Magic formula screen

Joel Greenblatt described the magic formula in The Little Book That Beats the Market. It ranks every company twice — once by how cheap it is, using earnings yield (operating earnings against enterprise value), and once by how good a business it is, using return on capital — and adds the two ranks. The lowest combined scores are cheap companies that earn well on the money invested in them.

This screen takes companies worth more than $1 billion outside the financial and utility sectors, as Greenblatt does, with positive operating earnings and a positive return on invested capital. It ranks them by EV/EBIT, lowest first, and by return on invested capital, highest first, and orders them by the sum. Greenblatt measures return on capital as operating earnings over net working capital plus net fixed assets; stockrow uses return on invested capital, which is close but not the same, so the list approximates his rather than reproducing it. The screener cannot order by a combined rank, so "Open in screener" shows the same companies sorted by EV/EBIT alone.