For Immediate Release
Chicago, IL – January 14, 2020 – Stocks in this week’s article are Shoe Carnival, Inc. SCVL, Crawford United Corp. CRAWA, Tilly's Inc. TLYS, SYNNEX Corp. SNX and Momo Inc. MOMO.
5 Top Stocks with Impressive Net Profit Margin
The primary purpose of a business is to generate profits that can be reinvested in expansion or utilized for rewarding the company’s shareholders.
Net profit margin is an effective tool for measuring the profits reaped by a business.
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, net profit margin can turn out to be a potent point of reference to gauge the strength in a company operations and cost-control measures.
Also, higher net profit is essential for rewarding stakeholders. Further, strength in the metric not only attracts investors but also draws well-skilled employees that eventually add to the value of the business.
Moreover, a higher net profit margin compared to its peers gives the company 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 own 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.
Moreover, the difference in accounting treatment of various items — especially non-cash expenses like depreciation and stock-based compensation — makes comparison a daunting task.
Further, 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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/715724/5-top-stocks-with-impressive-net-profit-margin
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Momo Inc. (MOMO) : Free Stock Analysis Report
SYNNEX Corporation (SNX) : Free Stock Analysis Report
Tilly's, Inc. (TLYS) : Free Stock Analysis Report
Shoe Carnival, Inc. (SCVL) : Free Stock Analysis Report
Hickok Inc. (CRAWA) : Free Stock Analysis Report
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