If you want to have a higher likelihood to find companies that are in good shape from a financial standpoint, you may want to consider stocks with trailing 12-month (TTM) Ebitda margins that are topping the S&P 500's 21.41% 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 when appraising the performance of a company. These decisions refer to the recognition of amortization and depreciation, which may differ significantly, even among companies that operate in the same industry.
The three companies listed below meet the above criteria. Wall Street sell-side analysts have also issued positive recommendation ratings for them.
The Estee Lauder Companies Inc
The first company that makes the cut is The Estee Lauder Companies Inc (EL, Financial), a New York-based makeup and personal care products manufacturer and marketer.
The Estee Lauder Companies Inc's Ebitda margin is 25.85%, resulting from Ebitda of $4.405 billion and revenue of $17.045 billion for the trailing 12 months ended in September 2021.
The share price, $344.41 at close on Thursday, is a 35% increase compared to year-ago levels. The company has a market capitalization of $123.97 billion and a 52-week range of $231.97 to $353.45.
The stock grants a forward dividend yield of 0.7%. The company will pay a quarterly dividend of $0.60 per common share on Dec. 15.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $366.68 per share.
Waste Management Inc
The second company that makes the cut is Waste Management Inc. (WM, Financial), a Houston, Texas-based provider of waste disposal services.
Waste Management Inc's Ebitda margin is 26.3%, resulting from Ebitda of $4.558 billion and revenue of $17.320 billion for the trailing 12 months ended in September 2021.
The share price, $161.24 at close on Thursday, represents a 23.3% increase compared to year-ago levels for a market capitalization of $67.45 billion and a 52-week range of $109.11 to $164.81.
The stock grants a forward dividend yield of 1.43%. The company last paid a quarterly dividend of $0.575 per common share on Sept. 17.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $165.07 per share.
Roper Technologies Inc
The third stock that qualifies is Roper Technologies Inc. (ROP, Financial), a Sarasota, Florida-based global designer and provider of software and engineered products.
Roper Technologies Inc's Ebitda margin is 36.37%, resulting from Ebitda of $2.396 billion and revenue of $6.588 billion for the trailing 12 months ended in September 2021.
The share price, $479.34 at close on Thursday, represents a 21% increase compared to year-ago levels for a market capitalization of $50.56 billion and a 52-week range of $365.23 to $505.
The stock grants a forward dividend yield of 0.52%. The company will pay a quarterly dividend of $0.62 per common share on Jan. 24.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $522.73 per share.
