4 Stocks With a History of Operating Income Margin Growth

Over time, these companies have achieved greater efficiency in generating profits from operations

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Feb 27, 2022
Summary
  • Deere & Co, Vertex Pharmaceuticals Inc., Constellation Brands Inc. and Baker Hughes Company have continued expanding their operating income margins over the past several years.
  • The operating income margin is a more effective measure than the net income margin when evaluating a company's ability to generate income.
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When the operating income margin continues to grow, it means a company is becoming more efficient in generating profits from its operating activities.

The operating income margin is a more effective measure than the net income margin when evaluating whether a company can generate income, as the metric excludes those items on which it has no or limited control, but that could weigh on the net income notably in some years.

The stocks listed below meet the above criteria, as their operating income margins have grown in recent years.

Deere & Co

The first stock investors may want to consider is Deere & Co (

DE, Financial), a Moline, Illinois-based global manufacturer and supplier of farm and heavy construction machinery.

The stock saw its trailing 12-month operating income margin (12.03% for the most recent fiscal quarter ended Jan. 31, 2022) grow by 12.80% on average every year over the past five years.

The share price increased by 217% over the past five years to close at $347 on Friday for a market capitalization of $106.94 billion.

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The company will pay a quarterly dividend of $1.05 per common share on May 9 for a 12-month dividend yield of 1.12% and a forward dividend yield of 1.21% as of Feb. 25.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $424.73 per share.

Vanguard Group Inc., BlackRock Inc. and JPMorgan Chase & Co are among the largest top fund holders of the company with 6.97%, 5.66% and 4.30% of shares outstanding, respectively.

Vertex Pharmaceuticals Inc.

The second stock that investors may want to consider is Vertex Pharmaceuticals Inc. (

VRTX, Financial), a Boston, Massachusetts-based biotech company engaging in the development and commercialization of cystic fibrosis therapies.

The company saw its trailing 12-month operating income margin (42.25% as of the December 2021 quarter) grow by 96.20% on average every year over the past five years.

The share price of $230.30 at close on Friday has risen by 154.14% over the past five years for a market capitalization of $58.63 billion.

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Vertex Pharmaceuticals Inc. does not pay dividends.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $272.23 per share.

BlackRock Inc., Vanguard Group and State Street Corp are among the largest top fund holders of the company with 9.41%, 7.92% and 4.85% of shares outstanding, respectively.

Constellation Brands Inc.

The third stock that investors may want to consider is Constellation Brands Inc. (

STZ, Financial), a Victor, New York-based producer, trader and distributor of beverages, alcohol and spirits in North and Central America as well as in Italy and New Zealand.

The company saw its trailing 12-month operating income margin (36.19% for the most recent fiscal quarter ended Nov. 30, 2021) grow by 3.10% on average every year over the past five years.

The share price ($217.04 at close on Friday) has risen by 36.67% over the past five years for a market capitalization of $40.72 billion.

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The company paid a quarterly dividend of $0.76 per common share on Feb. 23 for a 12-month and forward dividend yield of 1.4% as of Feb. 25.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of approximately $272.77 per share.

Vanguard Group Inc., BlackRock Inc. and Capital World Investors are among the largest top fund holders of the company with 6.55%, 6.18% and 470% of shares outstanding, respectively.

Baker Hughes Company

The fourth stock that investors may want to consider is Baker Hughes Company (

BKR, Financial), a Houston, Texas-based provider of technology and services to the oil and gas industry and industrial value chain worldwide.

The company saw its trailing 12-month operating income margin (10.41% as of the December 2021 quarter) grow by 2.90% on average every year over the past five years.

Over the past five years, the stock price ($29.50 at Friday's close) is down nearly 21%. Since March last year, the stock price has been in an uptrend mode trying to recover the loss. The stock has a market capitalization of $28.12 billion.

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The company paid a quarterly dividend of $0.18 per common share on Feb. 18 for a 12-month and forward dividend yield of 2.44% as of Feb. 25.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of approximately $33.27 per share.

General Electric Co, Capital World Investors and Vanguard Group are among the largest top fund holders of the company with 13.40%, 11.17% and 9.96% of shares outstanding, respectively.

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
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