For Immediate Release
Chicago, IL – April 5, 2023 – Stocks in this week’s article are Deere & Co. (
DE Quick Quote DE - Free Report) , Arcos Dorados ( ARCO Quick Quote ARCO - Free Report) and Sea Ltd. ( SE Quick Quote SE - Free Report) . 3 Top-Rated Efficient Stocks to Enrich Your Portfolio
Irrespective of market conditions, companies with favorable efficiency levels are likely to be on investors’ radar. This is because a company with a favorable efficiency level is expected to offer impressive returns as it is believed to be positively correlated to the company’s price performance.
Notably, efficiency, which is the ability to transform inputs into outputs, is a potential indicator of a company’s financial health.
However, at times it becomes difficult to measure the efficiency level of a company. This is why one must consider popular efficiency ratios while selecting stocks. These efficiency ratios are:
Inventory Turnover: The ratio of the 12-month cost of goods sold (COGS) to a four-quarter average inventory is considered one of the most popular efficiency ratios. It indicates a company’s ability to maintain a suitable inventory position. While a high value indicates that the company has a relatively low level of inventory compared to COGS, a low value indicates that the company is facing declining sales, which has resulted in excess inventory. Receivables Turnover: This is the ratio of 12-month sales to four-quarter average receivables. It shows a company’s potential to extend its credit and collect debt in terms of that credit. A high receivables turnover ratio or the “accounts receivable turnover ratio” or “debtor’s turnover ratio” is desirable as it shows that the company is capable of collecting its accounts receivables or that it has quality customers. Asset Utilization: This ratio indicates a company’s capability to convert assets into output and is thus a widely known measure of efficiency level. It is calculated by dividing total sales over the past 12 months by the last four-quarter average of total assets. Like the above ratios, high asset utilization may indicate that a company is efficient. Operating Margin: This efficiency measure is the ratio of operating income over the past 12 months to sales over the same period. It measures a company’s ability to control operating expenses. Hence, a high value of the ratio may indicate that the company manages its operating expenses more efficiently than its peers.
Here are the top three stocks that made it through the screen:
Deere & Co. is the world’s largest producer of agricultural equipment. Deere has an average four-quarter positive earnings surprise of 4.7%. Arcos Dorados operates as a franchisee of McDonald's, with its operations divided in Brazil; the North Latin America division; South Latin America and the Caribbean division. Arcos Dorados has an average four-quarter positive earnings surprise of nearly 46%. Sea Ltd. is an internet service provider. Sea Limited has an average four-quarter positive earnings surprise of 69.7%.
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Click here to sign up for a free trial to the Research Wizard today. For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2074118/3-top-rated-efficient-stocks-to-enrich-your-portfolio 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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Contact: Jim Giaquinto
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