5 most important stocks with an impressive net profit margin
The main objective of a business is to generate profits that can be reinvested in expansion or used to reward the shareholders of the business.
The net profit margin is an effective tool for measuring the profits earned by a business.
The net profit margin= Net profit/Sales * 100.
Simply put, net profit is the amount a business keeps after deducting all costs, interest, depreciation, taxes, and other expenses. In fact, the net profit margin can prove to be a powerful benchmark for assessing the strength of a company’s operations and cost control measures.
In addition, a higher net profit is essential to reward stakeholders. Moreover, the strength of the metric not only attracts investors, but also attracts well-qualified employees who end up adding to the value of the company.
In addition, a higher net profit margin than its peers gives the company a competitive advantage.
Advantages and disadvantages
Net profit margin helps investors better understand a company’s business model in terms of pricing policy, cost structure, and manufacturing efficiency. Therefore, a high net profit margin is preferred by all categories of investors.
However, the net profit margin as an investment criterion has its set of pitfalls. The measurement varies considerably from sector to sector. While net income is a key metric for measuring investment in traditional industries, it is not that important for technology companies.
In addition, the difference in the accounting treatment of various items – especially non-cash expenses like depreciation and stock-based compensation – makes comparison a difficult task.
Plus, for companies that prefer to grow with debt rather than equity financing, higher interest charges usually weigh on bottom line. In such cases, measurement is rendered ineffective when analyzing a company’s performance.
The winning strategy
A healthy net profit margin and solid EPS growth are the two most sought-after elements in a business model.
Apart from these, we have added a few criteria to ensure maximum return from this strategy.
12-month net margin– Most recent (%) greater than equal to 0: A high net profit margin indicates strong profitability.
Percentage change in F (0) / (F-1) BPA greater than equal to 0: It indicates profit growth.
Average broker rating (1-5) equal to 1: A rating of # 1 indicates the extreme optimism of brokers on the stock.
Zacks Rank less than or equal to 2: Stocks with a Zacks # 1 (strong buy) or 2 (buy) rank generally perform better than their peers in all types of market environment. The full list of today’s Zacks # 1 Rank stocks here
VGM scorefrom A or B: Our research shows that stocks with a VGM score of A or B when combined with a rank 1 or 2 of Zacks offer the best upside potential.
Here are five of the 21 actions that qualified the screen:
Based in Evansville, IN, Shoe Carnival, Inc. SCVL offers men, women and children a wide assortment of dress, casual and sporty shoes at moderate prices, with a focus on national and regional brands. Zacks’ consensus estimate for Fiscal 2020 net income has remained stable at $ 2.88 for the past 30 days. The action has a Zacks rank of 1 and a VGM score of A.
Cleveland, OH Crawford United Corporation CRAWA deals with aerospace components, commercial air handling and industrial pipes. The stock is a # 1 ranked player and has a VGM score of A. Additionally, Zacks’ consensus estimate for 2020 earnings of $ 2.39 has been consistent over the past 30 days.
Irvine, California Tilly’s Inc. TLYS is a specialist retailer in the action sports industry, selling clothing, footwear and accessories. The stock is ranked No.1 and has a VGM score of A. Additionally, Zacks’ consensus estimate for FY2021 earnings of 92 cents has been intact for the past 30 days.
Fremont, California-headquarters SYNNEX Company SNX is a global information technology supply chain services company, providing a full range of services to original equipment manufacturers, software vendors and reseller customers around the world. The stock is a No.1 ranked player and has an VGM score of A. Zacks’ consensus estimate for fiscal 2020 earnings of $ 13.68 has been increased by 3.63% over the past 30 years. last days.
headquartered in Beijing Momo Inc. MOMO provides a mobile social networking platform, primarily in the People’s Republic of China. The stock is a No.2 ranked player and has a VGM score of A. Zacks’ consensus estimate of $ 2.37 for 2020 earnings has remained unchanged for the past 30 days.
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