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Chicago, IL – August 28, 2025 – The stocks in this week’s article are Zurn Elkay Water Solutions Cor ZWS, Armstrong World Industries AWI, Ralph Lauren RL, Celestica CLS and Canadian Natural Resources Ltd. CNQ.
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, Zurn Elkay Water Solutions Cor, Armstrong World Industries, Ralph Lauren, Celestica and Canadian Natural Resources Ltd. 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 has narrowed down the universe of over 7,906 stocks to 15.
Here are the top five stocks that made it through the screen:
Zurn Elkay Water Solutions Cor
Zurn Elkay Water Solutions Cor is engaged in designing, procuring, manufacturing and marketing products that provide and improve water. ZWS has an average four-quarter earnings surprise of 10%.
Armstrong World Industries
Armstrong World Industries is a leading global producer of ceiling systems for use primarily in the construction and renovation of commercial, institutional and residential buildings. AWI has an average four-quarter earnings surprise of nearly 9.9%.
Ralph Lauren
Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia, and internationally. RL has an average four-quarter earnings surprise of 8.5%.
Celestica
Celestica is one of the largest electronics manufacturing services companies in the world, primarily serving original equipment manufacturers, cloud-based and other service providers and enterprises from several industries. CLS has an average four-quarter earnings surprise of 7.7%.
Canadian Natural Resources Ltd.
Canadian Natural Resources Limited is one of the largest independent energy companies in Canada engaged in the exploration, development and production of oil and natural gas. CNQ has an average four-quarter earnings surprise of 7.1%.
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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.
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