PGIM Fixed Income discuss transition from USD LIBOR to Secured Overnight Financing Rate (SOFR) and provide an assessment of SOFR’s progress and obstacles Profitability analysis is considered one of the best possible ways to assess the prospects of a company. Royal Dutch Shell paid no corporation tax in the UK last year even as it paid out billions of dollars in other jurisdictions. The Anglo-Dutch oil major paid a total of $7.8bn in corporate income tax and $5.9bn in royalties last year on pre-tax profits of $25.5bn, according to an annual report published on Tuesday. […]
This material reflects the views of the authors as of November 13, 2020 and is provided for informational or educational purposes only. Source(s) of data (unless otherwise noted): PGIM Fixed Income.
1 Draft legislation which is expected to be introduced by U.S. Representative Brad Sherman (D-CA), member of the United States House Committee on Financial Services where he serves as Chairman of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets
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Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy. Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated, based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.
Fixed income instruments are subject to credit, market, and interest rate. Emerging market investments are subject to greater volatility and price declines.
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Author: Source: ISDA as of October 2020
5 Stocks With High Net Income Ratio to Scoop Up
Profitability analysis is considered one of the best possible ways to assess the prospects of a company. This analysis is used to identify a profitable company from a loss-making one. In this context, it can be inferred that a profitable company generally has a high level of sales surplus, which will help it meet all operating and non-operating costs and still offer high returns.
In this context, it may be wise to invest in shares of a company with a high level of profitability as it normally ensures high returns. As a result, the simplest and most transparent way of checking a company’s profitability is by using accounting ratios. There are a variety of profitability ratios, from which we have selected net income ratio here as it is the most useful and simplest profitability metric.
There are a variety of profit ratios like gross income ratio, operating income ratio, pretax profit margin and net income ratio, which can be used to determine a company’s profit generating abilities. But net income ratio is widely accepted as the most conservative of the above-mentioned ratios.
Net income in simple words is total earnings a company makes after deducting all expenses from its sales revenue. Net income ratio or net profit margin is a ratio of a company’s net income and sales revenue. A high net income ratio shows that the company is able to effectively manage all business activities, including production, administration and selling.
Net income ratio is one of our key screening parameters. However, to find out the sure winners, we have added a few additional criteria to arrive at an efficient strategy.
Zacks Rank Equal to #1: No matter whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Trailing 12-Month Sales and Net Income Growth Higher than X Industry: Stocks that have witnessed higher-than-industry sales and net income growth in the past 12 months are positioned to perform well.
Trailing 12-Month Net Income Ratio Higher than X Industry: High net income ratio indicates a company’s solid profitability.
Percentage Rating Strong Buy greater than 70: This indicates that 70% of the current broker recommendations for the stock are Strong Buy.
These few parameters have narrowed down the universe of more than 6,804 stocks to only 17.
Here are five of the 17 stocks that qualified the screen:
TopBuild Corp. (BLD – Free Report) is an installer and distributor of insulation and other building products to the United States construction industry. Its 12-month net profit margin is 8.4%.
Generac Holdings Inc. (GNRC – Free Report) is a designer and manufacturer of power generation equipment, energy storage systems, and other power products. Its 12-month net profit margin is 12.8%.
Turtle Beach Corporation (HEAR – Free Report) is an audio technology company. Its 12-month net profit margin is 13%.
PennyMac Financial Services, Inc. (PFSI – Free Report) is engaged in mortgage banking and investment management activities in the United States. Its 12-month net profit margin is 42.7%.
Flagstar Bancorp, Inc. (FBC – Free Report) is a savings and loan holding company for Flagstar Bank. Its 12-month net profit margin is 22.4%.
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.
Author: Zacks Investment Research
Shell reveals latest year without paying UK corporation tax
Global debt rose at an unprecedented pace in the first nine months of the year as governments and companies embarked on a “debt tsunami” in the face of the coronavirus crisis, according to new research.
The unprecedented pace of debt accumulation will leave the global economy struggling to reduce borrowing in the future without “significant adverse implications for economic activity”, the Institute of International Finance warned on Wednesday.
The total level of global indebtedness has increased by $15tn this year, leaving it on track to exceed $277tn in 2020, said the IIF, which represents financial institutions. It expects total debt to reach 365 per cent of global gross domestic product by the end of the year, surging from 320 per cent at the end of 2019.
Debt burdens are especially onerous in emerging markets, having risen by 26 percentage points so far this year to approach 250 per cent of GDP, the IIF said. The share of EM governments’ revenues spent on repayments has also risen sharply this year, according to IIF data.
This week Zambia became the sixth developing country to default or restructure debts in 2020. More defaults are expected as the cost of the pandemic mounts.
The G20 group of the world’s largest economies has launched an initiative that has so far allowed 46 of the world’s poorest countries to delay about $5bn in debt repayments due this year. They are also edging towards unlocking additional IMF funds for poorer nations.
But analysts said more action was needed to fend off the rising risk of a fiscal crisis in a large number of developing countries.
Luis Oganes, head of emerging market research at JPMorgan, said emerging economies ran the risk of rising inflation if they sought to monetise debt by buying their own bonds, as some have done this year, or of deflation if they allowed debts to rise too far.
“High debt levels will lead to zombie banks and zombie companies that constrain growth,” he said.
Since the start of the pandemic, leading central banks have cut interest rates and pumped monetary stimulus into the world economy, which has helped to lower borrowing costs worldwide. Despite this, collapsing tax revenues have made emerging market debts much harder to service.
Some $7tn of debt will have to be repaid by borrowers in emerging markets between now and the end of next year, according to IIF estimates, of which about 15 per cent is in US dollars, exposing debtors to the risk of currency fluctuations.
Emre Tiftik, IIF director of sustainability research, said debt levels had risen much faster than anticipated at the start of the crisis.
From 2016 to the end of September, global debt rose by $52tn; that compares with an increase of $6tn between 2012 and 2016. The pace of growth in global GDP changed little over that period until the onset of the pandemic triggered a historic recession.
The change in debt — without a corresponding change in the pace of output growth — “suggests we are seeing a significant reduction in the GDP-generating capacity of debt”, Mr Tiftik said. “Aggressive support measures will be with us for some time and will inevitably increase debt significantly.”
The rise in emerging market debt was driven by a surge in non-financial corporate debt in China, bringing total emerging market indebtedness to $76tn. Excluding China, the US dollar value of debts in other emerging markets declined this year, reflecting the falling value of local currencies against the dollar.
Mr Tiftik said financial institutions had tried to “build buffers against the Covid shock”. “A significant proportion of their new debts has been directed to clients, which has been very useful in absorbing the initial shock of the crisis,” he said.
Debts in advanced economies rose by more than 50 percentage points this year to hit 432 per cent of GDP by the end of September. The US accounted for nearly half of this; its debts are set to reach $80tn this year, from $71tn at the end of 2019.
Author: Published 1 day ago on November 17, 2020