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Philip van Doorn

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Feb. 18, 2017, 8:29 a.m. EST

20 companies that have met a high bar this earnings season

They’ve increased sales at a fast pace while becoming more profitable

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By Philip van Doorn, MarketWatch


David Paul Morris/Bloomberg
Facebook’s sales per share for the past 12 months rose 51% from the previous 12-month period, while the company expanded its gross profit margin.

What are your favored measures for evaluating stocks? I want to see companies constantly increasing sales while becoming more profitable over time.

Those two gauges are more important than tracking quarterly earnings per share — and whether they meet, beat or miss analysts’ expectations.

So I’ve put together a list of large companies that have increased sales significantly while improving gross profit margins.

Investors are constantly being warned not to read too much into companies’ earnings announcements, not only because accounting rules can skew the bottom line in any three-month period, but also because many companies seem to obscure what’s really going on.

Read: Here’s how investors are duped each earnings season

Another reason not to focus too much on any quarter is that, in the long run, one earnings report and its attendant hysterical headlines about earnings “beats” or “misses” might not mean anything to a long-term investor. Then again, Wall Street promulgates this harmful obsession with quarterly results with quick-reaction reports and 12-month price targets and ratings. A year is very short for a serious long-term investor.

Since it’s earnings season, I’m going to share different information that incorporates the latest results.

Through Feb. 13, 398 of the companies included in the S&P 500 Index /quotes/zigman/3870025/realtime SPX -0.26% had announced results for quarters ending Oct. 28 or later. So I listed those that have increased sales per share the most and expanded profit margins. But I didn’t confine myself to the most recent quarter. Since I focused on gross margins, the sample excluded 48 companies — mostly banks — that use other measures of profitability.

Here are the 20 S&P 500 companies that have reported the largest increases in sales per share over the past 12 reported months (through Feb. 13) from the previous 12-month period, while also improving gross profit margins:

Company Ticker Sales per share - past 12 months Sales per share - previous 12-month period Increase in sales per share Gross margin - past 12 months Gross margin - previous 12-month period
Vertex Pharmaceuticals Inc. /quotes/zigman/79675/composite VRTX $6.94 $4.27 63% 90.34% 87.05%
Facebook Inc. Class A /quotes/zigman/9962609/composite FB $9.48 $6.27 51% 85.83% 83.25%
E-Trade Financial Corp. /quotes/zigman/118511/composite ETFC $7.31 $5.21 40% 89.45% 73.79%
Activision Blizzard Inc. /quotes/zigman/110164/composite ATVI $8.78 $6.33 39% 76.36% 66.02%
Qorvo Inc. /quotes/zigman/44188949/composite QRVO $23.11 $17.73 30% 38.63% 37.32%
Ulta Beauty Inc. /quotes/zigman/107036/composite ULTA $71.85 $57.45 25% 36.13% 34.97%
Amazon.com Inc. /quotes/zigman/63011/composite AMZN $280.96 $224.93 25% 35.09% 33.04%
Celgene Corp. /quotes/zigman/69584/composite CELG $13.71 $11.03 24% 96.90% 92.23%
Adobe Systems Inc. /quotes/zigman/67665/composite ADBE $11.60 $9.36 24% 84.63% 82.85%
Applied Materials Inc. /quotes/zigman/19895/composite AMAT $9.74 $7.88 24% 41.68% 40.90%
Nvidia Corp. /quotes/zigman/80597/composite NVDA $10.81 $8.77 23% 58.96% 56.13%
Fidelity National Information Services Inc. /quotes/zigman/349218/composite FIS $28.13 $22.99 22% 42.17% 33.85%
Zimmer Biomet Holdings Inc. /quotes/zigman/287652/composite ZBH $38.10 $31.30 22% 72.89% 61.87%
Acuity Brands Inc. /quotes/zigman/294255/composite AYI $77.63 $64.27 21% 43.17% 42.63%
Intercontinental Exchange Inc. /quotes/zigman/23571824/composite ICE $9.93 $8.23 21% 65.27% 64.45%
Edwards Lifesciences Corp. /quotes/zigman/257334/composite EW $13.61 $11.32 20% 74.47% 73.27%
Red Hat Inc. /quotes/zigman/208092/composite RHT $12.66 $10.59 20% 84.62% 84.12%
BorgWarner Inc. /quotes/zigman/131196/composite BWA $42.18 $35.53 19% 21.33% 21.19%
Corning Inc. /quotes/zigman/223221/composite GLW $8.45 $7.12 19% 39.49% 39.30%
Regeneron Pharmaceuticals Inc. /quotes/zigman/77392/composite REGN $42.02 $35.58 18% 91.68% 88.61%
Sources: FactSet, company filings

