If you want to have a higher chance of finding companies that are in good shape from a financial standpoint, you may want to consider stocks with trailing 12-month Ebitda margins that are topping the S&P 500's 21.64% as of the time of writing.
The Ebitda margin, which is calculated as earnings before interest, taxes, 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 these criteria. Wall Street sell-side analysts have also issued positive recommendation ratings for them.
BlackRock Inc.
The first company that makes the cut is BlackRock Inc. (BLK, Financial), a New York-based asset management company providing its services to individual and institutional investors as well as intermediaries.
BlackRock Inc.’s Ebitda margin is 45%, resulting from Ebitda of $8.72 billion and revenue of $19.37 billion for the trailing 12 months ended in September 2021.
The closing share price of $750.87 on Friday was up 4.40% compared to year-ago levels. The company has a market capitalization of $113.90 billion and a 52-week range of $670.28 to $973.16.
The stock grants a forward dividend yield of 2.6%. The company will pay a quarterly dividend of $4.88 per share on March 23.
On Wall Street, the stock has a median recommendation rating of buy and an average target price of $998.50 per share.
MPLX LP
The second company that qualifies is MPLX LP (MPLX, Financial), a Findlay, Ohio-based oil and gas midstream operator.
MPLX LP's Ebitda margin is 51.33%, resulting from Ebitda of $4.9 billion and revenue of $9.54 billion for the trailing 12 months ended December 2021.
Friday's closing share price of $31.67 was up 26.73% compared to year-ago levels for a market capitalization of $32.13 billion and a 52-week range of $23.24 to $34.41.
The stock grants a forward dividend yield of 8.9%. The company last paid a quarterly dividend of $0.705 per share on Feb. 14.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $36.63 per share.
NortonLifeLock Inc.
The third stock that meets the criteria is NortonLifeLock Inc (NLOK, Financial), a Tempe, Arizona-based global provider of cyber safety solutions.
NortonLifeLock Inc.’s Ebitda margin is 55%, resulting from Ebitda of $1.51 billion and revenue of $2.75 billion for the trailing 12 months ended in December 2021.
The closing share price of $28.45 on Friday was up 44.71% compared to year-ago levels for a market capitalization of $16.55 billion and a 52-week range of $19.41 to $30.91.
The stock grants a forward dividend yield of 1.76%. The company will pay a quarterly dividend of 12.5 cents per common share on March 16.
On Wall Street, the stock has a median recommendation rating of hold and an average target price of $29.33 per share.
