Example 1 — Value Investor / US Large Cap Variables filled in the prompt: [INVESTMENT STYLE AND OBJECTIVE]: Classic value investing — buying undervalued large cap US stocks with a margin of safety, targeting 30-50% upside over 2-3 years [MARKET AND UNIVERSE]: US large cap equities (S&P 500 and S&P 400 mid cap) — all sectors except financials and utilities (different accounting makes comparison difficult) [HORIZON AND HOLDING PERIOD]: Long-term — 2 to 3 year holding period minimum [MUST HAVE CRITERIA]: Strong free cash flow generation, low debt, some form of competitive advantage visible in margins or returns on capital [MUST AVOID CRITERIA]: Companies with declining revenue for 2+ consecutive years, companies with net debt above 3x EBITDA, companies in secular decline industries (print media, traditional retail without e-commerce) Generated output: ▸ INVESTMENT STYLE IDENTIFIED Classic Value — buying businesses trading at a meaningful discount to intrinsic value (estimated using normalized earnings and free cash flow) with a margin of safety that provides downside protection if the thesis takes longer than expected to play out. ▸ COMPLETE SCREENER CRITERIA MetricThresholdCategoryTierRationaleFalse Positive RiskForward P/E< 15xValuation1Below market average P/E signals potential undervaluation — 15x is approximately 30% below the S&P 500 historical averageCompanies with unsustainably high earnings about to mean-revert (value trap)FCF Yield> 5%Valuation1FCF yield above 5% means the business generates meaningful cash relative to its price — harder to fake than earningsCapital-light businesses where FCF is temporarily depressed by growth capexNet Debt / EBITDA< 2xFinancial Health1Leverage below 2x provides financial resilience — allows the company to survive a downturn without distressCompanies with high debt but stable regulated cash flows (utilities excluded anyway)ROIC> 10%Quality2ROIC above the cost of capital (approximately 8-10%) confirms the business creates value from its invested capitalBusinesses with high ROIC from a one-time event rather than structural advantageRevenue Growth (3-year CAGR)> 0%Growth2Minimum growth filter eliminates companies in absolute revenue decline — value investing does not require high growth but does require stabilityCyclical businesses at a revenue peak about to declineGross Margin> 30%Quality2Margins above 30% suggest some pricing power or cost advantage — below 30% is typically a commodity business with no moatBusinesses with temporarily elevated margins due to supply chain disruptionsEV/EBITDA< 10xValuation2Below 10x EV/EBITDA provides a cross-check on the P/E filter — both must be low to confirm the valuation caseAsset-heavy businesses where EBITDA overstates true cash generationEarnings ConsistencyPositive EPS in 8 of last 10 yearsQuality3Earnings consistency over a decade confirms the business is not cyclically cheap — it has demonstrated the ability to generate profit across different economic conditionsBusinesses that restructured and now have a clean earnings trajectoryEPS Revision TrendPositive or neutral (analysts not cutting estimates)Momentum3Prevents buying into an earnings deterioration — value investing is most dangerous when earnings are about to fallOverly conservative analyst consensus that is about to be upgradedPiotroski F-Score> 6 (out of 9)Quality composite3The Piotroski F-Score combines 9 financial health signals — a score above 6 confirms the business is financially improving, not deterioratingNot applicable — the F-Score is specifically designed to eliminate value traps ▸ FALSE POSITIVE ELIMINATION FILTERS Value Trap Risk (low P/E because earnings are about to collapse): Problem: a company with P/E of 10x is only cheap if those earnings are sustainable — if earnings are about to decline 50%, the real forward P/E is 20x. Secondary filter: require Piotroski F-Score above 6 AND positive EPS revision trend AND revenue growth above 0% — a company failing all three while appearing cheap on P/E is almost certainly a value trap. Debt Trap Risk (low valuation masked by excessive leverage): Problem: an over-levered company can appear cheap on an equity P/E basis while the enterprise value is actually fair or expensive once debt is properly accounted for. Secondary filter: Net Debt/EBITDA below 2x (Tier 1 filter) eliminates most debt traps. Additionally check interest coverage ratio above 5x as a manual verification step. Sector Decline Risk (cheap