For Immediate Release
Chicago, IL – June 6, 2018 - Stocks in this week’s article include: Turtle Beach Corp. HEAR, Ashtead Group Plc ASHTY, QuinStreet, Inc. QNST, Luxfer Holdings PLC LXFR and Enova International Inc. ENVA.
Screen of the Week of Zacks Investment Research:
Impressive Stocks with Significant Net Profit Margins
Investors eye businesses that report profits on a regular basis. In order to gauge the extent of profit, there is no better metric than 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 confronting 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. Net margin helps investors judge the risk involved in an investment. Creditors also view it as crucial to determining a company’s ability to pay off debts.
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.
And that's what we're screening for today…
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/306535/6-impressive-stocks-with-a-significant-net-profit-margin
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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.
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QuinStreet, Inc. (QNST) : Free Stock Analysis Report
Turtle Beach Corporation (HEAR) : Free Stock Analysis Report
Enova International, Inc. (ENVA) : Free Stock Analysis Report
Luxfer Holdings PLC (LXFR) : Free Stock Analysis Report
Ashtead Group PLC (ASHTY) : Free Stock Analysis Report
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