Zacks
Zacks.com featured highlights include Vince, YPF Sociedad Anonima, Interface, TechnipFMC and Arlo Technologies
Zacks Equity Research
6 min read

In This Article:

For Immediate Release

Chicago, IL – January 2, 2025 – Stocks in this week’s article are Vince Holding VNCE, YPF Sociedad Anonima YPF, Interface TILE, TechnipFMC FTI and Arlo Technologies ARLO.

5 Top-Ranked Efficient Stocks to Strengthen Your Portfolio

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, Vince Holding, YPF Sociedad Anonima, Interface, TechnipFMC and Arlo Technologies  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.

The use of these few criteria narrowed down the universe of over 7,906 stocks to 11.

Terms and Privacy Policy
Your Privacy Choices
Utah Privacy Notice

Recommended Stories