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.
Nvidia Corp
The first stock investors may want to consider is Nvidia Corp. (NVDA, Financial), a Santa Clara, California-based producer of graphics processing units and system-on-chip units for the consumer electronics, computer hardware, semiconductor and video game industries.
The stock saw its trailing 12-month operating income margin (31.48% for the most recent fiscal quarter ended July 30) grow by 1.80% on average every year over the past five years.
The stock price was $128.19 during regular hours on Thursday for an enterprise-value-to-Ebitda ratio of 34.01 (vs. the industry median of 10.42) and a market cap of $323.70 billion.
The company will pay a quarterly dividend of 4 cents per common share on Sept. 29, which will be on par with the previous distribution, determining a forward dividend yield of 0.12% as of this writing.
Vanguard Group Inc., BlackRock Inc. and FMR LLC are among the largest fund holders of the company with 8.06%, 7.17% and 5.63% of shares outstanding, respectively.
Amazon.com Inc.
The second stock investors may want to consider is Amazon.com Inc. (AMZN, Financial), a Seattle, Washington-based global e-commerce and cloud giant.
The company saw its trailing 12-month operating income margin (3.15% as of the June 2022 quarter) grow by 17.10% on average every year over the past five years.
The stock price was $126.95 during regular hours on Thursday for an enterprise-value-to-Ebitda ratio of 26.74 (vs. the industry median of 9.01) and a market cap of $1.29 trillion.
Amazon.com Inc. does not pay dividends.
Vanguard Group Inc., BlackRock Inc. and State Street Corp are among the largest institutional shareholders of the company with 6.76%, 5.77% and 3.21% of shares outstanding, respectively.
Adobe Inc.
The third stock investors may want to consider is Adobe Inc. (ADBE, Financial), a San Jose, California-based software company.
The company saw its trailing 12-month operating income margin (36.25% as of the most recent fiscal quarter that ended on June 2, 2022) grow by 6.10% on average every year over the past five years.
The stock price was $308 during regular hours on Thursday for an enterprise-value-to-Ebitda ratio of 21.07 (vs. the industry median of 13.31) and a market cap of $144.14 billion.
Adobe Inc. does not pay dividends.
Vanguard Group Inc., BlackRock Inc. and State Street Corp are among the largest shareholders of the company with 8.34%, 7.86% and 3.96% of shares outstanding, respectively.
