4 Stocks With Solid Net Profit Margins to Boost Portfolio Returns

Net profit represents the amount a company retains after all costs, interest, depreciation, taxes and other expenses are deducted. The net profit margin can be a valuable indicator of a company's operational strength and cost management. Higher net profits are crucial for rewarding stakeholders and attracting skilled employees, ultimately enhancing business value. A higher net profit margin compared to competitors provides a competitive edge.

Pros and Cons of Net Profit Margin

Net profit margin offers investors clarity on a company’s business model, including its pricing policy, cost structure and manufacturing efficiency. A strong net profit margin is preferred by all types of investors. However, this metric has its limitations. It varies significantly across industries, and while net income is crucial in traditional sectors, it is less relevant for technology companies. Differences in accounting treatments, particularly for non-cash expenses like depreciation and stock-based compensation, can complicate comparisons.

Moreover, companies that grow through debt rather than equity funding incur higher interest expenses, which can negatively impact net profit. In such cases, the net profit margin becomes less effective for evaluating performance. Despite these challenges, net profit margin remains a fundamental measure for understanding a company's profitability and operational efficiency.

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 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.

Here we discuss our four picks from the 14 stocks that qualified the screen:

Huron Consulting provides financial and operational consulting services. The company's experienced and credentialed professionals employ their expertise in accounting, finance, economics and operations to a wide variety of both financially sound and distressed organizations. The stock sports a Zacks Rank #1 and has a VGM Score of A.

The Zacks Consensus Estimate for Huron Consulting’s 2026 earnings has moved upward by 5.4% to $9.18 per share over the past 30 days. HURN outpaced the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 12.44%.

EuroDry is an owner and operator of drybulk vessels and provider of seaborne transportation for drybulk cargoes. The stock sports a Zacks Rank #1 and has a VGM Score of A.

The Zacks Consensus Estimate for EuroDry’s 2026 earnings has moved upward by 35.1% to $5.77 per share over the past seven days. EDRY outpaced the Zacks Consensus Estimate for earnings twice in the trailing four quarters while missing the same on two occasions, the average surprise being -5.59%.

Enova International is a prominent financial technology company that provides online financial services to non-prime consumers and small businesses. The stock carries a Zacks Rank of 2 at present and has a VGM Score of A.

The Zacks Consensus Estimate for Enova International’s 2026 earnings has been revised upward by 5.7% to $17.36 per share in the past 30 days. ENVA surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 8.01%.

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 30 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 12.1%.

Why Haven't You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.

Today you can access their live picks without cost or obligation.

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research