We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 High-Efficient Stocks With Strong Financial Performance
Read MoreHide Full Article
Key Takeaways
Polaris, Intrepid Potash, Interface, NetScout Systems and Acme United passed the efficiency screen.
The screen required four efficiency ratios to exceed industry averages across the selected stocks.
The strategy narrowed more than 7,906 stocks to 23, with five highlighted as the top stocks.
The efficiency ratio is a key indicator of a company’s overall financial health and operational performance. It evaluates how effectively management controls operating costs while generating revenues. The ratio also reflects how efficiently a business utilizes its assets and manages liabilities. A stronger efficiency ratio generally indicates better cost control, effective resource allocation, and the ability to maximize revenues while reducing unnecessary operating expenses.
However, at times, it becomes difficult to measure the efficiency level of a company. This is why one must consider the popular efficiency ratios listed below while selecting stocks.
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.
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.
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.
Screening Criteria Using Research Wizard:
In addition to the above-mentioned ratios, we have added a favorable Zacks Rank — Zacks Rank #1 (Strong Buy) — to the screen to make this strategy more profitable. You can see the complete list of today’s Zacks #1 Rank stocks here.
Inventory Turnover, Receivables Turnover, Asset Utilization, and Operating Margin greater than the industry average
(Values of these ratios higher than industry averages may indicate that the efficiency level of the company is higher than its peers.)
The use of these few criteria narrowed down the universe of over 7,906 stocks to 23.
Here are the top five stocks that made it through the screen:
Polaris
Polarisdesigns, engineers and manufactures off-road and on-road vehicles. PII has an average four-quarter earnings surprise of 82.6%.
Intrepid Potash
Intrepid Potashis the largest producer of potash in the United States and is dedicated to the production and marketing of potash and langbeinite, another mineral containing potassium. IPI has an average four-quarter earnings surprise of 37.4%.
Interface
Interface is the world's largest manufacturer of modular carpet, which it markets under the Interface and FLOR brands. TILE has an average four-quarter earnings surprise of 29.8%.
NetScout Systems
NetScout Systemsis a leading provider of business assurance — a powerful combination of service assurance, cybersecurity, and business intelligence solutions — for today's most demanding service provider, enterprise and government networks. NTCT has an average four-quarter earnings surprise of 25.1%.
Acme United
Acme Unitedsupplies cutting, measuring, first aid, and sharpening products to the school, home, office, hardware, sporting goods, and industrial markets in the United States, Canada, Europe, and internationally. ACU has an average four-quarter earnings surprise of 17.7%.
View the Zacks #1 Rank List
Image: Bigstock
5 High-Efficient Stocks With Strong Financial Performance
Key Takeaways
The efficiency ratio is a key indicator of a company’s overall financial health and operational performance. It evaluates how effectively management controls operating costs while generating revenues. The ratio also reflects how efficiently a business utilizes its assets and manages liabilities. A stronger efficiency ratio generally indicates better cost control, effective resource allocation, and the ability to maximize revenues while reducing unnecessary operating expenses.
However, at times, it becomes difficult to measure the efficiency level of a company. This is why one must consider the popular efficiency ratios listed below while selecting stocks.
Polaris (PII - Free Report) , Intrepid Potash (IPI - Free Report) , Interface (TILE - Free Report) , NetScout Systems (NTCT - Free Report) and Acme United (ACU - Free Report) have made it through the screen process:
Efficiency Ratios – to be Considered
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.
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.
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.
Screening Criteria Using Research Wizard:
In addition to the above-mentioned ratios, we have added a favorable Zacks Rank — Zacks Rank #1 (Strong Buy) — to the screen to make this strategy more profitable. You can see the complete list of today’s Zacks #1 Rank stocks here.
Inventory Turnover, Receivables Turnover, Asset Utilization, and Operating Margin greater than the industry average
(Values of these ratios higher than industry averages may indicate that the efficiency level of the company is higher than its peers.)
The use of these few criteria narrowed down the universe of over 7,906 stocks to 23.
Here are the top five stocks that made it through the screen:
Polaris
Polarisdesigns, engineers and manufactures off-road and on-road vehicles. PII has an average four-quarter earnings surprise of 82.6%.
Intrepid Potash
Intrepid Potashis the largest producer of potash in the United States and is dedicated to the production and marketing of potash and langbeinite, another mineral containing potassium. IPI has an average four-quarter earnings surprise of 37.4%.
Interface
Interface is the world's largest manufacturer of modular carpet, which it markets under the Interface and FLOR brands. TILE has an average four-quarter earnings surprise of 29.8%.
NetScout Systems
NetScout Systemsis a leading provider of business assurance — a powerful combination of service assurance, cybersecurity, and business intelligence solutions — for today's most demanding service provider, enterprise and government networks. NTCT has an average four-quarter earnings surprise of 25.1%.
Acme United
Acme Unitedsupplies cutting, measuring, first aid, and sharpening products to the school, home, office, hardware, sporting goods, and industrial markets in the United States, Canada, Europe, and internationally. ACU has an average four-quarter earnings surprise of 17.7%.