If you want to increase your likelihood to discover companies that are in good shape from a financial standpoint, you may want to consider the following three stocks, as their trailing 12-month (TTM) Ebitda margins are outperforming the S&P 500's 20.6% as of the writing of this article.
The Ebitda margin, which is calculated as earnings before interest, tax, depreciation and amortization divided by total revenue, is a good indicator of a company's financial health as it doesn't consider the effect of unique decisions and tax laws when assessing the performance of a company. These decisions refer to the recognition of amortization and depreciation, which may differ significantly, even among companies that operate in the same industry.
Wall Street sell-side analysts have also issued positive recommendation ratings for these stocks.
Novo Nordisk A/S
The first company that makes the cut is Novo Nordisk A/S (NVO, Financial), a Bagsvaerd, Denmark-based biotech developer of pharmaceutical products, including treatments for diabetes, obesity hemophilia, growth disorders and for hormone replacement therapy.
Novo Nordisk A/S' Ebitda margin is 47.2% as a result of Ebitda per share of $4.07 and revenue per share of $8.63 for the trailing 12 months ended in March 2021.
The share price, $92.60 at close on Friday, is a 41.55% increase compared to year-ago levels. The company has a market capitalization of $212.34 billion and a 52-week range of $63.22 to $92.87.
The stock grants a trailing dividend yield of 1.56%. The company has paid two semi-annual dividends during the period in question. The first one, 51.8 cents per common share, was paid on Aug. 25, 2020, and the second one, 92.2 cents per common share, was paid on April 7, 2021.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $82.43 per share.
Jim Simons (Trades, Portfolio) leads the group of top fund holders with 1.08% of shares outstanding. The investor is followed by Ken Fisher (Trades, Portfolio) with 0.70% of shares outstanding and Bank of America Corp /DE/ with 0.33% of shares outstanding.
Moderna Inc
The second company that qualifies is Moderna Inc (MRNA, Financial), a Cambridge, Massachusetts-based developer of candidates for messenger RNA-based vaccines and therapies that can be used to treat diseases in immuno-oncology, rare diseases, infectious diseases and cardiovascular diseases.
Moderna Inc's Ebitda margin is 22.7% as a result of Ebitda per share of $1.48 and revenue per share of $6.52 for the trailing 12 months ended in March 2021.
The share price, $353.60 at close on Friday, represents a 353.45% increase compared to year-ago levels for a market capitalization of $141.98 billion and a 52-week range of $54.21 to $362.
Moderna Inc does not pay dividends.
On Wall Street, the stock has a median recommendation rating of hold and an average target price of $198.77 per share.
Baillie Gifford (Trades, Portfolio) leads the group of top fund holders with 11.32% of shares outstanding. The investor is followed by Flagship Ventures Fund IV General Partner LLC with 7.80% of shares outstanding and Flagship Ventures Management, Inc. with 5.13% of shares outstanding.
GlaxoSmithKline PLC
The third stock that makes the cut is GlaxoSmithKline PLC (GSK, Financial), a British pharmaceutical giant.
GlaxoSmithKline PLC's Ebitda margin is 32.26% as a result of Ebitda per share of $5.70 and revenue per share of $17.67 for the trailing 12 months ended in June 2021.
The share price has declined by 2.77% over the past year to close at $40.14 on Friday, determining a market capitalization of $100.99 billion and a 52-week range of $33.26 to $42.40.
The stock's trailing dividend yield of 5.42% is calculated from a quarterly dividend of 52.6 cents per common share with the last payment issued on July 7.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $44.09 per share.
Dodge & Cox dominates the group of top fund holders of the company with 3.50% of shares outstanding. The investment firm is followed by Capital International Investors with 0.79% of shares outstanding and Ken Fisher (Trades, Portfolio) with 0.70% of shares outstanding.
Disclosure: I have no positions in any securities mentioned in this article.