I focused on sales per share, rather than revenue, because the per-share figures bake in any dilution from the issuance of stock for acquisitions, compensation or other purposes. This means that if a company’s revenue increased dramatically because of an acquisition paid for with stock, the per-share figures are far more meaningful than the raw sales figures. The per-share figures also reflect stock repurchases.

A company’s gross profit margin is its revenue, less the cost of goods sold, divided by revenue. It is a raw measure of product profitability. In contrast, bottom-line profit margins — net margins — can be misleading.

Also see: Earnings releases are still a confusing mess, and it’s investors who pay the price

This table includes total returns, forward price-to earnings ratios and PEG ratios for the group:

Company Ticker Total return - 3 years Total return - 5 years Price/consensus 2018 EPS estimate PEG ratio
Vertex Pharmaceuticals Inc. /quotes/zigman/79675/composite VRTX 3% 143% 29.4 0.5
Facebook Inc. Class A /quotes/zigman/9962609/composite FB 99% N/A 19.9 0.8
E-Trade Financial Corp. /quotes/zigman/118511/composite ETFC 66% 288% 15.2 0.9
Activision Blizzard Inc. /quotes/zigman/110164/composite ATVI 138% 294% 19.3 0.9
Qorvo Inc. /quotes/zigman/44188949/composite QRVO 181% 225% 9.9 0.7
Ulta Beauty Inc. /quotes/zigman/107036/composite ULTA 212% 230% 27.6 1.4
Amazon.com Inc. /quotes/zigman/63011/composite AMZN 134% 337% 67.0 1.6
Celgene Corp. /quotes/zigman/69584/composite CELG 41% 218% 13.3 0.7
Adobe Systems Inc. /quotes/zigman/67665/composite ADBE 75% 264% 24.4 1.3
Applied Materials Inc. /quotes/zigman/19895/composite AMAT 99% 207% 13.7 1.0
Nvidia Corp. /quotes/zigman/80597/composite NVDA 552% 621% 32.5 3.5
Fidelity National Information Services Inc. /quotes/zigman/349218/composite FIS 57% 206% 16.8 1.5
Zimmer Biomet Holdings Inc. /quotes/zigman/287652/composite ZBH 26% 101% 12.5 1.4
Acuity Brands Inc. /quotes/zigman/294255/composite AYI 63% 261% 30.3 0.8
Intercontinental Exchange Inc. /quotes/zigman/23571824/composite ICE 41% 130% 17.3 1.3
Edwards Lifesciences Corp. /quotes/zigman/257334/composite EW 168% 143% 23.4 1.4
Red Hat Inc. /quotes/zigman/208092/composite RHT 37% 63% 26.6 1.6
BorgWarner Inc. /quotes/zigman/131196/composite BWA -24% 10% 11.2 1.7
Corning Inc. /quotes/zigman/223221/composite GLW 50% 121% 14.9 3.0
Regeneron Pharmaceuticals Inc. /quotes/zigman/77392/composite REGN 15% 228% 23.2 1.2
Source: FactSet

In comparison, the S&P 500 trades for 15.9 times aggregate consensus 2018 EPS estimates. The index has returned 36% over the past three years and 92% over five years.

The PEG ratio is price-to-earnings-to-expected-EPS growth, based on consensus 2018 estimates among analysts.

Don’t miss: SEC wants earnings to comply with its rules and it won’t take no for an answer

You can see that most of the companies have outperformed over the past three and five years, and you might find the valuations attractive for several of them. If you are interested in any of the stocks, your next step is to do your own research and consider how likely a company is to continue making a success of its business strategy for many years to come.

