Cheap, profitable, paid to wait
Single-digit earnings multiple, with a dividend while you hold.
Profitable, cheap on earnings and on book, funded mostly by equity rather than creditors, and yielding above the market. The dividend is the point: a slow re-rating is far easier to sit through when the position pays you for the wait.
Educational research tooling, not investment advice. A screen is a filter over public data, not a recommendation.
What the Simple Way screen tests
Profitable, cheap on earnings and book, funded mostly by equity, and paying you above the market while you wait.
The rules, one by one
Every rule below is applied on every scan and reported with the value it was tested against, pass or fail. Each threshold is yours to change.
- P/E
- Price over trailing earnings. Required to be positive first, so loss-makers cannot slip through on a negative multiple.
- P/B
- Market cap over book equity. Excluded when equity is negative, since a negative P/B is not a cheap one.
- Equity / Assets
- Share of the balance sheet funded by owners rather than creditors.
- Dividend Yield
- Trailing dividend over price, tested against the market yield. Being paid to wait is what makes a slow re-rating tolerable.
- Dilution
- Change in share count year over year. Positive means new shares are transferring your claim to someone else; negative means buybacks. Based on annual filings, so it lags.
Who this screen is for
- Income-oriented value investors who want the cheapness and the yield in one test.
- Anyone who would rather own a dull profitable business than a distressed asset play.
- Investors screening for deep distress — this screen requires positive earnings by construction.
- Anyone treating a high yield as proof of safety; the screen tests the yield, not the coverage behind it.
Simple Way FAQ
What yield does the screen require?
More than the market yield, which is itself one of the tunable thresholds. The comparison, not the absolute number, is what matters.
Why equity/assets instead of debt/equity here?
It reads as a share: how much of the balance sheet the owners funded rather than the creditors. It stays meaningful when equity is small, where debt/equity blows up.
Are negative P/B companies excluded?
Yes. A negative price-to-book is not a cheap one, and companies with negative equity are excluded rather than scored as unlevered.
Why does every screen test dilution?
A discount that closes while the share count grows is a discount someone else collected. Dilution is measured from annual filings as the year-over-year change in shares outstanding, so it lags — a company that issued stock last quarter can still pass.
Other screens
NCAV
Net current asset value is current assets minus every liability. When it exceeds the market cap, the market is handing you the working capital and charging nothing for the business attached to it. The liquidity and leverage rules exist so that discount survives long enough to close.
Negative EV
Enterprise value is market cap plus debt minus cash. Below zero, the cash net of debt exceeds what the shares cost — you are paid to take the operating company. The price/sales and liquidity rules are there to make sure there is a business attached and that the cash is genuinely available.
Acquirer's Multiple
EV/EBITDA is what an acquirer of the entire business pays for its operating earnings. It is used instead of P/E because it is indifferent to how the company is financed — debt and cash are already in the numerator. The screen adds conservative leverage and a share count that is not growing.
Five scans, no card.
Run Simple Way over the universe you choose, open any company, and read the rules it passed and the ones it did not.
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