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Zacks.com featured highlights Sterling Infrastructure, Modine Manufacturing, Deckers Outdoor and Herc

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For Immediate Release

Chicago, IL – April 16, 2024 – Stocks in this week’s article are Sterling Infrastructure, Inc. (STRL - Free Report) , Modine Manufacturing Co. (MOD - Free Report) , Deckers Outdoor Corp. (DECK - Free Report) and Herc Holdings Inc. (HRI - Free Report) .

4 Stocks that Sport Impressive Interest Coverage Ratios

We often judge a company on the basis of its sales and earnings. These, however, may not be enough. Sometimes, a stock gets a boost if these numbers climb year over year or surpass estimates in a particular quarter, thus offering a great opportunity for an investor with a shorter horizon to cash in on. But if you seek long-term returns, investments backed only by sales and earnings numbers may not yield the desired results.

A critical analysis of a company’s financial background is a prerequisite for an informed investment decision. Here, coverage ratios that determine whether a company is sound enough to meet its financial obligations play a crucial role. The higher the ratio, the better. The focus of this article is on “Interest Coverage,” which is one such ratio.

Interest Coverage Ratio = Earnings before Interest & Taxes (EBIT) divided by Interest Expense.

Why Interest Coverage Ratio?

The interest coverage ratio is used to determine how effectively a company can pay the interest charges on its debt.

Debt, which is crucial for most companies to finance operations, comes at a cost called interest. Interest expense has a direct bearing on the profitability of a company and its creditworthiness depends on how effectively it meets interest obligations. Therefore, the interest coverage ratio is one of the important criteria to factor in before making any investment decision.

Interest coverage ratio suggests the number of times the interest could be paid from earnings and gauges the margin of safety a firm carries for paying interest.

An interest coverage ratio lower than 1.0 implies that the company is unable to fulfill its interest obligations and could default on repaying debt. A company that is 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.

Sterling Infrastructure, Inc., Modine Manufacturing Co., Deckers Outdoor Corp. and Herc Holdings Inc. boast an impressive interest coverage ratio.

Here are four of the 16 stocks that qualified the screening:

Sterling Infrastructure, which is engaged in e-infrastructure, transportation and building solutions, sports 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.

The Zacks Consensus Estimate for Sterling Infrastructure’s current financial year sales and EPS suggests growth of 11.7% and 11.4%, respectively, from a year ago. Sterling Infrastructure has a trailing four-quarter earnings surprise of 20.4%, on average. The stock has rallied 180.6% in the past year.

Modine Manufacturing, a diversified global leader in thermal management technology and solutions, carries a Zacks Rank #2 and has a VGM Score of B.

The Zacks Consensus Estimate for Modine Manufacturing’s current financial year sales and EPS suggests growth of 4.3% and 67.7%, respectively, from the year-ago period’s levels. MOD has a trailing four-quarter earnings surprise of 51.5%, on average. The stock has skyrocketed 320.2% in the past year.

Deckers, a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, carries a Zacks Rank #2 currently and has a VGM Score of B.

The Zacks Consensus Estimate for Deckers’ current financial year sales and EPS suggests growth of 15.9% and 38.7%, respectively, from the year-ago period. DECK has a trailing four-quarter earnings surprise of 32.1%, on average. The stock has rallied 74% in the past year.

Herc Holdings, which operates as an equipment rental supplier in the United States and internationally, carries a Zacks Rank #2 and has a VGM Score of A.

The Zacks Consensus Estimate for Herc Holdings’ current financial year sales and EPS suggests growth of 5.9% and 12.7%, respectively, from the year-ago period. Shares of HRI have risen 40.6% in the past year.

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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2255405/4-stocks-that-sport-impressive-interest-coverage-ratio

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Contact: Jim Giaquinto

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