We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Bet on These 4 Stocks With Strong Net Profit Margins to Boost Returns
Read MoreHide Full Article
Key Takeaways
NUTX, RCMT, TILE and QUAD were selected for strong net margins and solid EPS growth outlooks.
Each stock has a VGM Score of A or B and a Zacks Rank of 1 or 2, signaling high-return potential.
Earnings estimates for NUTX, RCMT, TILE and QUAD were revised upward in the past 60 days.
Investors prefer to invest in businesses that reap profits on a regular basis. To gauge the extent of profits, there is no better metric than the net profit margin.
A higher net margin reflects a company’s efficiency in converting sales into actual profits. Nutex Health Inc. (NUTX - Free Report) , RCM Technologies, Inc. (RCMT - Free Report) , Interface, Inc. (TILE - Free Report) and Quad/Graphics, Inc. (QUAD - Free Report) 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, a higher net profit is essential for rewarding stakeholders. Further, strength in the metric not only attracts investors but also draws well-skilled employees who eventually enhance a business's 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.
Screening Parameters
Net Margin 12 months – Most Recent (%) greater than or equal to 0: A high net profit margin indicates solid profitability.
Percentage Change in EPS F(0)/(F-1) greater than or 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.
Let us discuss the four aforementioned stocks out of the 12 stocks that qualified the screening.
Nutex Health is a physician-led, technology-enabled healthcare services company. The stock currently sports a Zacks Rank of 1 and has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nutex Health’s 2026 earnings has been revised upward by 21.4% to $27.58 per share over the past 60 days. In the last reported quarter, NUTX surpassed the Zacks Consensus Estimate for earnings by 82.13%.
RCM Technologies is a national provider of business, technology and resource solutions in information technology and professional engineering to customers in corporate and government sectors. The stock currently sports a Zacks Rank of 1 and has a VGM Score of A.
The Zacks Consensus Estimate for RCM Technologies’ 2026 earnings has moved northward by 13.3% to $3.07 per share over the past 60 days. In the last reported quarter, RCMT beat the Zacks Consensus Estimate for earnings by 51.85%.
Interface is the world's largest manufacturer of modular carpet, which it markets under the Interface and FLOR brands. The stock currently sports a Zacks Rank of 1 and has a VGM Score of B.
The Zacks Consensus Estimate for Interface’s 2026 earnings has moved upward by 11.8% to $2.36 per share over the past 60 days. TILE outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 29.76%.
Quad/Graphics provides marketing solutions. The company offers a comprehensive range of marketing and print services, which seamlessly integrate creative, production and media solutions across online and offline channels. The stock carries a Zacks Rank #2 and has a VGM Score of A.
The Zacks Consensus Estimate for Quad/Graphics’ 2026 earnings has moved upward by 7 cents to $1.27 per share over the past 60 days. QUAD outpaced the Zacks Consensus Estimate thrice in the trailing four quarters while matching the same on one occasion, with the average surprise being 12.11%.
View the Zacks #1 Rank List
Image: Bigstock
Bet on These 4 Stocks With Strong Net Profit Margins to Boost Returns
Key Takeaways
Investors prefer to invest in businesses that reap profits on a regular basis. To gauge the extent of profits, there is no better metric than the net profit margin.
A higher net margin reflects a company’s efficiency in converting sales into actual profits. Nutex Health Inc. (NUTX - Free Report) , RCM Technologies, Inc. (RCMT - Free Report) , Interface, Inc. (TILE - Free Report) and Quad/Graphics, Inc. (QUAD - Free Report) 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, a higher net profit is essential for rewarding stakeholders. Further, strength in the metric not only attracts investors but also draws well-skilled employees who eventually enhance a business's 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.
Screening Parameters
Net Margin 12 months – Most Recent (%) greater than or equal to 0: A high net profit margin indicates solid profitability.
Percentage Change in EPS F(0)/(F-1) greater than or 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.
Let us discuss the four aforementioned stocks out of the 12 stocks that qualified the screening.
Nutex Health is a physician-led, technology-enabled healthcare services company. The stock currently sports a Zacks Rank of 1 and has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nutex Health’s 2026 earnings has been revised upward by 21.4% to $27.58 per share over the past 60 days. In the last reported quarter, NUTX surpassed the Zacks Consensus Estimate for earnings by 82.13%.
RCM Technologies is a national provider of business, technology and resource solutions in information technology and professional engineering to customers in corporate and government sectors. The stock currently sports a Zacks Rank of 1 and has a VGM Score of A.
The Zacks Consensus Estimate for RCM Technologies’ 2026 earnings has moved northward by 13.3% to $3.07 per share over the past 60 days. In the last reported quarter, RCMT beat the Zacks Consensus Estimate for earnings by 51.85%.
Interface is the world's largest manufacturer of modular carpet, which it markets under the Interface and FLOR brands. The stock currently sports a Zacks Rank of 1 and has a VGM Score of B.
The Zacks Consensus Estimate for Interface’s 2026 earnings has moved upward by 11.8% to $2.36 per share over the past 60 days. TILE outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 29.76%.
Quad/Graphics provides marketing solutions. The company offers a comprehensive range of marketing and print services, which seamlessly integrate creative, production and media solutions across online and offline channels. The stock carries a Zacks Rank #2 and has a VGM Score of A.
The Zacks Consensus Estimate for Quad/Graphics’ 2026 earnings has moved upward by 7 cents to $1.27 per share over the past 60 days. QUAD outpaced the Zacks Consensus Estimate thrice in the trailing four quarters while matching the same on one occasion, with the average surprise being 12.11%.