For Immediate Release
Chicago, IL – May 21, 2018 - Stocks in this week’s article Amtech Systems, Inc. ASYS, QuinStreet, Inc. QNST, Turtle Beach Corp. HEAR, Enova International Inc. ENVA and Federated National Holding Company FNHC.
Bet on These Stocks with Remarkable Net Profit Margins
Net profit, also referred to as the bottom line, is one of the key tools that gauges the financial health of an enterprise. The figure demonstrates a company’s ability to convert per dollar sales into profits.
A low profit margin indicates higher risks, implying that a drop in revenues might dent profits, pushing the company into the red (net loss).
Net Profit Margin = Net profit/Sales* 100.
In simple terms, net profit is the amount a company retains after deducting all costs, interest, depreciation, taxes and other expenses. In fact, net profit margin can turn out to be a potent point of reference to gauge the strength in a company operations and cost-control measures.
Also, higher net profit is essential for rewarding stakeholders. Further, strength in the metric not only attracts investors but also draws well-skilled employees that eventually add to the value of the business.
Moreover, a higher net profit margin compared to its peers lends the company a competitive edge.
Pros and Cons
Net profit margin helps investors gain clarity on a company’s business model in terms of pricing policy, cost structure and manufacturing efficiency. Hence, a strong net profit margin is preferred by all classes of investors.
However, net profit margin as an investment criterion has its own share of pitfalls. The metric varies widely from industry to industry. While net income is a key metric for investment measurement in traditional industries, it is not that important for technology companies.
Moreover, the difference in accounting treatment of various items — especially non-cash expenses like depreciation and stock-based compensation — makes comparison a daunting task.
Further, for companies preferring to grow with debt instead of equity funding, higher interest expenses usually weigh on net profit. In such cases, the measure is rendered ineffective to analyze a company’s performance.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/304135/bet-on-these-5-stocks-with-remarkable-net-profit-margin
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QuinStreet, Inc. (QNST) : Free Stock Analysis Report
Turtle Beach Corporation (HEAR) : Free Stock Analysis Report
Amtech Systems, Inc. (ASYS) : Free Stock Analysis Report
Enova International, Inc. (ENVA) : Free Stock Analysis Report
Federated National Holding Company (FNHC) : Free Stock Analysis Report
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