For Immediate Release
Chicago, IL – April 27, 2017 - Stocks in this week’s article include Nucor Corporation (NYSE:NUE) (NYSE: NUE – Free Report ), Primerica, Inc. (NYSE: PRI – Free Report ), Universal Forest Products, Inc. (NASDAQ: UFPI – Free Report ), UnitedHealth Group Incorporated (NYSE:UNH) (NYSE: UNH – Free Report ) and Lithia Motors, Inc. (NYSE: LAD – Free Report ).
Screen of the Week of Zacks Investment Research:
Stocks with Exciting Interest Coverage Ratios
A layman can easily dupe himself if he decides to pick a stock only on the basis of numbers flashing on a real-time stock screen. A critical analysis of the company’s financial background is essential for a better investment decision.
Often investors evaluate a company’s performance by simply looking at its sales and earnings, which sometimes do not reveal the real picture. To be more precise, they do not tell whether a company’s fundamentals are sound enough to meet its financial obligations. Here, the role of coverage ratios comes into play — the higher these are the more efficient an enterprise will be in meeting its financial obligations.
Why Interest Coverage Ratio?
Interest Coverage Ratio is used to determine how effectively a company can pay the interest charges on its debt.
Debt, which is crucial to financing operations for a majority of companies, comes at a cost called interest. Interest expense has a direct bearing on the profitability of a company. And the company’s creditworthiness depends on how effectively it meets its interest obligations. Therefore, Interest Coverage Ratio is one of the important criteria to factor in before making any investment decision.
Interest Coverage Ratio = Earnings before Interest & Taxes (EBIT) divided by Interest Expense .
The Interest Coverage Ratio suggests how many times the interest could be paid from earnings and also gauges the margin of safety a firm has for paying interest.
An interest coverage ratio lower than one suggests that the company is unable to fulfill its interest obligations, and could default in repaying debt. A company that is capable of generating earnings well above its interest expense can withstand financial hardships. Definitely one should also track the company’s past performance to determine whether the interest coverage ratio has improved or worsened over a period of time.
The Winning Strategy
Apart from having an Interest Coverage ratio that is more than the industry average, adding a favorable Zacks Rank and a VGM Score of “A” or “B” to your search criteria should lead to better results.
Interest Coverage Ratio greater than X-Industry Median
Price greater than or equal to 5: The stocks must all be trading at a minimum of $5 or higher.
5-Year Historical EPS Growth (%) greater than X-Industry Median: Stocks that have a strong EPS growth history.
Projected EPS Growth (%) greater than X-Industry Median: This is the projected EPS growth over the next three to five years. This shows that the stock has near-term earnings growth potential.
Average 20-Day Volume greater than 100,000: A substantial trading volume ensures that the stock is easily tradable.
Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform irrespective of the market environment.
VGM Score of less than or equal to B: Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2 offer the best upside potential.
Here are seven of the 17 stocks that qualified the screening:
Nucor Corporation (NYSE:NUE – Free Report ), which manufactures and sells steel and steel products, has a VGM score of “A.” Its expected EPS growth rate for 3–5 years pegged at 12%. The stock carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here .
Primerica, Inc. (NYSE:PRI – Free Report ), which distributes financial products to middle income households, has a VGM score of “B”. Its expected EPS growth rate for 3–5 years is pegged at 13%. The stock currently carries a Zacks Rank #2.
Universal Forest Products, Inc. (NASDAQ:UFPI – Free Report ), which designs, manufactures, and markets wood and wood-alternative products for home centers and other retailers, has a Zacks Rank #2 and a VGM score of “B.” The expected EPS growth rate for 3–5 years is currently 10%.
UnitedHealth Group Incorporated (NYSE:UNH – Free Report ), a diversified health and well-being company, has a Zacks Rank #2 and a VGM score of “A.” The expected EPS growth rate for 3–5 years is currently pegged at 13.4%.
Lithia Motors, Inc. (NYSE:LAD – Free Report ) which operates automotive franchises, and retails new and used vehicles, has a VGM score of “B” and an expected EPS growth rate of 12.8% for 3–5 years. The stock currently carries a Zacks Rank #2.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today .
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance .
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros .
Get the full Report on NUE - FREE
Get the full Report on PRI - FREE
Get the full Report on UFPI - FREE
Get the full Report on UNH - FREE
Get the full Report on LAD - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook (NASDAQ:FB): https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/performance
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Nucor Corporation (NUE): Free Stock Analysis Report
Primerica, Inc. (PRI): Free Stock Analysis Report
Universal Forest Products, Inc. (UFPI): Free Stock Analysis Report
UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report
Lithia Motors, Inc. (LAD): Free Stock Analysis Report
Original post