The financially sound companies whose attractively priced stocks make up the Barron’s 400 Index have larger sector profit margins than those in the Standard & Poor’s 500. This is the second Diary entry on profit margins. The first (B400 Companies Have Larger Profit Margins Than Those in S&P 500) looked at the overall indexes and [...]John A. Prestbo
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Barron’s 400 Index companies regularly surpass S&P 500 companies in earnings growth. One of the main reasons is that the profit margins of the financially strong Barron’s 400 companies are running nearly 20% larger than those in the S&P 500. Profit margin is a measure of how well companies convert top-line revenue into bottom-line [...]John A. Prestbo
Companies in the Barron’s 400 Index are boosting their capacity to turn revenues into profits, which puts them in excellent position to make the most of any acceleration in economic growth. We measure this trend with two versions of profit margins. Operating margin is the proportion of a company’s revenue that is left over after paying [...]John A. Prestbo
In assessing companies’ financial strength, the capability of generating profits is good. The ability to grow those profits is better. Best of all is the rate of profitability. How much money a company makes on each dollar of sales is a measure that sums up a lot of things— how well management controls costs, and how well the company serves [...]John A. Prestbo