For Immediate Release
Chicago, IL – March 16, 2020 – Stocks in this week’s article are Enova International, Inc. ENVA, Mueller Industries, Inc. MLI, The Bancorp, Inc. TBBK, SP Plus Corp. SP and Progress Software Corp. PRGS.
Top-Rated Stocks that Boast Solid Net Profit Margins
Investors prefer to put their money into businesses that reap profits on a regular basis. In order to gauge the extent of profits, there is no better metric than net profit margin.
A higher net margin reflects the company’s efficiency in converting sales into actual profits.
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 of a company’s operations and its 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 who eventually enhance a business’ value.
Moreover, a higher net profit margin compared with its peers provides 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.
In addition, the difference in accounting treatment of various items — especially non-cash expenses like depreciation and stock-based compensation — makes comparison a daunting task.
Furthermore, 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, while 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 returns from this strategy.
For the rest of this Screen of the Week article please visit Zacks.com at:https://www.zacks.com/stock/news/811151/6-toprated-stocks-that-boast-solid-net-profit-margins
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Mueller Industries, Inc. (MLI) : Free Stock Analysis Report
The Bancorp, Inc. (TBBK) : Free Stock Analysis Report
Progress Software Corporation (PRGS) : Free Stock Analysis Report
SP Plus Corporation (SP) : Free Stock Analysis Report
Enova International, Inc. (ENVA) : Free Stock Analysis Report
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