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If you tend to find yourself looking into cash flows and profitability ratios, then you may find this article to be an interesting starting point for your own analysis.

To construct this list we initially found those companies with increasing operating cash flow relative to revenues over the last twelve months (TTM) when comparing against the 3-year and 5-year averages. I.e. TTM operating cash flow greater than 3-year average and 5-year by more than 25%.

We then focused on those names that observed a higher return on equity, on a year-over-year basis, and had an encouraging DuPont breakdown. This implies:

  • Improving profit margin, i.e. higher Net Income/ Revenues
  • Improving asset turnover, i.e. higher Sales/Assets
  • And decreasing leverage ratio, i.e. lower Assets/Equity

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last year. To access a complete analysis of this list's recent performance, click here.

Considering this information, which of these stocks are you most bullish about?

1. Air Products & Chemicals Inc. (NYSE:APD): Chemicals Industry. Market cap of $19.56B. TTM FOCF/Revenue at 0.65% vs 3-year average at 0.32% and 5-year average at 0.26%. MRQ net profit margin 12.17% vs. PQ net profit margin at 11.2%. MRQ sales/assets ratio 0.18 vs. PQ sales/assets ratio 0.17. MRQ assets/equity ratio 2.37 vs. PQ assets/equity ratio 2.5. The stock has gained 37.15% over the last year.

2. athenahealth, Inc. (NASDAQ:ATHN): Business Services Industry. Market cap of $1.37B. TTM FOCF/Revenue at 12.17% vs 3-year average at 8.14% and 5-year average at 6.25%. MRQ net profit margin 4.65% vs. PQ net profit margin at 0.51%. MRQ sales/assets ratio 0.26 vs. PQ sales/assets ratio 0.25. MRQ assets/equity ratio 1.48 vs. PQ assets/equity ratio 1.61. The stock is a short squeeze candidate, with a short float at 25.14% (equivalent to 23.74 days of average volume). The stock has performed poorly over the last month, losing 14.83%.

3. B&G Foods Inc. (NYSE:BGS): Processed & Packaged Goods Industry. Market cap of $840.64M. TTM FOCF/Revenue at 8.85% vs 3-year average at 4.46% and 5-year average at 3.53%. MRQ net profit margin 10.12% vs. PQ net profit margin at 0.26%. MRQ sales/assets ratio 0.15 vs. PQ sales/assets ratio 0.15. MRQ assets/equity ratio 3.71 vs. PQ assets/equity ratio 3.89. The stock has gained 65.41% over the last year.

4. Buckeye Technologies Inc. (NYSE:BKI): Paper & Paper Products Industry. Market cap of $928.64M. TTM FOCF/Revenue at 15.32% vs 3-year average at 9.89% and 5-year average at 7.28%. MRQ net profit margin 12.07% vs. PQ net profit margin at 10.14%. MRQ sales/assets ratio 0.27 vs. PQ sales/assets ratio 0.22. MRQ assets/equity ratio 1.53 vs. PQ assets/equity ratio 1.99. This is a risky stock that is significantly more volatile than the overall market (beta = 2.57).

5. Bristol-Myers Squibb Company (NYSE:BMY): Drug Manufacturers Industry. Market cap of $47.09B. TTM FOCF/Revenue at 9.76% vs 3-year average at 3.84% and 5-year average at 2.21%. MRQ net profit margin 19.68% vs. PQ net profit margin at 15.46%. MRQ sales/assets ratio 0.16 vs. PQ sales/assets ratio 0.16. MRQ assets/equity ratio 1.93 vs. PQ assets/equity ratio 2.02. The stock has gained 14.62% over the last year.

6. CNH Global NV (NYSE:CNH): Farm & Construction Machinery Industry. Market cap of $8.81B. TTM FOCF/Revenue at 4.89% vs 3-year average at 3.4% and 5-year average at 1.87%. MRQ net profit margin 3.72% vs. PQ net profit margin at 0.45%. MRQ sales/assets ratio 0.13 vs. PQ sales/assets ratio 0.12. MRQ assets/equity ratio 4.16 vs. PQ assets/equity ratio 4.29. This is a risky stock that is significantly more volatile than the overall market (beta = 2.55).

