This guide is for educational purposes only and does not constitute investment advice. Data sourced from SEC EDGAR filings. Past performance is not indicative of future results. Consult a qualified financial advisor before making investment decisions.
Value Investing Toolkit: How to Screen S&P 500 Stocks with Free SEC Data
Value investing means buying stocks for less than they are worth — then waiting for the market to recognize the gap. The challenge is measuring “worth” without relying on guesswork. Billiver provides three evidence-based tools, all built on public SEC filings, to help you evaluate financial strength, bankruptcy risk, and operating efficiency across 900+ S&P 500 companies.
Piotroski F-Score: Is the Company Financially Strong?
Piotroski F-Score A 9-point scoring system that tests profitability, leverage, and operating efficiency using only SEC 10-K data. Scores range from 0 (weakest) to 9 (strongest).
Created by Stanford accounting professor Joseph Piotroski in 2000, the F-Score was designed to separate financially healthy “value” stocks from value traps. Each of the 9 criteria is binary — pass or fail — making it transparent and reproducible.
What the F-Score tells you
- Score 8–9: Strong fundamentals — profitability, improving leverage, and efficient operations all check out.
- Score 5–7: Mixed signals — some areas improving, others deteriorating. Dig deeper.
- Score 0–4: Weak fundamentals — multiple red flags in profitability or leverage.
On Billiver: Every S&P 500 company has a live Piotroski F-Score page with all 9 criteria broken down as pass/fail. Read the full Piotroski guide or see the top-scoring stocks.
Altman Z-Score: How Likely Is Bankruptcy?
Altman Z-Score A 5-factor formula that estimates bankruptcy probability. Companies scoring above 2.99 are in the 'Safe Zone'; below 1.81, the 'Distress Zone.'
Edward Altman developed the Z-Score in 1968 by analyzing dozens of bankrupt and non-bankrupt companies. The model combines five ratios — working capital, retained earnings, EBIT, book value of equity, and revenue — each relative to total assets, to produce a single risk score.
The three zones
On Billiver: Each company page includes a 5-factor Altman Z-Score breakdown. Read the full Z-Score guide or see the safest-scoring stocks.
Financial Ratios: Is the Business Running Efficiently?
While the F-Score and Z-Score give composite answers, individual financial ratios let you drill into specific questions: How profitable is each dollar of revenue? Can the company cover its interest payments? How quickly does it turn inventory into sales?
Key ratios for value investors
Breaks Return on Equity into three drivers: profit margin, asset turnover, and leverage. Shows whether ROE comes from real profitability or just debt.
Measures whether a company can pay its short-term obligations. Quick ratio excludes inventory for a stricter test.
EBIT divided by interest expense. Below 1.5x is a warning sign; above 5x is comfortable.
Asset turnover, inventory turnover, and days sales outstanding reveal how well management converts resources into revenue.
On Billiver: Every company has a dedicated financial ratios page with DuPont analysis, multi-year trends, and sector percentile rankings. Read the DuPont guide or see the highest-ROE stocks.
Combining the Tools: A Practical Approach
No single metric tells the full story. Here is one way to use Billiver's tools together:
- Screen with Piotroski F-Score (7+). Start with companies showing strong fundamentals. This filters out value traps with deteriorating finances.
- Check Altman Z-Score (Safe Zone). Confirm the company is not at elevated bankruptcy risk. Gray Zone stocks may still be interesting but need extra scrutiny.
- Dig into financial ratios. Use DuPont ROE to understand profit drivers. Check interest coverage if the company carries significant debt. Compare efficiency ratios against sector peers.
- Compare with industry peers. A company may look strong in isolation but weak relative to competitors. Billiver shows sector percentile rankings for every metric.
This is a starting framework, not a buy/sell recommendation. Always conduct your own due diligence and consider factors beyond financial statements, such as competitive moats, management quality, and macroeconomic conditions.
Limitations
- Backward-looking. All metrics are based on historical SEC filings. They reflect what already happened, not what will happen next.
- Sector differences. Financial sector companies (banks, insurers) have fundamentally different balance sheet structures. The Altman Z-Score was originally designed for manufacturing firms.
- No valuation signal. These tools measure financial quality, not price. A company with a perfect F-Score can still be overpriced.
- Accounting assumptions. SEC filings follow GAAP rules, which allow management discretion in areas like revenue recognition and depreciation. The numbers are standardized but not immune to manipulation.