5 Oceania Companies With Good Financial Strength and Profitability

- By James Li

According to the Good Companies Screen, a Premium All-in-One Screener template, five companies headquartered in Australia or New Zealand that have good profitability and cash-to-debt ratios as of Wednesday are Technology One Ltd. (ASX:TNE), Objective Corp. Ltd. (ASX:OCL), Fisher & Paykel Health Care Corp. Ltd. (ASX:FPH)(NZSE:FPH), Fortescue Metals Group Ltd. (ASX:FMG) and Integrated Research Ltd. (ASX:IRI).

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• ASX:TNE 15-Year Financial Data

• The intrinsic value of ASX:TNE

• Peter Lynch Chart of ASX:TNE

The Good Companies Screen looks for companies that have good business predictability and expanding operating margins. To further narrow the list of companies, the investor can consider the stocks with high cash-to-debt ratios, a key indicator of financial strength. According to the GuruFocus Filter Rank feature, our research suggests that stocks with high cash-to-debt ratios generally have high 12-month returns with a correlation rank of 10.

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Technology One

Technology One (ASX:TNE) develops user-friendly enterprise software products that are deeply integrated into customers' information technology infrastructure. GuruFocus ranks the Brisbane, Queensland-based company's financial strength 8 out of 10 on several positive investing signs, which include a strong Altman Z-score of 8.14, a cash-to-debt ratio of 4.28 and a debt-to-Ebitda ratio that outperforms over 80% of global competitors.

Technology One's profitability ranks 9 out of 10, driven by a five-star business predictability rank and an operating margin that has increased approximately 7.5% per year on average over the past five years and is outperforming over 95% of global competitors.

Gurus with holdings in Technology One include the Royce Premier International Fund and the Wasatch International Growth (Trades, Portfolio) Fund.

Objective

Objective Corp. Ltd. (ASX:OCL) provides a wide range of information technology software and services. GuruFocus ranks the Sydney-based company's profitability 9 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank and profit margins and returns that are outperforming over 85% of global competitors.

Objective's financial strength ranks 7 out of 10 on the back of strong interest coverage and Altman Z-scores despite debt ratios underperforming more than half of global competitors. Additionally, the company's cash-to-debt ratio is a high 4.01.

Fisher & Paykel

Fisher & Paykel (ASX:FPH) manufactures a wide range of respiratory care devices and instruments. GuruFocus ranks the Auckland, New Zealand-based company's profitability 9 out of 10 on several positive investing signs, which include returns that are outperforming over 94% of global competitors and an operating margin that has increased approximately 6% per year on average over the past five years and is near a 10-year high of 32.88%.

Fortescue Metals Group

Fortescue Metals Group (ASX:FMG) produces iron ore primarily from the Pilbara section of West Australia. GuruFocus ranks the company's profitability 10 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and an operating margin that has increased over 20% per year on average over the past five years and is outperforming over 97% of global competitors.

Integrated Research

Integrated Research (ASX:IRI) provides a wide range of proactive experience management solutions for information technology, payments and communication ecosystems. GuruFocus ranks the Sydney-based technology company's profitability 9 out of 10 on several positive investing signs, which include a four-star business predictability rank and an operating margin that has increased approximately 3.5% per year on average over the past five years and is outperforming over 95% of global competitors.

Disclosure: No positions.

Read more here:

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This article first appeared on GuruFocus.