U.S. markets open in 32 minutes
  • S&P Futures

    4,133.25
    +0.50 (+0.01%)
     
  • Dow Futures

    33,559.00
    -11.00 (-0.03%)
     
  • Nasdaq Futures

    14,014.50
    +38.75 (+0.28%)
     
  • Russell 2000 Futures

    2,227.40
    +2.50 (+0.11%)
     
  • Crude Oil

    61.01
    +0.83 (+1.38%)
     
  • Gold

    1,746.30
    -1.30 (-0.07%)
     
  • Silver

    25.49
    +0.06 (+0.23%)
     
  • EUR/USD

    1.1969
    +0.0014 (+0.12%)
     
  • 10-Yr Bond

    1.6310
    +0.0080 (+0.49%)
     
  • Vix

    16.49
    -0.42 (-2.48%)
     
  • GBP/USD

    1.3760
    +0.0008 (+0.06%)
     
  • USD/JPY

    108.9450
    -0.1030 (-0.09%)
     
  • BTC-USD

    64,118.73
    +1,172.05 (+1.86%)
     
  • CMC Crypto 200

    1,380.28
    +86.29 (+6.67%)
     
  • FTSE 100

    6,914.11
    +23.62 (+0.34%)
     
  • Nikkei 225

    29,620.99
    -130.61 (-0.44%)
     

A Trio of Stocks With a Record of Operating Income Margin Growth

  • Oops!
    Something went wrong.
    Please try again later.
GuruFocus.com
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.

- By Alberto Abaterusso

When the operating income margin keeps on expanding, it typically means that the company's management is successful in implementing policies that keep expenses well below profits.

The operating income margin ratio is an especially useful tool for measuring profitability as it excludes certain short-term items and one-off events which could significantly influence the net income in a given year.


Thus, investors may want to consider the following three stocks, as their operating income margins have expanded over recent years and are higher than those of most competitors.

Mastercard Inc

The first stock to consider is Mastercard Inc (NYSE:MA).

The Purchase, New York-based global provider of credit card services saw its trailing 12-month operating income margin (51.50% as of Dec. 2020) increase by 0.8% on average every year over the past five years. The operating margin ranks higher than 79% of the 355 companies that operate in the credit services industry.

A Trio of Stocks With a Record of Operating Income Margin Growth
A Trio of Stocks With a Record of Operating Income Margin Growth

The share price has added 293.65% over the past five years to trade at $353.85 at close on Friday for a market capitalization of $351.5 billion, a 52-week range of $199.99 to $368.79 and a forward dividend yield of 0.5%.

On Wall Street, the stock has a median recommendation rating of buy with an average target price of $385.06 per share.

Vanguard Group Inc dominates the group of top fund holders with 7.10% of shares outstanding. It is followed by BlackRock Inc. with 6.79% of shares outstanding and FMR LLC with 3.58% of shares outstanding.

The Home Depot Inc

The second stock to consider is The Home Depot Inc (NYSE:HD).

The Atlanta-based operator of home improvement retail stores in North America and Mexico saw its trailing 12-month operating income margin (12.66% as of Jan. 2021) increase by 0.7% on average every year over the past five years. The operating margin ranks higher than 90% of the 1,047 companies in the retail - cyclical industry.

A Trio of Stocks With a Record of Operating Income Margin Growth
A Trio of Stocks With a Record of Operating Income Margin Growth

The share price of $258.34 at close on Friday has climbed 105.70% over the past five years, determining a market capitalization of $278.13 billion, a 52-week range of $140.63 to $292.95 and a forward dividend yield of 2.55%.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $307.61 per share.

Vanguard Group Inc, BlackRock Inc. and State Street Corp are among the largest top fund holders of the company, owning 8.33%, 6.70% and 4.50% of shares outstanding, respectively.

Eli Lilly and Co

Another stock to consider is Eli Lilly and Co (NYSE:LLY).

The Indianapolis, Indiana-based global manufacturer of pharmaceutical products saw its trailing 12-month operating income margin (31.29% as of Dec. 2020) increase by 11.2% on average every year over the past five years. The operating margin ranks higher than 92% of the 1,008 companies that operate in the drug manufacturers industry.

A Trio of Stocks With a Record of Operating Income Margin Growth
A Trio of Stocks With a Record of Operating Income Margin Growth

The share price has grown 176.80% over the past five years to trade at $204.89 at close on Friday for a market capitalization of $196.37 billion, a 52-week range of $117.06 to $218 and a forward dividend yield of 1.66%.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $217.79 per share.

Lilly Endowment Inc dominates the group of top fund holders with 11.55% of shares outstanding. It is followed by Vanguard Group Inc with 7.18% of shares outstanding and BlackRock Inc. with 6.15% of shares outstanding.

Disclosure: I have no positions in any securities mentioned in this article.

Read more here:



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.