For Immediate Release
Chicago, IL – June 17, 2019 - Stocks in this week’s article are Enova International Inc. ENVA, Great Lakes Dredge & Dock Corp. GLDD, North American Construction Group Ltd. NOA, Blucora, Inc. BCOR and SkyWest, Inc. SKYW.
Bet on Impressive Stocks with Remarkable Net Profit Margin
Investors target businesses that generate profits on a regular basis. In order to gauge the extent of profit, there is no better metric than the net profit margin.
A higher net margin reflects a company's efficiency in converting sales into actual profit. Moreover, this metric lends an insight into how well a company is run and the headwinds hounding it.
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 gives 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 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/429527/bet-on-6-impressive-stocks-with-remarkable-net-profit-margin
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SkyWest, Inc. (SKYW) : Free Stock Analysis Report
Blucora, Inc. (BCOR) : Free Stock Analysis Report
Great Lakes Dredge & Dock Corporation (GLDD) : Free Stock Analysis Report
Enova International, Inc. (ENVA) : Free Stock Analysis Report
North American Construction Group Ltd. (NOA) : Free Stock Analysis Report
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