This list isn't built from an opinion but from a fully disclosed two-factor rule profile following Joel Greenblatt's Magic Formula principle, running daily across the entire analysis universe, from the DAX and S&P 500 to Global (Total World). It scores return on capital and EV/EBIT in fixed point tiers, and excludes financials and utilities just like the original.
Illustrative selection based on a rule-based two-factor profile following the Magic Formula principle, calculated daily. Financials and utilities are excluded. Not a buy recommendation, just a starting point for your own research.
Register for free and keep going: the matches shown here stay unlocked in your account (detail pages, watchlist, price alerts), plus your own thresholds in the rule editor and the screener across the starter universe (DAX, S&P 500, Euro STOXX 50).
Refine one or two criteria within the top list already shown, without further requests.
A ROC of 40% or above counts as a near-monopoly return (+5), 25 to 40% as excellent (+3), 15 to 25% as solid (+1). Greenblatt's own definition divides operating profit (EBIT) by net working capital plus net fixed assets, deliberately excluding goodwill.
Under 6.7 signals deep undervaluation, equivalent to an earnings yield above 15% (+5). 6.7 to 10 counts as very attractive (+3), 10 to 16.7 as fairly valued (+1).
A ROC below 5% or missing altogether means value destruction and costs two points. An EV/EBIT of 33.3 or above, or a missing multiple because operating profit is negative, counts as massively overpriced or unprofitable (-2).
A knockout filter rules out both sectors upfront, just like the original: their balance-sheet logic makes the return-on-capital metric not meaningfully comparable.
Base: the daily analysis universe of 16,265 stocks, evaluated against the rules below.
| Metric | What it shows | Score bands | Pitfall |
|---|---|---|---|
| EV/EBIT | Enterprise value including debt per euro of operating profit. | under 6.7 deep undervaluation, up to 10 very attractive, up to 16.7 fair | Missing when operating profit is negative, the profile treats that as unprofitable. |
| Return on capital (ROC) | Operating profit relative to tangible capital employed, excluding goodwill. | 40%+ near-monopoly return, 25 – 40% excellent, 15 – 25% solid | Calculated using Greenblatt's own definition, not directly comparable to ROE or ROCE. |
Rules of thumb, not fixed cutoffs. Sensible thresholds vary by industry, and are freely adjustable in the rule editor.
The DAX, MDAX, SDAX and TecDAX together regularly produce matches in industrials and materials, whenever a high return on capital meets a low EV/EBIT.
Looking beyond Germany considerably widens the field of companies with a high return on capital, especially in cyclical sectors where valuations swing.
The full analysis universe, from the S&P 500 to Global (Total World). This is where combinations of high return on capital and low EV/EBIT show up that smaller markets rarely produce.
Companies that earn strongly and are still cheaply valued often pay out an above-average dividend too. An extra check for a yield above the market average narrows down this tab.
Copy the profile shown with one click. Every rule is disclosed, nothing is hidden.
Add metrics, reweight points, narrow down by country and market cap: the match list recalculates instantly.
Check it against historical data before any money is involved, and get notified when a match changes.
These exact rules run over every stock daily.
After a free sign-up: the full profile in the rule editor to copy, adjust thresholds and save as your own starting profile.
See & copy all rulesThe content on this page is for general informational purposes only. It does not constitute individual investment advice, a recommendation to buy or sell securities, or a public offer. Past performance is not a reliable indicator of future results. All information without guarantee.