/quotes/zigman/3870025/realtime
US : S&P Base CME
2,578.85
-6.79 -0.26%
Volume: 2.09B
Nov. 17, 2017 4:52p
loading...
/quotes/zigman/79675/composite
US : U.S.: Nasdaq
$ 147.41
-0.53 -0.36%
Volume: 846,852
Nov. 17, 2017 4:00p
P/E Ratio
188.99
Dividend Yield
N/A
Market Cap
$37.41 billion
Rev. per Employee
$1.07M
loading...
/quotes/zigman/9962609/composite
US : U.S.: Nasdaq
$ 179.00
-0.59 -0.33%
Volume: 12.56M
Nov. 17, 2017 4:00p
P/E Ratio
34.69
Dividend Yield
N/A
Market Cap
$521.85 billion
Rev. per Employee
$2.14M
loading...
/quotes/zigman/118511/composite
US : U.S.: Nasdaq
$ 44.18
+0.16 +0.36%
Volume: 1.40M
Nov. 17, 2017 4:00p
P/E Ratio
20.74
Dividend Yield
N/A
Market Cap
$11.92 billion
Rev. per Employee
$646,667
loading...
/quotes/zigman/110164/composite
US : U.S.: Nasdaq
$ 64.10
-0.03 -0.05%
Volume: 4.10M
Nov. 17, 2017 4:00p
P/E Ratio
145.22
Dividend Yield
0.47%
Market Cap
$48.49 billion
Rev. per Employee
$735,000
loading...
/quotes/zigman/44188949/composite
US : U.S.: Nasdaq
$ 77.33
-0.58 -0.74%
Volume: 860,089
Nov. 17, 2017 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$9.92 billion
Rev. per Employee
$340,901
loading...
/quotes/zigman/107036/composite
US : U.S.: Nasdaq
$ 215.10
+9.14 +4.44%
Volume: 1.67M
Nov. 17, 2017 4:00p
P/E Ratio
28.60
Dividend Yield
N/A
Market Cap
$12.65 billion
Rev. per Employee
$167,187
loading...
/quotes/zigman/63011/composite
US : U.S.: Nasdaq
$ 1,129.88
-7.41 -0.65%
Volume: 2.32M
Nov. 17, 2017 4:00p
P/E Ratio
286.77
Dividend Yield
N/A
Market Cap
$548.03 billion
Rev. per Employee
$472,039
loading...
/quotes/zigman/69584/composite
US : U.S.: Nasdaq
$ 104.10
+0.75 +0.73%
Volume: 5.77M
Nov. 17, 2017 4:00p
P/E Ratio
24.73
Dividend Yield
N/A
Market Cap
$81.37 billion
Rev. per Employee
$1.73M
loading...
/quotes/zigman/67665/composite
US : U.S.: Nasdaq
$ 182.24
-0.06 -0.03%
Volume: 1.42M
Nov. 17, 2017 4:00p
P/E Ratio
57.13
Dividend Yield
N/A
Market Cap
$89.86 billion
Rev. per Employee
$435,625
loading...
/quotes/zigman/19895/composite
US : U.S.: Nasdaq
$ 56.49
-1.35 -2.33%
Volume: 27.04M
Nov. 17, 2017 4:00p
P/E Ratio
20.03
Dividend Yield
0.71%
Market Cap
$61.69 billion
Rev. per Employee
$830,239
loading...
/quotes/zigman/80597/composite
US : U.S.: Nasdaq
$ 211.36
-0.25 -0.12%
Volume: 12.66M
Nov. 17, 2017 4:00p
P/E Ratio
52.45
Dividend Yield
0.28%
Market Cap
$126.97 billion
Rev. per Employee
$871,541
loading...
/quotes/zigman/349218/composite
US : U.S.: NYSE
$ 92.06
-1.14 -1.22%
Volume: 1.51M
Nov. 17, 2017 4:01p
P/E Ratio
56.83
Dividend Yield
1.26%
Market Cap
$31.12 billion
Rev. per Employee
$167,982
loading...
/quotes/zigman/287652/composite
US : U.S.: NYSE
$ 111.61
-0.63 -0.56%
Volume: 1.02M
Nov. 17, 2017 4:02p
P/E Ratio
35.10
Dividend Yield
0.86%
Market Cap
$22.73 billion
Rev. per Employee
$419,616
loading...
/quotes/zigman/294255/composite