because the industry is in structural decline): Problem: a newspaper company might have P/E of 8x and FCF yield of 8% because the market is pricing in zero terminal value — the stock is cheap but not a value opportunity. Secondary filter: the must-avoid criteria exclude secular decline industries — apply this as a manual sector check on every stock that passes the quantitative screen. ▸ PRIORITY RANKING Tier 1 — Non-negotiable (eliminate if not met): (1) Forward P/E below 15x (2) FCF Yield above 5% (3) Net Debt / EBITDA below 2x Tier 2 — Important (strong preference): (1) ROIC above 10% (2) Revenue Growth (3Y CAGR) above 0% (3) Gross Margin above 30% (4) EV/EBITDA below 10x Tier 3 — Nice-to-have (ranking signals): (1) Earnings consistency: positive EPS in 8 of last 10 years (2) EPS revision trend: flat or positive (3) Piotroski F-Score above 6 ▸ PLATFORM IMPLEMENTATION Finviz (finviz.com/screener — US stocks, free): P/E: filter (Forward P/E) → select (Under 15) FCF Yield: not directly available on Finviz → use (P/FCF) Under 20 as a proxy (P/FCF under 20 = FCF yield above 5%) Debt/Equity: filter (Debt/Equity) → select (Under 0.5) as a proxy for Net Debt/EBITDA below 2x Return on Investment: filter (Return on Investment) → select (Positive > 10%) Sales growth past 5 years: filter (Sales growth past 5 years) → select (Positive > 0%) Gross Margin: filter (Gross Margin) → select (Positive > 30%) Index filter: filter (Index) → select (S&P 500) or (S&P 400) separately TradingView Stock Screener (tradingview.com/screener — global, free): Price to Earnings Ratio (Forward): set maximum to 15 Free Cash Flow Yield: set minimum to 5% (available directly) Net Debt to EBITDA: set maximum to 2 (available directly) Return on Invested Capital: set minimum to 10% Revenue Growth (3Y): set minimum to 0% Gross Profit Margin: set minimum to 30% EV/EBITDA: set maximum to 10 Koyfin (koyfin.com — premium, $49/month, recommended for this screener): All metrics available directly with exact labels matching the criteria above Piotroski F-Score available as a direct filter (not available on free platforms) Earnings consistency filter available as (Years of positive EPS) ▸ SCREENER INTERPRETATION GUIDE After running the screen, expect 15-40 stocks to pass all Tier 1 and Tier 2 filters in a typical market environment. Before adding any stock to a watchlist, perform these 3 manual checks: Manual check 1 — Read the most recent earnings call transcript: does management have a credible explanation for why the stock is cheap? Is there a specific catalyst (spin-off, leadership change, end of a headwind) that creates a path to re-rating? If management cannot explain why the stock is undervalued, neither can you. Manual check 2 — Check the 5-year revenue and earnings chart on Macrotrends.net: is the cheapness recent (a new development) or chronic (the stock has been cheap for 5+ years with no catalyst)? Chronic cheapness usually means the market is right. Manual check 3 — Check the competitive position: does the company have any pricing power, switching costs, or market share trend that supports the margin and ROIC sustainability? A business with no competitive advantage that passes the quantitative screen is likely experiencing a temporarily favorable earnings environment that will not persist. ▸ SCREENER LIMITATIONS Limitation 1: The screener cannot detect earnings quality problems. A company can show strong reported EPS and FCF while using aggressive accounting (channel stuffing, capitalized expenses, one-time gains). Always cross-check reported FCF against cash flow from operations to verify the quality of the cash generation. Limitation 2: The screener applies fixed thresholds across all sectors and business models. A 30% gross margin threshold is appropriate for industrials but eliminates most retail businesses (where 25% is high quality) and misses some exceptional software businesses where the relevant metric is net revenue retention. Consider running separate screens with sector-specific threshold adjustments for sectors you understand well. Limitation 3: The screener is backward-looking. All metrics are based on historical financial data — the screen identifies businesses that have been cheap, high quality, and financially healthy in the past. It cannot identify businesses that are about to become cheap or about to deteriorate. Always supplement the quantitative screen with a forward-looking assessment of the business prospects.