When the operating income margin continues to grow, it means a company is becoming more efficient in generating profits from its operating activities.
The operating income margin is a more effective measure than the net income margin when evaluating whether a company can generate income, as the metric excludes those items on which it has no or limited control, but that could weigh on the net income notably in some years.
The stocks listed below meet the above criteria, as their operating income margins have grown in recent years. They also have positive ratings on Wall Street.
Vale SA
The first stock investors may want to consider is Vale SA (VALE, Financial), a Brazilian producer and seller of various mining products such as iron, nickel and coal.
The stock saw its trailing 12-month operating income margin (54.82% for the most recent fiscal quarter ended March 31) grow by 13.30% on average every year over the past five years.
The share price was $18.34 as of the end of regular trading on Wednesday for an enterprise value-to-Ebitda ratio of 2.92 (versus the industry median of 7.64) and a market capitalization of $88.37 billion.
The company paid a semi-annual dividend of 72.5 cents per common share on March 23 and a semi-annual dividend of $1.506 per common share on Oct. 8, 2021, for a 12-month dividend yield of 12.16% as of the end of regular trading on Wednesday.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $21.14 per share.
Capital Research Global Investors, Capital International Investors and Capital World Investors are among the largest fund holders of the company with 3.72%, 3.31% and 3.06% of shares outstanding, respectively.
LexinFintech Holdings Ltd
The second stock investors may want to consider is LexinFintech Holdings Ltd (LX, Financial), a Shenzhen, People's Republic of China-based operator of an online platform where customers access various consumer finance services.
The company saw its trailing 12-month operating income margin (27% as of the December 2021 quarter) grow by 101.60% on average every year over the past five years.
The share price was $1.91 as of the end of regular trading on Wednesday for a price-sales ratio of 0.23 (versus the industry median of 3.34) and a market capitalization of $352.19 million.
The company does not pay dividends.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of approximately $3.85 per share.
Man Group plc, Vanguard Group Inc. and FIL Ltd are among the largest institutional shareholders of the company with 2.58%, 2.24% and 1.66% of shares outstanding, respectively.
Sibanye Stillwater Ltd
The third stock that investors may want to consider is Sibanye Stillwater Ltd. (SBSW, Financial), a South African precious metals producer with mining activities located in North America and South Africa.
The company saw its trailing 12-month operating income margin (34.41% as of the December 2021 quarter) grow by 41.20% on average every year over the past five years.
The share price was $12.48 as of the end of regular trading on Wednesday for an enterprise value-to-Ebitda ratio of 2.54 (versus the industry median of 7.64) and a market capitalization of $8.83 billion.
The company paid a semi-annual dividend of 49.4 cents per common share on April 7 and a semi-annual dividend of 80.7 cents per common share on Sept. 30, 2021, for a 12-month dividend yield of 10.43% as of the end of regular trading on Wednesday.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of approximately $18.25 per share.
Condire Management, LP, AQR Capital Management LLC and Van Eck Associates Corp are among the largest shareholders of the company with 0.78%, 0.58% and 0.49% of shares outstanding, respectively.
Laredo Petroleum Inc.
The fourth stock that investors may want to consider is Laredo Petroleum Inc (LPI, Financial), an independent energy company based in Tulsa, Oklahoma. This company is currently developing oil and gas commodities in the Permian Basin of western Texas in the United States. The company operates on total proven reserves accounting for approximately 86.6 million barrels of oil equivalent.
The company saw its trailing 12-month operating income margin (47.97% as of the March 2022 quarter) grow by 4.60% on average every year over the past five years.
The share price was $100.52 as of the end of regular trading on Wednesday for an enterprise value-to-Ebitda ratio of 5.42 (versus the industry median of 7.95) and a market capitalization of $1.74 billion.
The company does not pay dividends.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of approximately $127.67 per share.
BlackRock Inc., State Street Corp and SPDR(R) S&P(R) Oil & Gas Exploration & Production ETF are among the largest institutional shareholders of the company with 12.77%, 12.05% and 6.92% of shares outstanding, respectively.