US : U.S.: NYSE
$ 161.82
-2.54 -1.55%
Volume: 362,396
Nov. 17, 2017 4:02p
P/E Ratio
21.75
Dividend Yield
0.32%
Market Cap
$6.92 billion
Rev. per Employee
$280,408
loading...
/quotes/zigman/23571824/composite
US : U.S.: NYSE
$ 66.59
+0.51 +0.77%
Volume: 2.79M
Nov. 17, 2017 4:03p
P/E Ratio
24.63
Dividend Yield
1.20%
Market Cap
$38.66 billion
Rev. per Employee
$1.08M
loading...
/quotes/zigman/257334/composite
US : U.S.: NYSE
$ 107.09
-0.01 -0.0093%
Volume: 1.04M
Nov. 17, 2017 4:02p
P/E Ratio
31.13
Dividend Yield
N/A
Market Cap
$22.66 billion
Rev. per Employee
$298,604
loading...
/quotes/zigman/208092/composite
US : U.S.: NYSE
$ 125.95
-0.68 -0.54%
Volume: 1.32M
Nov. 17, 2017 4:03p
P/E Ratio
75.87
Dividend Yield
N/A
Market Cap
$22.41 billion
Rev. per Employee
$251,833
loading...
/quotes/zigman/131196/composite
US : U.S.: NYSE
$ 51.94
-0.10 -0.19%
Volume: 1.85M
Nov. 17, 2017 4:03p
P/E Ratio
37.64
Dividend Yield
1.31%
Market Cap
$10.97 billion
Rev. per Employee
$350,689
loading...
/quotes/zigman/223221/composite
US : U.S.: NYSE
$ 31.63
-0.02 -0.06%
Volume: 3.37M
Nov. 17, 2017 4:03p
P/E Ratio
13.46
Dividend Yield
1.96%
Market Cap
$27.51 billion
Rev. per Employee
$244,545
loading...
/quotes/zigman/77392/composite
US : U.S.: Nasdaq
$ 391.59
-3.10 -0.79%
Volume: 591,886
Nov. 17, 2017 4:00p
P/E Ratio
35.57
Dividend Yield
N/A
Market Cap
$42.41 billion
Rev. per Employee
$1.02M
loading...
/quotes/zigman/79675/composite
US : U.S.: Nasdaq
$ 147.41
-0.53 -0.36%
Volume: 846,852
Nov. 17, 2017 4:00p
P/E Ratio
188.99
Dividend Yield
N/A
Market Cap
$37.41 billion
Rev. per Employee
$1.07M
loading...
/quotes/zigman/9962609/composite
US : U.S.: Nasdaq
$ 179.00
-0.59 -0.33%
Volume: 12.56M
Nov. 17, 2017 4:00p
P/E Ratio
34.69
Dividend Yield
N/A
Market Cap
$521.85 billion
Rev. per Employee
$2.14M
loading...
/quotes/zigman/118511/composite
US : U.S.: Nasdaq
$ 44.18
+0.16 +0.36%
Volume: 1.40M
Nov. 17, 2017 4:00p
P/E Ratio
20.74
Dividend Yield
N/A
Market Cap
$11.92 billion
Rev. per Employee
$646,667
loading...
/quotes/zigman/110164/composite
US : U.S.: Nasdaq
$ 64.10
-0.03 -0.05%
Volume: 4.10M
Nov. 17, 2017 4:00p
P/E Ratio
145.22
Dividend Yield
0.47%
Market Cap
$48.49 billion
Rev. per Employee
$735,000
loading...
/quotes/zigman/44188949/composite
US : U.S.: Nasdaq
$ 77.33
-0.58 -0.74%
Volume: 860,089
Nov. 17, 2017 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$9.92 billion
Rev. per Employee
$340,901
loading...
/quotes/zigman/107036/composite
US : U.S.: Nasdaq
$ 215.10
+9.14 +4.44%
Volume: 1.67M
Nov. 17, 2017 4:00p
P/E Ratio
28.60
Dividend Yield
N/A
Market Cap
$12.65 billion
Rev. per Employee
$167,187
loading...
/quotes/zigman/63011/composite
US : U.S.: Nasdaq
$ 1,129.88
-7.41 -0.65%
Volume: 2.32M
Nov. 17, 2017 4:00p
P/E Ratio
286.77
Dividend Yield
N/A
Market Cap
$548.03 billion
