When the operating income margin continues to expand, it means that the company is becoming more efficient in generating profits from its operations.
The operating income margin is a more effective measure than the net income margin when assessing whether the company is capable of generating income, as the metric excludes those items on which the company has no or limited control, but that could weigh on the net income remarkably in some years.
Thus, investors may want to consider the three stocks listed below, as their operating income margins have expanded in recent years.
Accenture PLC
The first stock investors may want to consider is Accenture PLC (ACN, Financial), a Dublin, Ireland-based supplier of various professional services to businesses worldwide.
The company saw its trailing 12-month operating income margin (14.89% as of the February 2021 quarter) grow by 1.7% on average every year over the past five years.
The share price rose by 140.15% over the past five years to trade at $285.56 at close on Monday for a market capitalization of $181.41 billion. Currently, Accenture PLC pays a quarterly cash dividend of 88 cents per common share, leading to a forward dividend yield of 1.23% as of June 21.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $300.48 per share.
Vanguard Group Inc dominates the group of top fund holders with 8.78% of shares outstanding. It is followed by BlackRock Inc. with 7.59% of shares outstanding and State Street Corp with 3.96% of shares outstanding.
Thermo Fisher Scientific Inc
The second stock investors may want to consider is Thermo Fisher Scientific Inc (TMO, Financial), a Waltham, Massachusetts-based provider of instruments for diagnostics and research worldwide.
The company saw its trailing 12-month operating income margin (30.92% as of the March 2021 quarter) grow by 9.2% on average every year over the past five years.
The share price of $483.56 at close on Monday has gained 217.84% over the past five years, determining a market capitalization of $190.20 billion. Currently, Thermo Fisher Scientific Inc pays a quarterly cash dividend of 26 cents per common share, leading to a forward dividend yield of 0.22% as of June 21.
On Wall Street, the stock has a median recommendation rating of buy with an average target price of $550.82 per share.
Vanguard Group Inc leads the group of top fund holders with 7.85% of shares outstanding. It is followed by BlackRock Inc. with 7.46% of shares outstanding and Capital World Investors with 4.26% of shares outstanding.
Danaher Corp
The third stock investors may want to consider is Danaher Corp (DHR, Financial), a Washington-based manufacturer and marketer of solutions for diagnostics and research.
The company saw its trailing 12-month operating income margin (29.12% as of the March 2021 quarter) grow by 4.7% on average every year over the past five years.
The share price has risen nearly 245% over the past five years to trade at $262.59 at close on Monday for a market capitalization of $186.37 billion. Currently, Danaher Corp pays a quarterly cash dividend of 21 cents per common share, leading to a forward dividend yield of 0.32% as of June 21.
On Wall Street, the stock has a median recommendation rating of buy with an average target price of $294.67 per share.
Vanguard Group Inc is the leader in the group of top fund holders with 6.88% of shares outstanding. It is followed by BlackRock Inc. with 6.36% of shares outstanding and Price T Rowe Associates Inc /Md/ with 4.51% of shares outstanding.
Disclosure: I have no positions in any securities mentioned in this article.