7. The Cooper Companies Inc. (NYSE:COO): Medical Instruments & Supplies Industry. Market cap of $3.43B. TTM FOCF/Revenue at 14.23% vs 3-year average at 10.19% and 5-year average at 4.7%. MRQ net profit margin 10.87% vs. PQ net profit margin at 1.54%. MRQ sales/assets ratio 0.12 vs. PQ sales/assets ratio 0.12. MRQ assets/equity ratio 1.45 vs. PQ assets/equity ratio 1.63. The stock has gained 98.24% over the last year.

8. Hexcel Corp. (NYSE:HXL): Aerospace/Defense Products & Services Industry. Market cap of $1.90B. TTM FOCF/Revenue at 5.51% vs 3-year average at 1.63% and 5-year average at 0.88%. MRQ net profit margin 7.96% vs. PQ net profit margin at 6.01%. MRQ sales/assets ratio 0.26 vs. PQ sales/assets ratio 0.22. MRQ assets/equity ratio 1.78 vs. PQ assets/equity ratio 2.09. The stock has performed poorly over the last month, losing 11.64%.

9. KEMET Corp. (NYSE:KEM): Diversified Electronics Industry. Market cap of $371.13M. TTM FOCF/Revenue at 7.75% vs 3-year average at 1.32% and 5-year average at 0.61%. MRQ net profit margin 8.06% vs. PQ net profit margin at 0.15%. MRQ sales/assets ratio 0.3 vs. PQ sales/assets ratio 0.29. MRQ assets/equity ratio 2.46 vs. PQ assets/equity ratio 2.61. The stock has performed poorly over the last month, losing 16.72%.

10. LMI Aerospace Inc. (NASDAQ:LMIA): Aerospace/Defense Products & Services Industry. Market cap of $258.16M. TTM FOCF/Revenue at 7.16% vs 3-year average at 5.72% and 5-year average at 3.54%. MRQ net profit margin 7.01% vs. PQ net profit margin at 6.46%. MRQ sales/assets ratio 0.33 vs. PQ sales/assets ratio 0.33. MRQ assets/equity ratio 1.19 vs. PQ assets/equity ratio 1.31. The stock has gained 21.3% over the last year.

11. Marriott International, Inc. (NASDAQ:MAR): Lodging Industry. Market cap of $12.14B. TTM FOCF/Revenue at 5.36% vs 3-year average at 3.99% and 5-year average at 2.8%. MRQ net profit margin 3.64% vs. PQ net profit margin at 3.16%. MRQ sales/assets ratio 0.32 vs. PQ sales/assets ratio 0.3. MRQ assets/equity ratio 6.32 vs. PQ assets/equity ratio 8.22. It's been a rough couple of days for the stock, losing 6.66% over the last week.

12. Moog Inc. (MOG-A): Aerospace/Defense Products & Services Industry. Market cap of $1.82B. TTM FOCF/Revenue at 5.12% vs 3-year average at 3.49% and 5-year average at 1.18%. MRQ net profit margin 5.33% vs. PQ net profit margin at 4.9%. MRQ sales/assets ratio 0.21 vs. PQ sales/assets ratio 0.2. MRQ assets/equity ratio 2.29 vs. PQ assets/equity ratio 2.36. The stock has gained 22.28% over the last year.

13. Nanometrics Incorporated (NASDAQ:NANO): Scientific & Technical Instruments Industry. Market cap of $377.32M. TTM FOCF/Revenue at 14.07% vs 3-year average at 3.89% and 5-year average at 0.11%. MRQ net profit margin 16.91% vs. PQ net profit margin at 15.93%. MRQ sales/assets ratio 0.26 vs. PQ sales/assets ratio 0.24. MRQ assets/equity ratio 1.27 vs. PQ assets/equity ratio 1.36. The stock has had a couple of great days, gaining 5.73% over the last week.

