For Immediate Release
Chicago, IL – July 14, 2023 – Stocks in this week’s article are Nexstar Media Group, Inc. (
NXST Quick Quote NXST - Free Report) , Cadence Design Systems, Inc. ( CDNS Quick Quote CDNS - Free Report) , Atmos Energy Corp. ( ATO Quick Quote ATO - Free Report) and O'Reilly Automotive, Inc. ( ORLY Quick Quote ORLY - Free Report) . 4 Stocks with Remarkable Interest Coverage Ratios
An ill-informed investor can lose cash if he wagers on a stock only on the basis of the numbers flashing on a real-time stock screen. A critical analysis of the company's financial background is always required for a better investment decision, especially at a time when the stock market is juggling myriad issues.
Often, investors evaluate a company's performance by simply looking at its sales and earnings, which sometimes do not reveal the real picture. To be more precise, they do not tell whether a company's fundamentals are sound enough to meet its financial obligations. Here, the coverage ratio comes into play — the higher the metric, the more efficient an enterprise will be in meeting its financial obligations.
Why Interest Coverage Ratio?
The interest coverage ratio is used to determine how effectively a company can pay interest charges on its debt.
Debt, which is crucial to financing operations for the majority of companies, comes at a cost called interest. Interest expense has a direct bearing on the profitability of a company. The company's creditworthiness depends on how effectively it meets its interest obligations. Therefore, Interest Coverage Ratio is one of the important criteria to factor in before making any investment decision.
Interest Coverage Ratio = Earnings before Interest & Taxes (EBIT) divided by Interest Expense.
Interest Coverage Ratio suggests how many times the interest could be paid from earnings and gauges the margin of safety a firm has for paying interest.
An interest coverage ratio lower than one suggests that the company is unable to fulfill its interest obligations and could default on repaying debt. A company capable of generating earnings well above its interest expense can withstand financial hardships. One should also track the company's past performance to determine whether the interest coverage ratio has improved or worsened over a period of time.
Nexstar Media Group, Inc., Cadence Design Systems, Inc., Atmos Energy Corp. and O'Reilly Automotive, Inc. boast impressive interest coverage ratios.
Here are four of the 12 stocks that qualified the screening:
Nexstar Media Group, a leading diversified media company that produces and distributes engaging local and national news, sports and entertainment content, carries a Zacks Rank #1 and has a VGM Score of B. You can see . the complete list of today's Zacks #1 Rank stocks here
Nexstar Media Group has a trailing four-quarter earnings surprise of 21.4%, on average. The expected EPS growth rate for three-five years is 10%. The stock has risen 8% in the past year.
Cadence Design Systems, which provides software, hardware, services, and reusable integrated circuit design blocks globally, carries a Zacks Rank #2 and has a VGM Score of B. Its expected EPS growth rate for three-five years is 19.5%.
The Zacks Consensus Estimate for Cadence Design Systems' current financial year sales and EPS suggests growth of 13.7% and 17.1%, respectively, from the year-ago period. Cadence Design Systems has a trailing four-quarter earnings surprise of 7.3%, on average. The stock has rallied 51.2% in the past year.
Atmos Energy, which is engaged in the regulated natural gas distribution, and pipeline and storage businesses, carries a Zacks Rank #2 and has a VGM Score of B. The expected EPS growth rate for three-five years is 7.5%.
The Zacks Consensus Estimate for Atmos Energy's current financial year sales and EPS suggests growth of 22.3% and 7.7%, respectively, from the year-ago period. Atmos Energy has a trailing four-quarter earnings surprise of 4.9%, on average. The stock has risen 8.6% in the past year.
O'Reilly Automotive, which operates as a retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories, carries a Zacks Rank #2 and has a VGM Score of A. The expected EPS growth rate for three-five years is 13.2%.
The Zacks Consensus Estimate for O'Reilly Automotive's current financial year sales and EPS suggests growth of 7.8% and 11.4%, respectively, from the year-ago period. ORLY has a trailing four-quarter earnings surprise of 4.6%, on average. The stock has advanced 43.9% in the past year.
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The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
. 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/2120771/4-stocks-with-remarkable-interest-coverage-ratio 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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Strong Stocks that Should Be in the News
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