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4 Top-Ranked Stocks Worth Buying Now on Solid Net Profit Margin
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Investors seek companies that consistently generate profits. One of the best metrics to measure profitability is the net profit margin. This metric highlights a company's ability to convert sales into actual profits, providing insights into operational efficiency and management quality. Willdan Group, Inc. (WLDN - Free Report) , Limbach Holdings, Inc. (LMB - Free Report) , Graham Corporation (GHM - Free Report) and Centrus Energy Corporation (LEU - Free Report) boast solid net profit margins.
Net Profit Margin = Net profit/Sales * 100.
Net profit represents the amount retained after all expenses, including costs, interest, depreciation and taxes. A strong net profit margin indicates effective cost control and operational strength, which are crucial for rewarding stakeholders and attracting investors and talented employees. Moreover, a higher net profit margin compared to peers provides a company with 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, this metric varies across industries, making direct comparisons challenging. While it is vital for traditional industries, it might be less relevant for technology companies.
Differences in accounting practices, especially with regard to non-cash expenses like depreciation and stock-based compensation, further complicate comparisons. Additionally, companies that rely heavily on debt may show lower net profits due to high interest expenses, limiting the metric's effectiveness in evaluating 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.
Screening Parameters
Net Margin 12 months – Most Recent (%) greater than equal to 0: High net profit margin indicates solid profitability.
Percentage Change in EPS F(0)/(F-1) greater than equal to 0: It indicates earnings growth.
Average Broker Rating (1-5) equal to 1: A rating of #1 indicates brokers’ extreme bullishness on the stock.
Zacks Rank less than or equal to 2: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) generally perform better than their peers in all types of market environments.
VGM Score of A or B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Here we discuss our four picks from the 25 stocks that qualified the screen:
Willdan Group is a provider of professional technical and consulting services to utilities, private industry, and public agencies at all levels of government. The stock currently sports a Zacks Rank of 1 and has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Willdan Group’s 2024 earnings has been revised upward by 23 cents to $2.10 per share in the past 60 days. WLDN surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 82.2%.
Limbach provides building systems. The company engineers, constructs and services the mechanical, plumbing, air conditioning, heating, building automation, electrical and control systems. The stock flaunts a Zacks Rank #1 and has a VGM Score of B at present.
The Zacks Consensus Estimate for Limbach’s 2024 earnings has been revised upward by 6 cents to $2.43 per share in the past 30 days. LMB surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 67.9%.
Graham designs and builds vacuum and heat transfer equipment for process industries and energy markets worldwide. The stock sports a Zacks Rank of 1 at present and has a VGM Score of B.
The Zacks Consensus Estimate of 95 cents per share for Graham’s fiscal 2025 earnings has moved 14 cents north in the past 60 days. GHM surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 133.3%.
Centrus Energy is a supplier of enriched uranium fuel for commercial nuclear power plants. At present, the stock sports a Zacks Rank #1 and has a VGM Score of B.
The Zacks Consensus Estimate for Centrus Energy’s 2024 earnings has been revised upward by 45 cents to $3.06 per share in the past 60 days. LEU surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 107.1%.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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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4 Top-Ranked Stocks Worth Buying Now on Solid Net Profit Margin
Investors seek companies that consistently generate profits. One of the best metrics to measure profitability is the net profit margin. This metric highlights a company's ability to convert sales into actual profits, providing insights into operational efficiency and management quality. Willdan Group, Inc. (WLDN - Free Report) , Limbach Holdings, Inc. (LMB - Free Report) , Graham Corporation (GHM - Free Report) and Centrus Energy Corporation (LEU - Free Report) boast solid net profit margins.
Net Profit Margin = Net profit/Sales * 100.
Net profit represents the amount retained after all expenses, including costs, interest, depreciation and taxes. A strong net profit margin indicates effective cost control and operational strength, which are crucial for rewarding stakeholders and attracting investors and talented employees. Moreover, a higher net profit margin compared to peers provides a company with 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, this metric varies across industries, making direct comparisons challenging. While it is vital for traditional industries, it might be less relevant for technology companies.
Differences in accounting practices, especially with regard to non-cash expenses like depreciation and stock-based compensation, further complicate comparisons. Additionally, companies that rely heavily on debt may show lower net profits due to high interest expenses, limiting the metric's effectiveness in evaluating 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.
Screening Parameters
Net Margin 12 months – Most Recent (%) greater than equal to 0: High net profit margin indicates solid profitability.
Percentage Change in EPS F(0)/(F-1) greater than equal to 0: It indicates earnings growth.
Average Broker Rating (1-5) equal to 1: A rating of #1 indicates brokers’ extreme bullishness on the stock.
Zacks Rank less than or equal to 2: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) generally perform better than their peers in all types of market environments.
VGM Score of A or B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Here we discuss our four picks from the 25 stocks that qualified the screen:
Willdan Group is a provider of professional technical and consulting services to utilities, private industry, and public agencies at all levels of government. The stock currently sports a Zacks Rank of 1 and has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Willdan Group’s 2024 earnings has been revised upward by 23 cents to $2.10 per share in the past 60 days. WLDN surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 82.2%.
Limbach provides building systems. The company engineers, constructs and services the mechanical, plumbing, air conditioning, heating, building automation, electrical and control systems. The stock flaunts a Zacks Rank #1 and has a VGM Score of B at present.
The Zacks Consensus Estimate for Limbach’s 2024 earnings has been revised upward by 6 cents to $2.43 per share in the past 30 days. LMB surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 67.9%.
Graham designs and builds vacuum and heat transfer equipment for process industries and energy markets worldwide. The stock sports a Zacks Rank of 1 at present and has a VGM Score of B.
The Zacks Consensus Estimate of 95 cents per share for Graham’s fiscal 2025 earnings has moved 14 cents north in the past 60 days. GHM surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 133.3%.
Centrus Energy is a supplier of enriched uranium fuel for commercial nuclear power plants. At present, the stock sports a Zacks Rank #1 and has a VGM Score of B.
The Zacks Consensus Estimate for Centrus Energy’s 2024 earnings has been revised upward by 45 cents to $3.06 per share in the past 60 days. LEU surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 107.1%.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
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.
Disclosure: Performance information for Zacks' portfolios and strategies are available at: https://www.zacks.com/performance/.