For Immediate Release
Chicago, IL – November 9, 2017 - Stocks in this week’s article Commercial Vehicle Group Inc. CVGI, Arkema SA ARKAY, Nutrisystem Inc. NTRI, Gibraltar Industries Inc. ROCK and Willdan Group Inc. WLDN.
5 Top Stocks with Powerful Net Profit Margin
The primary purpose of a business is to generate profits that can be reinvested for expansion or utilized to reward shareholders. Net profit margin is an effective tool for the measurement of profit generated by a business.
Net Profit Margin = Net profit /Sales * 100.
Net profit of a business is the amount that remains in the last line (also known as bottom line) of the income statement after all costs (including taxes) have been deducted from revenues.
In fact, net profit margin can turn out to be a potent point of reference to gauge the strength in a company’s operations and cost-control measures.
Higher net profit is essential for rewarding stakeholders. Net margin helps investors judge the risks of investing in a company. Creditors also view it as a major factor in determining a company’s ability to pay off debts.
Moreover, a higher net profit margin as compared to peers lends a competitive edge. Strength in the metric not only attracts investors but also draws well-skilled employees that eventually add to the value of the business.
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 the 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/282113/5-top-stocks-with-powerful-net-profit-margin
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Commercial Vehicle Group, Inc. (CVGI) : Free Stock Analysis Report
Arkema SA (ARKAY) : Free Stock Analysis Report
Willdan Group, Inc. (WLDN) : Free Stock Analysis Report
NutriSystem Inc (NTRI) : Free Stock Analysis Report
Gibraltar Industries, Inc. (ROCK) : Free Stock Analysis Report
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