14. Penn National Gaming Inc. (NASDAQ:PENN): Resorts & Casinos Industry. Market cap of $2.92B. TTM FOCF/Revenue at 8.08% vs 3-year average at 2.9% and 5-year average at 1.65%. MRQ net profit margin 7.73% vs. PQ net profit margin at 6.1%. MRQ sales/assets ratio 0.15 vs. PQ sales/assets ratio 0.13. MRQ assets/equity ratio 2.4 vs. PQ assets/equity ratio 2.47. The stock is a short squeeze candidate, with a short float at 5.45% (equivalent to 5.6 days of average volume). The stock has gained 35.07% over the last year.

15. Petrobras Argentina SA (NYSE:PZE): Major Integrated Oil & Gas Industry. Market cap of $1.84B. TTM FOCF/Revenue at 7.62% vs 3-year average at 0.41% and 5-year average at 0.11%. MRQ net profit margin 4.43% vs. PQ net profit margin at 4.22%. MRQ sales/assets ratio 0.17 vs. PQ sales/assets ratio 0.13. MRQ assets/equity ratio 2.26 vs. PQ assets/equity ratio 2.34. Might be undervalued at current levels, with a PEG ratio at 0.74, and P/FCF ratio at 6.94.

16. Rackspace Hosting, Inc (NYSE:RAX): Internet Software & Services Industry. Market cap of $5.21B. TTM FOCF/Revenue at 14.28% vs 3-year average at 6.77% and 5-year average at 4.75%. MRQ net profit margin 6.01% vs. PQ net profit margin at 5.49%. MRQ sales/assets ratio 0.28 vs. PQ sales/assets ratio 0.26. MRQ assets/equity ratio 1.74 vs. PQ assets/equity ratio 1.87. The stock is a short squeeze candidate, with a short float at 14.11% (equivalent to 8.18 days of average volume). The stock has gained 132.28% over the last year.

17. Red Robin Gourmet Burgers Inc. (NASDAQ:RRGB): Restaurants Industry. Market cap of $511.33M. TTM FOCF/Revenue at 4.93% vs 3-year average at 3.35% and 5-year average at 2.14%. MRQ net profit margin 3.04% vs. PQ net profit margin at 1.8%. MRQ sales/assets ratio 0.51 vs. PQ sales/assets ratio 0.47. MRQ assets/equity ratio 1.88 vs. PQ assets/equity ratio 1.98. The stock is a short squeeze candidate, with a short float at 15.3% (equivalent to 7.39 days of average volume).

18. Sauer-Danfoss Inc. (NYSE:SHS): Diversified Machinery Industry. Market cap of $2.08B. TTM FOCF/Revenue at 14.42% vs 3-year average at 3.31% and 5-year average at 2.12%. MRQ net profit margin 12.49% vs. PQ net profit margin at 5.36%. MRQ sales/assets ratio 0.46 vs. PQ sales/assets ratio 0.35. MRQ assets/equity ratio 3.17 vs. PQ assets/equity ratio 9.43. This is a risky stock that is significantly more volatile than the overall market (beta = 2.1).

19. TRW Automotive Holdings Corp. (NYSE:TRW): Auto Parts Industry. Market cap of $6.47B. TTM FOCF/Revenue at 5.34% vs 3-year average at 3.53% and 5-year average at 2.39%. MRQ net profit margin 6.84% vs. PQ net profit margin at 5.69%. MRQ sales/assets ratio 0.41 vs. PQ sales/assets ratio 0.4. MRQ assets/equity ratio 4.18 vs. PQ assets/equity ratio 6.47. This is a risky stock that is significantly more volatile than the overall market (beta = 3.38). The stock has gained 66.43% over the last year.

*Data sourced from Screener.co, Yahoo! Finance and Finviz.

Source: Value Ideas: 19 Stocks With Improving Cash Flows, Encouraging DuPont Breakdowns