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4 Top-Ranked Stocks With Solid Net Profit Margin to Enhance Returns
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Key Takeaways
BTSG, CSTM, STRA and ATRO 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 BrightSpring Health Services, Inc. (BTSG - Free Report) , Constellium SE (CSTM - Free Report) , Strategic Education, Inc. (STRA - Free Report) and Astronics Corporation (ATRO - 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 17 stocks that qualified the screen:
BrightSpring Health Services provides complementary home and community-based pharmacy and health solutions. The stock sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for BrightSpring Health Services’ 2026 earnings has moved upward by 20.1% to $1.61 per share over the past seven days. BTSG outpaced the Zacks Consensus Estimate thrice in the trailing four quarters, while missing the same on one occasion, with the average surprise being 40.4%.
Constellium develops innovative, value-added aluminium products for aerospace, automotive and packaging markets and applications. The stock sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for Constellium’s 2026 earnings has been revised upward by 20.6% to $2.05 per share over the past 30 days. CSTM outpaced the Zacks Consensus Estimate thrice in the trailing four quarters, while missing the same on one occasion, with the average surprise being 112.6%.
Strategic Education, through its subsidiaries Strayer University and New York Code and Design Academy, provides a range of post-secondary education and other academic programs in the United States. The stock sports a Zacks Rank of 1 at present and has a VGM Score of B.
The Zacks Consensus Estimate for Strategic Education’s 2026 earnings has moved upward by 14 cents to $6.87 per share over the past seven days. STRA outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 19.9%.
Astronics is a manufacturer of specialized lighting and electronics for the cockpit, cabin and exteriors of military, commercial transport and private business jet aircraft. The stock sports a Zacks Rank #1 and has a VGM Score of B.
The Zacks Consensus Estimate for Astronics’ 2026 earnings has moved upward by 7 cents to $2.62 per share over the past 30 days. ATRO outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 31.7%.
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4 Top-Ranked Stocks With Solid Net Profit Margin to Enhance 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 BrightSpring Health Services, Inc. (BTSG - Free Report) , Constellium SE (CSTM - Free Report) , Strategic Education, Inc. (STRA - Free Report) and Astronics Corporation (ATRO - 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 17 stocks that qualified the screen:
BrightSpring Health Services provides complementary home and community-based pharmacy and health solutions. The stock sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for BrightSpring Health Services’ 2026 earnings has moved upward by 20.1% to $1.61 per share over the past seven days. BTSG outpaced the Zacks Consensus Estimate thrice in the trailing four quarters, while missing the same on one occasion, with the average surprise being 40.4%.
Constellium develops innovative, value-added aluminium products for aerospace, automotive and packaging markets and applications. The stock sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for Constellium’s 2026 earnings has been revised upward by 20.6% to $2.05 per share over the past 30 days. CSTM outpaced the Zacks Consensus Estimate thrice in the trailing four quarters, while missing the same on one occasion, with the average surprise being 112.6%.
Strategic Education, through its subsidiaries Strayer University and New York Code and Design Academy, provides a range of post-secondary education and other academic programs in the United States. The stock sports a Zacks Rank of 1 at present and has a VGM Score of B.
The Zacks Consensus Estimate for Strategic Education’s 2026 earnings has moved upward by 14 cents to $6.87 per share over the past seven days. STRA outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 19.9%.
Astronics is a manufacturer of specialized lighting and electronics for the cockpit, cabin and exteriors of military, commercial transport and private business jet aircraft. The stock sports a Zacks Rank #1 and has a VGM Score of B.
The Zacks Consensus Estimate for Astronics’ 2026 earnings has moved upward by 7 cents to $2.62 per share over the past 30 days. ATRO outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 31.7%.