Chicago, IL – April 3, 2025 – Stocks in this week’s article are EmbraerEmpresa Brasileira de Aeronautica ERJ, Steelcase SCS and Axalta Coating Systems AXTA.
Efficiency level measures a company's capability to transform available input into output and is often considered an important parameter for gauging its potential to make profits.A company with a high efficiency level is expected to provide stellar returns as it is believed to be positively correlated with price performance.
However, at times, it becomes difficult to measure the efficiency level of a company. This is why one must consider popular efficiency ratios while selecting stocks.
To that end, EmbraerEmpresa Brasileira de Aeronautica,Steelcase and Axalta Coating Systems made it through the screening process.
These efficiency ratios are:
Receivables Turnover: This is the ratio of 12-month sales to four-quarter average receivables. It shows a company's potential to extend its credit and collect debt in terms of that credit. A high receivables turnover ratio or the "accounts receivable turnover ratio" or "debtor's turnover ratio" is desirable as it shows that the company is capable of collecting its accounts receivables or that it has quality customers.
Asset Utilization: This ratio indicates a company's capability to convert assets into output and is thus a widely known measure of efficiency level. It is calculated by dividing total sales over the past 12 months by the last four-quarter average of total assets. Like the above ratios, high asset utilization may indicate that a company is efficient.
Inventory Turnover: The ratio of the 12-month cost of goods sold (COGS) to a four-quarter average inventory is considered one of the most popular efficiency ratios. It indicates a company's ability to maintain a suitable inventory position. While a high value indicates that the company has a relatively low inventory level compared to COGS, a low value indicates that the company is facing declining sales, which has resulted in excess inventory.
Operating Margin: This efficiency measure is the ratio of operating income over the past 12 months to sales over the same period. It measures a company's ability to control operating expenses. Hence, a high value of the ratio may indicate that the company manages its operating expenses more efficiently than its peers.
Here are the top three stocks that made it through the screen:
EmbraerEmpresa Brasileira de Aeronautica designs, manufactures and sells aircraft and aviation-related structural parts to the world's commercial aviation, executive aviation and defense markets. ERJ has an average four-quarter earnings surprise of 138.4%.
Steelcase is a designer and manufacturer of products used to create high-performance work environments. SCS has an average four-quarter earnings surprise of 31.5%.
Axalta Coating Systems is a global coatings company engaged in the manufacturing, marketing and distribution of coatings systems. AXTA has an average four-quarter earnings surprise of nearly 16.3%.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2438862/3-top-ranked-efficient-stocks-for-solid-gains-amid-volatility
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Embraer-Empresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report
Steelcase Inc. (SCS) : Free Stock Analysis Report
Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
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