For Immediate Release
Chicago, IL – March 28, 2022 – Stocks in this week’s article are Louisiana-Pacific Corp. (
LPX Quick Quote LPX - Free Report) , PDC Energy, Inc. ( PDCE Quick Quote PDCE - Free Report) , Encore Wire Corp. ( WIRE Quick Quote WIRE - Free Report) and CONSOL Energy ( CEIX Quick Quote CEIX - Free Report) . 4 Stocks with Solid Net Profit Margins to Boost Portfolio Returns
Investors eye businesses that generate 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 underlines a company's efficiency in translating sales into actual profits. Moreover, this metric lends an insight into how well a company is run and the headwinds weighing on it.
Louisiana-Pacific Corp., PDC Energy, Inc., Encore Wire Corp. and CONSOL Energy boast solid net profit margins. 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, the 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 attracts investors and draws well-skilled employees, who eventually enhance business value.
Moreover, a higher net profit margin compared with its peers provides the 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, net profit margin as an investment criterion has its 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.
Here we discuss our four picks from the 74 stocks that qualified the screen:
Louisiana-Pacific is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for use in residential, industrial and light commercial construction. The company currently sports a Zacks Rank of 1 and has a VGM Score of A.
The Zacks Consensus Estimate for Louisiana-Pacific's 2022 earnings has been revised upward to $11.87 per share from $8.54 in the past 30 days. LPX surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 13.3%.
PDC Energy is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. At present, the stock has a Zacks Rank #1 and a VGM Score of A.
The Zacks Consensus Estimate of $13.32 for PDC Energy's current-year earnings has moved 29.1% north in the past 30 days. PDCE surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 47.3%.
Encore Wire is a low-cost manufacturer of copper electrical building wire and cable. The company is a significant supplier of both residential wire for interior electrical wiring in homes, apartments and manufactured housing, as well as building wire for electrical distribution in commercial and industrial buildings. Encore Wire sports a Zacks Rank of 1, at present, and has a VGM Score of A.
The Zacks Consensus Estimate for Encore Wire's 2022 earnings has been revised upward to $10.74 per share from $9.76 in the past 60 days. WIRE surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 298.1%.
CONSOL Energy is a leading provider of title insurance, specialty insurance and claims management services. The company sports a Zacks Rank of 1 at present and has a VGM Score of A.
The Zacks Consensus Estimate for CONSOL Energy's 2022 earnings has been revised upward to $11.73 from $8.09 in the past 30 days. CEIX surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average beat being 85.7%.
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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 For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1887360/4-stocks-with-solid-net-profit-margin-to-boost-portfolio-returns 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. About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year.
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Contact: Jim Giaquinto
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