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4 Stocks Boasting Amazingly High Net Income Ratio

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Nitish Marwah
·4 min read
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Profitability analysis is considered one of the best possible ways to assess the prospects of a company. This analysis is used to distinguisha 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 its operating and non-operating costs and still offer high returns.

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 as it is the most useful and simplest profitability metric.

Net Income Ratio

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 find out 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 isthetotal earnings a company makes after deducting all the expenses from its sales revenues. Net income ratio or net profit margin is a ratio of a company’s net income and sales revenues. A high net income ratio shows that the company is able to effectively manage all its business activities, including production, administration, selling, etc.

Screening Parameters

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 7,138 stocks to only 12.

Here are four of the 12 stocks that qualified the screen:

1-800-FLOWERS.COM, Inc. FLWS is an e-commerce provider of floral products and gifts. Its 12-month net profit margin is 5.6%.

First Bank FRBA is a state-chartered bank with five full-service branches that provides personal and business banking services in New Jersey. Its 12-month net profit margin is 20.3%.

Rent-A-Center, Inc. RCII provides customers the opportunity to obtain ownership of high-quality, durable products under flexible rental purchase agreements with no long-term obligation. Its 12-month net profit margin is 7.4%.

SB Financial Group, Inc. SBFG is a provider of commercial banking and wealth management services to individual and corporate customers. Its 12-month net profit margin is 20.6%.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and backtest them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

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.


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1800 FLOWERS.COM, Inc. (FLWS) : Free Stock Analysis Report
 
First Bank (FRBA) : Free Stock Analysis Report
 
SB Financial Group, Inc. (SBFG) : Free Stock Analysis Report
 
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