For Immediate Release
Chicago, IL – May 6, 2021 – Stocks in this week’s article are Encompass Health Corp. (
EHC Quick Quote EHC - Free Report) , Facebook, Inc. ( FB Quick Quote FB - Free Report) , MKS Instruments, Inc. ( MKSI Quick Quote MKSI - Free Report) , The Blackstone Group Inc. ( BX Quick Quote BX - Free Report) and Interpublic Group of Companies Inc. ( IPG Quick Quote IPG - Free Report) . Robust Sales Growth Make These 5 Stocks Worth Betting On Now
Steady sales growth is the key to survival for businesses in today’s fast changing and highly competitive operating backdrop. Hence, solid revenues are necessary to drive growth, and there is a strong relationship between sales growth and the value of an enterprise.
Though a company might not be profitable over a particular time period, it usually generates revenues. Notably, in cases when companies tend to incur a loss on a temporary basis, they are valued based on revenues and not on the bottom line. This is because sales growth (or decline) is usually an early indicator of the company’s future earnings performance.
The Price-to-Sales (P/S) ratio takes into account a company’s revenues when valuing it and is key stock selection criteria keeping in mind that management usually has limited opportunities to fiddle with revenues as they can with earnings. Thus, the P/S ratio is subject to lower manipulation than the Price-to-Earnings ratio.
While sales growth is an important metric for any corporate for the purpose of growth projections and strategic decision-making, this alone doesn’t indicate much about a company’s prospects. Though it provides investors an insight into product demand and pricing power, a huge sales number does not necessarily convert into profits.
So, a consideration of a company’s cash position along with its sales number can be a more dependable strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and further potential investments. Most importantly, an adequate cash position suggests that revenues are being channelized in the right direction.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1503933/robust-sales-growth-make-these-5-stocks-worth-betting-on-now Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. About Screen of the Week
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