Chicago, IL – April 11, 2025 – Stocks in this week’s article are Griffon Corp. GFF, BGC Group, Inc. BGC, Kingstone Companies, Inc. KINS and Sterling Infrastructure, Inc. STRL.
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 Corp., BGC Group, Inc., Kingstone Companies, Inc. and Sterling Infrastructure, Inc. 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 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.
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%.
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