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14 December 2024
By Maynard Paton
Today I have revisited a ShareScope screen that applies two ratios favoured by ‘quality’ investors — operating margin and return on equity (ROE).
The exact criteria I re-used were:
- An operating margin (latest and 10-year average) of 20% or more, and;
- An ROE (latest and 10-year average) of 20% or more.
Any business with a margin and ROE of at least 20% is probably quite special.
To narrow the field down further, I also sought companies that carried net cash (i.e. net borrowings excluding IFRS 16 finance leases of less than zero):
This time the filter returned 17 matches, including Rightmove, Games Workshop, Cerillion, Property Franchise and six other shares I have studied for ShareScope.
I selected Tatton Asset Management because its impressive 40%-plus margin was the highest among the remaining seven names.
Let’s take a closer look.
Read my full TATTON ASSET MANAGEMENT article for ShareScope >>