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A Trio of Strong Performers to Consider

Shareholders of Northrop Grumman Corp., (NYSE:NOC) Brown & Brown Inc. (NYSE:BRO) and ESCO Technologies Inc (NYSE:ESE) have seen their holdings outperform the U.S. market by large margins over several years.

The S&P 500 index increased by 5.8% over the past year, 25.7% over the past three years and 42.6% over the past five years through Feb. 28. During the same time periods, the prices of the above stocks has grown faster than the S&P 500.


Wall Street sell-side analysts expect these stocks to keep on performing well, as they have issued positive recommendation ratings.

Northrop Grumman

Shares of Northrop Grumman have risen 16.2% over the past 12 months, 35.4% over the past three years and approximately 100% over the past five years through Feb. 28, topping the S&P 500 by 10.4%, 9.7% and 57.4%, respectively.

The Falls Church, Virginia-based provider of various cybersecurity, intelligence, surveillance and reconnaissance solutions has also paid quarterly dividends over the years in question. Currently, the company pays $1.32 per common share. The next payment will be made on Mar. 11, 2020.

Based on the share price of $328.84 at close on Feb. 28, the quarterly payment yields 1.61% for both the trailing 12-month dividend and the forward dividend.

GuruFocus assigned a moderate rating of 5 out of 10 for the company's financial strength and a high rating of 8 out of 10 for its profitability.

Northrop Grumman has an operating margin of 11.35% compared to the industry median of 6.19% and a net margin of 9.05% compared to the industry median of 4.63%. Also, the company has a return on equity of 33.5% while the industry median yields 6.39%.

The stock has a market capitalization of $55.13 billion, a price-earnings ratio of 24.87, a price-sales ratio of 1.65 and a price-book ratio of 6.26. These ratios, together with the Peter Lynch chart, suggest that this stock is not trading cheaply.

Wall Street sell-side analysts issued an overweight recommendation rating for this stock with an average target price of $423.28 per share.

Brown & Brown

Shares of Brown & Brown have risen 44% over the past 12 months, 97.3% over the past three years and 169.5% over the past five years through Feb. 28, beating the S&P 500 by 38.2%, 71.6% and 127%, respectively.

The Daytona Beach, Florida-based marketer and seller of insurance products and services in North America, Bermuda, the Cayman Islands and England has also paid quarterly dividends over the observed period. Currently, the company pays 8.5 cents per common share. The last quarterly dividend was sent out to shareholders on Feb. 19.

Based on the share price of $43.01 at close on Feb. 28, the payment yields 0.77% for the trailing 12-month dividend and 0.79% for the forward dividend.

GuruFocus assigned the company a moderate financial strength rating of 5 out of 10 and a high profitability rating of 8 out of 10.

Brown & Brown has an operating margin of 24.59% versus the industry median of 10.48% and a net margin of 17.08% versus the industry median of 6.46%. Furthermore, the company has a return on equity of 12.34% while the industry median is 9.31%.

The stock has a market capitalization of $12.11 billion, a price-earnings ratio of 30.5, a price-sales ratio of 4.96 and a price-book ratio of 3.62. These ratios together with the below Peter Lynch chart suggest that the stock doesn't trade cheaply.

Wall Street sell-side analysts recommend a hold rating for this stock with an average target price of $44.67 per share.

ESCO Technologies

Shares of ESCO Technologies Inc have gained 32.1% over the last year, 66.2% over the last three years and 131.5% over the last five years through Feb. 28, topping the S&P 500 by 26.3%, 40.5% and 90%, respectively.

The St. Louis, Missouri-based producer and supplier of engineered products and systems for a broad range of users worldwide has also paid quarterly dividends over the observed period. Currently, the company pays a quarterly cash dividend of 8 cents per common share. The next payment will be made on Apr. 17, 2020.

Based on the share price of $90.92 at close on Feb. 28, the dividend produces a trailing 12-month yield and a forward yield of 0.35%.

GuruFocus assigned a high rating of 7 out of 10 for the company's financial strength and for its profitability.

ESCO Technologies has an operating margin of 13.88% versus the industry median of 3.5% and a net margin of 9.97% versus the industry median of 2.58%. Furthermore, the company has a return on equity of 10.21% which beats the industry median of 5.2%.

The stock has a market capitalization of $2.36 billion, a price-earnings ratio of 15.78, a price-sales ratio of 2.96 and a price-book ratio of 2.58. These ratios, along with the Peter Lynch chart, tell that the stock may be not trading cheaply.

Wall Street sell-side analysts recommend an overweight rating for this stock and have established an average target price of $105.50 per share.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.