Rev. per Employee
$472,039
loading...
/quotes/zigman/69584/composite
US : U.S.: Nasdaq
$ 104.10
+0.75 +0.73%
Volume: 5.77M
Nov. 17, 2017 4:00p
P/E Ratio
24.73
Dividend Yield
N/A
Market Cap
$81.37 billion
Rev. per Employee
$1.73M
loading...
/quotes/zigman/67665/composite
US : U.S.: Nasdaq
$ 182.24
-0.06 -0.03%
Volume: 1.42M
Nov. 17, 2017 4:00p
P/E Ratio
57.13
Dividend Yield
N/A
Market Cap
$89.86 billion
Rev. per Employee
$435,625
loading...
/quotes/zigman/19895/composite
US : U.S.: Nasdaq
$ 56.49
-1.35 -2.33%
Volume: 27.04M
Nov. 17, 2017 4:00p
P/E Ratio
20.03
Dividend Yield
0.71%
Market Cap
$61.69 billion
Rev. per Employee
$830,239
loading...
/quotes/zigman/80597/composite
US : U.S.: Nasdaq
$ 211.36
-0.25 -0.12%
Volume: 12.66M
Nov. 17, 2017 4:00p
P/E Ratio
52.45
Dividend Yield
0.28%
Market Cap
$126.97 billion
Rev. per Employee
$871,541
loading...
/quotes/zigman/349218/composite
US : U.S.: NYSE
$ 92.06
-1.14 -1.22%
Volume: 1.51M
Nov. 17, 2017 4:01p
P/E Ratio
56.83
Dividend Yield
1.26%
Market Cap
$31.12 billion
Rev. per Employee
$167,982
loading...
/quotes/zigman/287652/composite
US : U.S.: NYSE
$ 111.61
-0.63 -0.56%
Volume: 1.02M
Nov. 17, 2017 4:02p
P/E Ratio
35.10
Dividend Yield
0.86%
Market Cap
$22.73 billion
Rev. per Employee
$419,616
loading...
/quotes/zigman/294255/composite
US : U.S.: NYSE
$ 161.82
-2.54 -1.55%
Volume: 362,396
Nov. 17, 2017 4:02p
P/E Ratio
21.75
Dividend Yield
0.32%
Market Cap
$6.92 billion
Rev. per Employee
$280,408
loading...
/quotes/zigman/23571824/composite
US : U.S.: NYSE
$ 66.59
+0.51 +0.77%
Volume: 2.79M
Nov. 17, 2017 4:03p
P/E Ratio
24.63
Dividend Yield
1.20%
Market Cap
$38.66 billion
Rev. per Employee
$1.08M
loading...
/quotes/zigman/257334/composite
US : U.S.: NYSE
$ 107.09
-0.01 -0.0093%
Volume: 1.04M
Nov. 17, 2017 4:02p
P/E Ratio
31.13
Dividend Yield
N/A
Market Cap
$22.66 billion
Rev. per Employee
$298,604
loading...
/quotes/zigman/208092/composite
US : U.S.: NYSE
$ 125.95
-0.68 -0.54%
Volume: 1.32M
Nov. 17, 2017 4:03p
P/E Ratio
75.87
Dividend Yield
N/A
Market Cap
$22.41 billion
Rev. per Employee
$251,833
loading...
/quotes/zigman/131196/composite
US : U.S.: NYSE
$ 51.94
-0.10 -0.19%
Volume: 1.85M
Nov. 17, 2017 4:03p
P/E Ratio
37.64
Dividend Yield
1.31%
Market Cap
$10.97 billion
Rev. per Employee
$350,689
loading...
/quotes/zigman/223221/composite
US : U.S.: NYSE
$ 31.63
-0.02 -0.06%
Volume: 3.37M
Nov. 17, 2017 4:03p
P/E Ratio
13.46
Dividend Yield
1.96%
Market Cap
$27.51 billion
Rev. per Employee
$244,545
loading...
/quotes/zigman/77392/composite
US : U.S.: Nasdaq
$ 391.59
-3.10 -0.79%
Volume: 591,886
Nov. 17, 2017 4:00p
P/E Ratio
35.57
Dividend Yield
N/A
Market Cap
$42.41 billion
Rev. per Employee
$1.02M
loading...

Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

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