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Zacks.com featured highlights Build-A-Bear, Modine Manufacturing, Constellium and Arcos Dorados

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For Immediate Release

Chicago, IL – March 29, 2023 – Stocks in this week’s article are Build-A-Bear Workshop (BBW - Free Report) , Modine Manufacturing (MOD - Free Report) , Constellium SE (CSTM - Free Report) and Arcos Dorados Holdings (ARCO - Free Report) .

4 Solid Net Profit Margin Stocks 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. Build-A-Bear Workshop, Modine Manufacturing, Constellium SE and Arcos Dorados Holdings 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.

Here we discuss our four picks from the 33 stocks that qualified the screen:

Build-A-Bear Workshop is the leading and only national company providing a make-your-own stuffed animal interactive retail-entertainment experience. The stock sports a Zacks Rank of 1, at present, and has a VGM Score of B.

The Zacks Consensus Estimate for Build-A-Bear Workshop’s fiscal 2024 earnings has been revised upward by 25 cents to $3.46 per share in the past 30 days. BBW surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 17.4%.

Modine Manufacturing operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. This includes heat exchangers for cooling all types of engines, transmissions, auxiliary hydraulic equipment, air conditioning components used in cars, trucks, farm and construction machinery and equipment, and heating and cooling equipment for residential and commercial building HVAC (heating, ventilating, air conditioning and refrigeration equipment). The company currently sports a Zacks Rank of 1 and has a VGM Score of B.

The Zacks Consensus Estimate for Modine Manufacturing’s fiscal 2023 earnings has remained unchanged at $1.76 per share in the past 60 days. MOD surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 56.1%.

Constellium develops innovative, value-added aluminum products for aerospace, automotive and packaging markets and applications. The company currently sports a Zacks Rank #1 and has a VGM Score of A.

The Zacks Consensus Estimate for CSTM’s 2023 earnings has been revised upward to $1.33 per share from $1.05 in the past 30 days. Constellium surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 150.8%.

Arcos Dorados operates as a franchisee of McDonald's, with its operations divided in Brazil, the North Latin America division, South Latin America and the Caribbean division. It also runs quick-service restaurants in Latin America and the Caribbean. The company currently carries a Zacks Rank of 1 and has a VGM Score of A.

The Zacks Consensus Estimate for Arcos Dorados’ 2023 earnings has been revised upward by 5 cents to 66 cents per share in the past 30 days. ARCO surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 46%.

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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2071207/4-solid-net-profit-margin-stocks-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

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