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Buy These 4 Stocks With Solid Net Profit Margin to Boost Returns
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Key Takeaways
GLDD, NGS, STRT and NRIM all demonstrate solid net profit margins, reflecting operational strength.
All stocks have witnessed upward EPS estimate revisions recently, highlighting confidence in their outlooks.
All picks hold high Zacks Ranks and strong VGM Scores, supporting their upside potential.
Investors focus on businesses that consistently generate profits. The net profit margin is key to assessing profitability. A higher net margin indicates a company's efficiency in converting sales into actual profits, providing insights into its operational effectiveness and the challenges it faces. Companies like Great Lakes Dredge & Dock Corporation (GLDD - Free Report) , Natural Gas Services Group, Inc. (NGS - Free Report) , Strattec Security Corporation (STRT - Free Report) and Northrim BanCorp, Inc. (NRIM - Free Report) exhibit strong net profit margins.
Net Profit Margin = Net Profit / Sales * 100
Net profit represents the amount a company retains after all costs, interest, depreciation, taxes and other expenses are deducted. The net profit margin can be a valuable indicator of a company's operational strength and cost management. Higher net profits are crucial for rewarding stakeholders and attracting skilled employees, ultimately enhancing business value. Additionally, a higher net profit margin compared to competitors provides a competitive edge.
Pros and Cons of Net Profit Margin
Net profit margin offers investors clarity on a company’s business model, including its pricing policy, cost structure and manufacturing efficiency. A strong net profit margin is preferred by all types of investors. However, this metric has its limitations. It varies significantly across industries, and while net income is crucial in traditional sectors, it is less relevant for technology companies. Differences in accounting treatments, particularly for non-cash expenses like depreciation and stock-based compensation, can complicate comparisons.
Moreover, companies that grow through debt rather than equity funding incur higher interest expenses, which can negatively impact net profit. In such cases, the net profit margin becomes less effective for evaluating performance. Despite these challenges, net profit margin remains a fundamental measure for understanding a company's profitability and operational efficiency.
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. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 11 stocks that qualified the screen:
Great Lakes Dredge & Dock is the largest provider of dredging services in the United States, conducting business to maintain and deepen shipping channels, reclaim land from the ocean and renourish storm-damaged coastline. The stock sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for Great Lakes Dredge & Dock’s 2025 earnings has moved upward by 8 cents to $1.10 per share over the past 30 days. GLDD outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 65.5%.
Natural Gas Services manufactures, fabricates, sells, rents and services natural gas compressors that enhance the production of natural gas wells. The stock sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for Natural Gas Services’ 2025 earnings has been revised upward by 14 cents to $1.62 per share over the past 30 days. NGS surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 28.9%.
Strattec Security designs, develops, manufactures and markets mechanical locks, electro-mechanical locks and related products for automotive manufacturers with operations in the United States, Canada and Mexico.
The Zacks Consensus Estimate for Strattec Security’s fiscal 2026 earnings has moved 23.3% north in the past 30 days and currently stands at $5.24 per share. STRT beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 83.1%.
Northrim BanCorp is a full-service commercial bank that provides a full range of personal and business banking services. The stock sports a Zacks Rank of 1 at present and has a VGM Score of A.
The Zacks Consensus Estimate for Northrim BanCorp’s 2025 earnings has been revised upward by 15 cents to $2.50 per share in the past 30 days. NRIM beat the Zacks Consensus Estimate thrice while missing on one occasion in the trailing four quarters, the average surprise being approximately 19%.
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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Buy These 4 Stocks With Solid Net Profit Margin to Boost Returns
Key Takeaways
Investors focus on businesses that consistently generate profits. The net profit margin is key to assessing profitability. A higher net margin indicates a company's efficiency in converting sales into actual profits, providing insights into its operational effectiveness and the challenges it faces. Companies like Great Lakes Dredge & Dock Corporation (GLDD - Free Report) , Natural Gas Services Group, Inc. (NGS - Free Report) , Strattec Security Corporation (STRT - Free Report) and Northrim BanCorp, Inc. (NRIM - Free Report) exhibit strong net profit margins.
Net Profit Margin = Net Profit / Sales * 100
Net profit represents the amount a company retains after all costs, interest, depreciation, taxes and other expenses are deducted. The net profit margin can be a valuable indicator of a company's operational strength and cost management. Higher net profits are crucial for rewarding stakeholders and attracting skilled employees, ultimately enhancing business value. Additionally, a higher net profit margin compared to competitors provides a competitive edge.
Pros and Cons of Net Profit Margin
Net profit margin offers investors clarity on a company’s business model, including its pricing policy, cost structure and manufacturing efficiency. A strong net profit margin is preferred by all types of investors. However, this metric has its limitations. It varies significantly across industries, and while net income is crucial in traditional sectors, it is less relevant for technology companies. Differences in accounting treatments, particularly for non-cash expenses like depreciation and stock-based compensation, can complicate comparisons.
Moreover, companies that grow through debt rather than equity funding incur higher interest expenses, which can negatively impact net profit. In such cases, the net profit margin becomes less effective for evaluating performance. Despite these challenges, net profit margin remains a fundamental measure for understanding a company's profitability and operational efficiency.
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. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 11 stocks that qualified the screen:
Great Lakes Dredge & Dock is the largest provider of dredging services in the United States, conducting business to maintain and deepen shipping channels, reclaim land from the ocean and renourish storm-damaged coastline. The stock sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for Great Lakes Dredge & Dock’s 2025 earnings has moved upward by 8 cents to $1.10 per share over the past 30 days. GLDD outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 65.5%.
Natural Gas Services manufactures, fabricates, sells, rents and services natural gas compressors that enhance the production of natural gas wells. The stock sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for Natural Gas Services’ 2025 earnings has been revised upward by 14 cents to $1.62 per share over the past 30 days. NGS surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 28.9%.
Strattec Security designs, develops, manufactures and markets mechanical locks, electro-mechanical locks and related products for automotive manufacturers with operations in the United States, Canada and Mexico.
The Zacks Consensus Estimate for Strattec Security’s fiscal 2026 earnings has moved 23.3% north in the past 30 days and currently stands at $5.24 per share. STRT beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 83.1%.
Northrim BanCorp is a full-service commercial bank that provides a full range of personal and business banking services. The stock sports a Zacks Rank of 1 at present and has a VGM Score of A.
The Zacks Consensus Estimate for Northrim BanCorp’s 2025 earnings has been revised upward by 15 cents to $2.50 per share in the past 30 days. NRIM beat the Zacks Consensus Estimate thrice while missing on one occasion in the trailing four quarters, the average surprise being approximately 19%.
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/.