A Trio of Profitable Companies With Solid Financial Conditions

These companies have good financial strength and profitability ratings

Summary
  • Erie Indemnity Co, Manhattan Associates Inc. and Endava PLC run profitable businesses with strong balance sheets.
  • Wall Street likes these business and has issued positive ratings for them.
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When screening the market for value opportunities, investors may want to consider stocks that represent companies with high profitability and robust financial conditions. These qualities are represented by GuruFocus profitability and financial strength ratings of at least 6 out of 10.

The companies below meet the above criteria. Furthermore, sell-side analysts on Wall Street have recommended positive ratings for them.

Erie Indemnity Co

The first stock that makes the cut is Erie Indemnity Co (ERIE, Financial), an Erie, Pennsylvania-based attorney-in-fact acting on behalf of the subscribers at the Erie Insurance Exchange, an insurance broker in the U.S.

GuruFocus rated its financial strength 7 out of 10, driven by a Piotroski F-Score of 6, which indicates that the financial condition is typical of a stable company.

GuruFocus rated its profitability 7 out of 10, driven by a return on equity (ROE) ratio of 24.74% versus the industry median of 8.58%.

The share price ($181.81 as of Feb. 18) has dropped by 28.4% over the past year for a market capitalization of $9.51 billion, a price-earnings ratio of 31.13 and a price-book ratio of 7.39.

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The price-sales ratio is 3.98 and the 52-week range is $168.87 to $258.38.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $115 per share.

Manhattan Associates Inc.

The second stock that qualifies is Manhattan Associates Inc. (MANH, Financial), an Atlanta, Georgia-based developer of software solutions for supply chains and inventory management as well as omnichannel operations handling. The company sells these technologies in North America and overseas.

GuruFocus rated its financial strength 8 out of 10, driven by an Altman Z-Score of 19.63 and a Piotroski F-Score of 7, which are indicating that the company has a solid balance sheet.

GuruFocus rated its profitability 8 out of 10, driven by a return on equity ratio of 49.09% (versus the industry median of 3.94%) and by a return on capital ratio of 302.1% (versus the industry median of 16.21%).

The share price ($126.07 as of Feb. 18) was slightly down year over year for a market capitalization of $7.96 billion, a price-earnings ratio of 73.30 and a price-book ratio of 31.76.

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The price-sales ratio is 12.22 and the 52-week range is $110.11 to $188.52.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of approximately $179 per share.

Endava PLC

The third stock that qualifies is Endava PLC (DAVA, Financial), a London, U.K.-based provider of various technology services for global clients in several markets such as consumer products, health care, mobility and retail vertical markets.

GuruFocus rated its financial strength 7 out of 10, driven by an Altman Z-Score of 22.32, which suggests that the balance sheet of the company is solid. Also, the interest coverage ratio of 43.67 tells that the company can easily pay the interest expenses on any debt outstanding.

The company's profitability rating scored 7 out of 10, driven by an operating margin ratio of 15.08% (versus the industry median of 3.88%) and a three-year revenue growth rate of 23.6% (versus the industry median of 5.9%).

The share price ($135.87 as of Feb. 18) has risen by almost 60% over the past year for a market capitalization of $7.61 billion, a price-earnings ratio of 86.76 and a price-book ratio of 15.73.

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The price-sales ratio is 10.39 and the 52-week range is $79.21 to $172.41.

On Wall Street, the stock has a median recommendation rating of buy and an average target price of $133.98 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