featured highlights International Game Technology, Encore Wire, CONSOL Energy and Tecnoglass

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Chicago, IL – November 11, 2022 – The stocks in this week’s article are International Game Technology IGT, Encore Wire WIRE, CONSOL Energy Inc. CEIX and Tecnoglass, Inc. TGLS.

These 4 Strong Net Profit Margin Stocks Have Upside Potential

Investors look at companies that consistently generate profits. In order to gauge the magnitude of profits, there is no better measure than the net profit margin.

A higher net margin highlights a company’s efficiency in translating sales into actual profits. Additionally, this metric provides insight into how a business is run and the headwinds hanging over it. International game technology, Yarn Again, CONSOL Energy Inc. and Tecnoglass, Inc. show strong net profit margins.

Net Profit Margin = Net Profit/Sales * 100.

Simply put, net profit is the amount a business keeps after deducting all costs, interest, depreciation, taxes, and other expenses. In fact, net profit margin can prove to be a powerful benchmark for assessing the strength of a company’s operations and its cost control measures.

In addition, a higher net profit is essential to reward stakeholders. Moreover, the strength of the metric attracts investors and attracts well-qualified employees, which ultimately increase the value of the company.

Additionally, a higher net profit margin than its peers gives the company a competitive edge.

Advantages and disadvantages

Net profit margin helps investors better understand a company’s business model in terms of pricing policy, cost structure, and manufacturing efficiency. Therefore, a high net profit margin is preferred by all classes of investors.

However, the net profit margin as an investment criterion has its share of pitfalls. The metric varies widely from industry to industry. Although net income is a key metric for measuring investment in traditional industries, it is not so important for technology companies.

In addition, the difference in accounting treatment of various items, particularly non-cash expenses such as amortization and stock-based compensation, makes comparison difficult.

Additionally, for companies that prefer to grow through debt rather than equity, the higher interest expense typically weighs on bottom line profit. In such cases, measurement is rendered ineffective when analyzing a company’s performance.

The winning strategy

A healthy net profit margin and strong EPS growth are the two most sought-after elements in a business model.

Apart from these, we have added some criteria to ensure maximum return from this strategy.

Here we discuss our four picks from the 51 stocks that qualified the screen:

International game technology, a gaming company, is engaged in the design, development, manufacture and marketing of casino-style gaming equipment, system technology and gaming content. Its segment includes North America and International. International Game Technology sports a Zacks rank of 1, at present, and has a VGM score of A.

Zacks’ consensus estimate for International Game Technology’s 2022 earnings has been revised up a penny to 84 cents per share in the past seven days. IGT has exceeded the Zacks consensus estimate three times in the past four quarters while missing the same on one occasion, with the average surprise being 115.8%.

Yarn Again is a low cost manufacturer of copper electrical building wires and cables. The company is a leading supplier of residential wires for interior electrical wiring in houses, apartments and manufactured homes, as well as construction wires for electrical distribution in commercial and industrial buildings. The company currently sports a Zacks rating of 1 and a VGM score of A.

Zacks’ consensus estimate for Encore Wire’s 2022 earnings was revised up to $33.35 per share from $26.86 in the past 30 days. WIRE has exceeded the Zacks consensus estimate for the past four quarters, with the average surprise being 173.4%.

CONSOL Energy is a producer and exporter of high Btu thermal and metallurgical cross bituminous coal. It owns and operates productive longwall mining operations, primarily in the northern Appalachian Basin. The company currently has a Zacks rating of 1 and a VGM score of B.

Zacks’ consensus estimate for CONSOL Energy’s 2022 earnings was revised up to $11.05 per share from $9.72 in the past seven days. CEIX has exceeded the Zacks consensus estimate three times in the past four quarters while missing the same on one occasion, with the average surprise being 34.9%.

Tecnoglass is engaged in the manufacture and sale of architectural glass and aluminum products for the residential and commercial construction industries. The company currently sports a Zacks rating of 1 and a VGM score of A.

Zacks’ consensus estimate for Tecnoglass’ 2022 earnings has been revised up 19.5% to $3.07 per share in the past seven days. TGLS has exceeded the Zacks consensus estimate for the past four quarters, with the average surprise being 26.91%.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold securities short and/or hold long and/or short positions in the options mentioned herein. An affiliated investment advisory firm may hold or have shorted securities and/or hold long and/or short positions in options mentioned herein.

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Contact: Jim Giaquinto


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International Game Technology (IGT): Free Stock Analysis Report

Encore Wire Corporation (WIRE): Free Stock Analysis Report

Tecnoglass Inc. (TGLS): Free Stock Analysis Report

Consol Energy Inc. (CEIX): Free Stock Analysis Report

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