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5 High-Efficiency Stocks to Buy Now: ROKU, FET, CLMT, FTI, SHEL
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Key Takeaways
Roku, Forum Energy Technologies, Calumet, TechnipFMC and Shell passed the efficiency screen.
The screen favored stocks with inventory, receivables, asset utilization and margins above industry averages.
Roku posted a 94.7% average four-quarter earnings surprise, the highest among the five.
The efficiency ratio is an important measure of a company’s overall financial health and operational effectiveness. It assesses how efficiently management controls operating expenses while generating revenues and maintaining sustainable business operations. The ratio also provides insight into how effectively a company utilizes its assets, manages its liabilities and allocates its resources. A strong efficiency ratio generally indicates that a company is making effective use of its available resources while maintaining better control over costs and improving its ability to generate revenues.
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 17.
Here are the top five stocks that made it through the screen:
Roku
Rokuis the leading TV streaming platform provider in the United States, Canada and Mexico based on hours streamed. The average four-quarter earnings surprise for ROKU is 94.7%.
Forum Energy Technologies
Forum Energy Technologies is a global oilfield products company, serving the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry. The average four-quarter earnings surprise for FET is 41.6%.
Calumet
Calumet manufactures, formulates and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. The average four-quarter earnings surprise for CLMT is 33%.
TechnipFMC
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. FTI has an average four-quarter earnings surprise of 19.7%.
Shell
Shellis fully integrated, meaning it participates in every aspect related to energy from oil production, to refining and marketing and span almost every corner of the globe. The average four-quarter earnings surprise for SHEL is 10.3%.
View the Zacks #1 Rank List
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5 High-Efficiency Stocks to Buy Now: ROKU, FET, CLMT, FTI, SHEL
Key Takeaways
The efficiency ratio is an important measure of a company’s overall financial health and operational effectiveness. It assesses how efficiently management controls operating expenses while generating revenues and maintaining sustainable business operations. The ratio also provides insight into how effectively a company utilizes its assets, manages its liabilities and allocates its resources. A strong efficiency ratio generally indicates that a company is making effective use of its available resources while maintaining better control over costs and improving its ability to generate revenues.
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.
Roku (ROKU - Free Report) , Forum Energy Technologies (FET - Free Report) , Calumet, Inc. (CLMT - Free Report) , TechnipFMC (FTI - Free Report) and Shell (SHEL - 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 17.
Here are the top five stocks that made it through the screen:
Roku
Rokuis the leading TV streaming platform provider in the United States, Canada and Mexico based on hours streamed. The average four-quarter earnings surprise for ROKU is 94.7%.
Forum Energy Technologies
Forum Energy Technologies is a global oilfield products company, serving the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry. The average four-quarter earnings surprise for FET is 41.6%.
Calumet
Calumet manufactures, formulates and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. The average four-quarter earnings surprise for CLMT is 33%.
TechnipFMC
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. FTI has an average four-quarter earnings surprise of 19.7%.
Shell
Shellis fully integrated, meaning it participates in every aspect related to energy from oil production, to refining and marketing and span almost every corner of the globe. The average four-quarter earnings surprise for SHEL is 10.3%.