If you want to increase your likelihood to discover companies that are in good shape from a financial standpoint, you may want to consider the following three stocks, as their trailing 12-month (TTM) Ebitda margins are beating the S&P 500's 19.13% as of the writing of this article.
The Ebitda margin, which is calculated as earnings before interest, tax, depreciation and amortization divided by total revenue, is a good indicator of a company's financial health as it doesn't consider the effect of unique decisions and tax laws from the evaluation of a company's performance. These decisions are in regards to the recognition of amortization and depreciation, which may differ significantly even amid companies that operate in the same industry.
Wall Street sell-side analysts have also issued positive recommendation ratings for these stocks.
Cisco Systems Inc
The first company that qualifies is Cisco Systems Inc (CSCO, Financial), a San Jose, California-based communication equipment company.
Cisco Systems Inc's Ebitda margin is 31%, as its Ebitda for the trailing twelve months ended in April 2021 was $15.105 billion and revenue was $48.846 billion over the same period.
The share price has increased by 17% over the past year to trade at $52.43 at close on Friday for a market capitalization of $221.35 billion and a 52-week range of $35.28 to $54.14.
The stock's forward dividend yield of 2.82% is based on an expected quarterly cash dividend of 37 cents per common share and Friday's closing price.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $55.82 per share.
Vanguard Group Inc dominates the group of top fund holders with 7.89% of shares outstanding. It is followed by BlackRock Inc. with 7.76% of shares outstanding and State Street Corp with 4.20% of shares outstanding.
Broadcom Inc
The second company that qualifies is Broadcom Inc (AVGO, Financial), a San Jose, California-based manufacturer and distributor of various semiconductors worldwide.
Broadcom Inc's Ebitda margin is 49.32%, as its Ebitda for the trailing twelve months ended in January 2021 was $12.174 billion and revenue was $24.685 billion over the same period.
The share price has risen by nearly 63% over the past year to close at $451.24 on Friday for a market capitalization of $186.53 billion and a 52-week range of $270.50 to $495.14.
The stock's forward dividend yield of 3.2% is calculated from an expected quarterly cash dividend of $3.60 per common share and Friday's closing price.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $516.10 per share.
Capital World Investors leads the group of top fund holders with 9.56% of shares outstanding. The investment firm is followed by Vanguard Group with 8.94% of shares outstanding and Capital International Investors with 8.14% of shares outstanding.
McDonald's Corp
The third stock that makes the cut is McDonald's Corp (MCD, Financial), a Chicago-based operator and franchisor of McDonald's restaurants in the U.S. and internationally.
McDonald's Corp's Ebitda margin is 49.32%, as its Ebitda for the trailing twelve months ended in March 2021 was $9.676 billion and revenue was $19.618 billion over the same period.
The share price has increased by 25.08% over the past year to close at $231.24 on Friday, determining a market capitalization of $173.11 billion and a 52-week range of $178.88 to $238.18.
The stock's forward dividend yield of 2.22% is calculated from Friday's closing price and an expected quarterly cash dividend of $1.29 per common share.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $257.17 per share.
Vanguard Group dominates the group of top fund holders of the company with 8.60% of shares outstanding. The investment firm is followed by BlackRock with 6.81% of shares outstanding and State Street Corp with 4.82% of shares outstanding.
Disclosure: I have no positions in any securities mentioned in this article.
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