Grab These 4 Stocks With Solid Net Profit Margins to Boost Returns

The primary purpose of a business is to generate profits that can be reinvested in expansion or utilized for rewarding shareholders. Net profit margin is an effective tool to measure the profits reaped by a business.A higher net margin underlines a company’s efficiency in translating sales into actual profits. Moreover, this metric gives insight into how well a company is run and the headwinds weighing on it. Griffon Corporation GFF, BGC Group, Inc. BGC, Kingstone Companies, Inc. KINS and Sterling Infrastructure, Inc. STRL 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, 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 not only attracts investors but also draws well-skilled employees who eventually enhance the value of a business.Moreover, a higher net profit margin compared with its peers provides a company with a competitive edge.Pros and ConsNet 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 StrategyA 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 ParametersNet 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.Let us discuss the abovementioned four stocks out of the 19 stocks that qualified the screening.Griffon is a diversified holding company with exposure in several industries. The company engages in the manufacture and sale of a wide range of consumer and professional, and home and building products, including garage doors, shutters, materials for disposable diapers and disposable health care products.  The stock sports a Zacks Rank #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 Griffon’s fiscal 2025 earnings has been revised upward by 3 cents to $5.71 per share over the past 30 days. GFF surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 14.7%.BGC Group is a brokerage and financial technology company. Through its various affiliates, the company specializes in the brokerage of a broad range of products, including fixed income, foreign exchange, equities, energy and commodities, shipping and futures.  The stock currently flaunts a Zacks Rank #1 and has a VGM Score of A.The Zacks Consensus Estimate of $1.22 per share for BGC Group’s 2025 earnings has moved 6 cents north in the past seven days. BGC surpassed the Zacks Consensus Estimate once in the trailing four quarters while matching the same on three occasions, the average surprise being 3.3%.Kingstone Companies is engaged in offering property and casualty insurance to individuals in the United States. The stock sports a Zacks Rank of 1 at present and a VGM Score of A.The Zacks Consensus Estimate for Kingstone Companies’ 2025 earnings has been revised upward to $1.90 from $1.80 per share 30 days ago. KINS matched the Zacks Consensus Estimate for earnings in the preceding three quarters.Sterling Infrastructure operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions, principally 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 Sterling Infrastructure’s 2025 earnings has been revised upward by 29.3% to $8.21 per share in the past 60 days. STRL surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.2%.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/.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BGC Group, Inc. (BGC): Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL): Free Stock Analysis Report Kingstone Companies, Inc (KINS): Free Stock Analysis Report Griffon Corporation (GFF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks