article above. The points below summarize the most important takeaways for value investors who want to apply value stock screener in real portfolio decisions. ValueMarkers exposes the underlying data on every covered ticker via the screener and stock profile pages, so the concepts in this article translate directly into actionable filters.
Key inputs for value stock screener
See the main discussion of value stock screener in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using value stock screener alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Sector benchmarks for value stock screener
See the main discussion of value stock screener in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using value stock screener alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Related ValueMarkers Resources
- Pe Ratio — Glossary entry for Pe Ratio
- Enterprise Value — Glossary entry for Enterprise Value
- Pb Ratio — Glossary entry for Pb Ratio
- Net Net Meaning — related ValueMarkers analysis
- Netnet — related ValueMarkers analysis
- Value Investor Club — related ValueMarkers analysis
Frequently Asked Questions
what happens if the stock market crashes
A stock market crash improves conditions for deep value stock screeners because prices fall below fundamental values across more companies. When the broad market drops 30%, many stocks that previously screened at P/B of 1.2 (not deep value) fall to P/B of 0.8 (deep value territory). Investors who run their screens during crashes and act on the results have historically achieved the best returns from deep value strategies. The 2009 and 2020 lows produced the largest clusters of deep value screen hits in recent memory.
what time does the stock market open
The New York Stock Exchange and Nasdaq open at 9:30 a.m. Eastern Time. For deep value investors using a stock screener, timing entry to intraday movements is generally less important than finding the right companies at the right prices. Most screeners, including ValueMarkers, update data daily or weekly rather than in real time, which aligns with the multi-year holding periods that deep value strategies require.
are stock markets closed today
U.S. equity markets are closed on nine federal holidays each year: New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Juneteenth, Independence Day, Labor Day, Thanksgiving, and Christmas Day. Markets also close early on the afternoon before Thanksgiving and Christmas. You can check the current day's status through the NYSE's official holiday calendar or any major financial data provider.
what time does the stock market close
U.S. equity markets close at 4:00 p.m. Eastern Time on regular trading days. For deep value investors who use weekly or monthly screening cycles, the exact closing time is less operationally important than understanding which date the screener's data reflects. Always check the data refresh date in any screener so you know whether you are working with today's prices or last week's closing data.
when does the stock market open
The U.S. stock market opens at 9:30 a.m. Eastern Time. Pre-market trading runs from 4:00 a.m. to 9:30 a.m. Eastern with lower volume and wider spreads. For deep value investors entering positions in micro-cap or small-cap stocks, trading during regular market hours (9:30 a.m. to 4:00 p.m. Eastern) is preferable to pre-market or after-hours sessions because liquidity is better and execution costs are lower.
why is the stock market down today
Daily market declines reflect short-term sentiment shifts driven by macro data, interest rate changes, earnings surprises, or geopolitical events. For a deep value stock screener user, a market-wide decline is worth monitoring because it may push previously borderline candidates below key thresholds. A stock at P/B 0.85 that drops 10% in a broad sell-off now sits at P/B 0.77, crossing into deeper value territory. Running your screen after significant market declines often produces better results than running it at market highs.
Open the ValueMarkers screener now, set P/B below 0.8, earnings yield above 12%, and current ratio above 1.5, then sort by VMCI Score to build your first deep value watchlist in under 10 minutes.
Written by Javier Sanz, Founder of ValueMarkers. Last updated April 2026.
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Disclaimer: This content is for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.