Interested in technology companies? Do you like stocks that pay dividends? Do you look for companies with low debt? Looking for ways to dig deeper into a company's profitability? For a closer look at stocks of this nature, we ran a screen.
The D/E (debt to equity) ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
EPS (earnings per share) growth illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
ROE, or return on equity, is one way to identify great potential names relative to profitability. This ratio illustrates the percentage return on shareholder equity. Also, this metric segments the company into operational efficiency, asset use efficiency, and financial leverage. Why does this matter? Simply put, it allows investors to get a real picture of how the company is generating these returns and helps identify parts of the company that may be underperforming.
We first looked for technology dividend stocks. We then screened for businesses that have maintained a sound capital structure (D/E Ratio < 0.3). From here, we then looked for companies that have shown strong bottom line growth over the last year (one-year fiscal EPS growth rate > 10%)(ROE [TTM] > 30%). We did not screen out any market caps.
Do you think these stocks should be trading higher? Please use our list to assist with your own analysis.
1. FactSet Research Systems (FDS)
|Industry:||Information & Delivery Services|
FactSet Research Systems has a Dividend yield of 1.03%, Debt/Equity Ratio of 0.00, Earnings Per Share Growth of 15.43%, and Return on Equity of 32.02%. The short interest was 8.99% as of May 2, 2012. FactSet Research Systems provides financial and economic information to investment community worldwide. The company offers fundamental financial data on various companies, analytical applications, and client services to the portfolio managers, research and performance analysts, risk managers, marketing professionals, sell-side equity research professionals, investment bankers, and fixed income professionals. FactSet's applications provide users access to company analysis, multicompany comparisons, industry analysis, company screening, portfolio analysis, predictive risk measurements, alphatesting, portfolio optimization and simulation, news and quotes, and tools to value and analyze fixed income securities and portfolios.
2. Microsoft (MSFT)
Microsoft has a Dividend yield of 2.50%, Debt/Equity Ratio of 0.17, Earnings Per Share Growth of 28.20%, and Return on Equity of 38.23%. The short interest was 0.77% as of May 2, 2012. Microsoft develops, licenses, and supports a range of software products and services for various computing devices worldwide. The company's Windows and Windows Live Division segment offers PC operating system that primarily includes Windows 7 and Windows Vista operating systems; Windows live suite of applications and Web services; and Microsoft PC hardware products. Its Microsoft's Server and Tools segment provides Windows Server operating systems, Windows Azure, Microsoft SQL Server, SQL Azure, Windows Intune, Windows Embedded, Visual Studio, Silverlight, system center products, Microsoft consulting services, and product support services.
3. Computer Programs & Systems (CPSI)
|Industry:||Healthcare Information Services|
Computer Programs & Systems has a Dividend yield of 3.11%, Debt/Equity Ratio of 0.00, Earnings Per Share Growth of 36.98%, and Return on Equity of 49.75%. The short interest was 5.20% as of May 2, 2012. Computer Programs and Systems, a healthcare information technology company, designs, develops, markets, installs, and supports computerized information technology systems to small and midsize hospitals in the U.S. Its enterprise-wide system automates the management of clinical and financial data across the primary functional areas of a hospital. The company offers services that enable customers to outsource certain data-related business processes in the areas of clinical care, revenue cycle management, cost control, and regulatory compliance.
4. USA Mobility (USMO)
USA Mobility has a Dividend yield of 7.84%, Debt/Equity Ratio of 0.11, Earnings Per Share Growth of 14.08%, and Return on Equity of 40.58%. The short interest was 5.56% as of May 2, 2012. USA Mobility provides wireless messaging, mobile voice, and data and unified communications solutions to the healthcare, government, and enterprise sectors in the U.S. The company provides one-way and two-way messaging services. Its one-way messaging consists of numeric messaging services, which enable subscribers to receive messages comprising numbers, such as phone numbers; and alphanumeric messages, including numbers and letters that enables subscribers to receive text messages.
5. Quality Systems (QSII)
|Industry:||Healthcare Information Services|
Quality Systems has a Dividend yield of 1.87%, Debt/Equity Ratio of 0.00, Earnings Per Share Growth of 25.93%, and Return on Equity of 32.01%. The short interest was 11.29% as of May 2, 2012. Quality Systems, together with its subsidiaries, develops and markets healthcare information systems in the U.S. The company operates through four divisions: QSI Dental, NextGen, Inpatient Solutions, and Practice Solutions. The QSI Dental division develops, markets, and supports software suites for dental practices; and practice management software, which is designed to automate and streamline various administrative functions required for operating a medical or dental practice.
Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.