3 Stocks Growing Earnings Faster Than Sales

These companies have efficient operating activities

Summary
  • The profit margins of O'Reilly Automotive, Arthur J. Gallagher & Co. and Vulcan Materials are increasing.
  • There is an indication that their operating activities are very efficient.
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Investors could be interested in the three stocks listed below since they are growing earnings faster than sales, which may indicate efficient operating activities as profit margins increase with growth.

The following companies have five-year revenue growth rates of no less than 5% per year and five-year net income growth rates of no less than 10% per year.

O'Reilly Automotive

The first stock value investors could be interested in is O'Reilly Automotive Inc. (ORLY, Financial), a Springfield, Missouri-based operator of stores for the sale of automotive aftermarket parts, equipment and accessories in the U.S.

On average, the company saw its trailing 12-month revenue grow by 7.2% and its trailing 12-month net income grow by 12.7% every year over the last five years.

The stock closed at around $620.92 per share on Friday for a market cap of $43.17 billion and a 52-week range of $424.03 to $621.67.

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Currently, O'Reilly Automotive does not pay dividends.

GuruFocus assigned a financial strength rating of 4 out of 10 and a profitability rating of 9 out of 10 to the company.

Wall Street sell-side analysts issued a median recommendation rating of overweight for this stock and have established an average target price of $614.26 per share.

Arthur J. Gallagher & Co.

The second stock investors could be interested in is Arthur J. Gallagher & Co. (AJG, Financial), a Rolling Meadows, Illinois-based provider of insurance brokerage and third-party claims settlement services.

On average, company saw its trailing 12-month revenue grow by 6.2% and its trailing 12-month net income grow by 18.7% on every year over the last five years.

The stock closed at around $143.05 per share on Friday for a market cap of $29.06 billion and a 52-week range of $100.32 to $154.03.

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Currently, the company pays a quarterly cash dividend of 48 cents per share. The latest payment was made on June 18, leading to a forward dividend yield of 1.38% as of July 23.

GuruFocus assigned a score of 4 out of 10 to the company's financial strength rating and 8 out of 10 to its profitability rating.

Wall Street sell-side analysts issued a median recommendation rating of overweight for this stock and have established an average target price of $157.18 per share.

Vulcan Materials

The third stock value investors could be interested in is Vulcan Materials Co. (VMC, Financial), a Birmingham, Alabama-based producer of building materials.

The company saw its trailing 12-month revenue grow by 8.4% and its trailing 12-month net income grow by 18.3%, on average, every year over the last five years.

The stock traded at around $178.14 per share at close on Friday for a market capitalization of $23.56 billion and a 52-week range of $114.835 to $194.17.

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Currently, Vulcan pays a quarterly dividend of 37 cents per common share with the next payment scheduled for Sept. 3, leading to a forward dividend yield of 0.83% as of July 23.

GuruFocus assigned the company a score of 5 out of 10 for its financial strength rating and 8 out of 10 for its profitability rating.

Wall Street sell-side analysts issued a median recommendation rating of overweight for this stock and have established an average target price of $194.82 per share.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure