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One of the most important aspects of stock analysis is evaluating the company's profits, but there are many different ways to do this. One very popular method is DuPont analysis, which breaks down return on equity (ROE) profitability to find those companies with healthy sources of increasing profits.

We ran DuPont on stocks of the consumer goods sector that are currently rallying above their 20-day, 50-day, and 200-day moving averages, indicating these stocks have strong upward momentum.

DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:

ROE

= (Net Profit/Equity)

= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these positive characteristics: Increasing ROE along with,

  • Decreasing leverage, (i.e. decreasing Asset/Equity ratio)
  • Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)

Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable.

Interactive Chart: Press Play to compare changes in market cap over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these names have strong profitability? Use this list as a starting point for your own analysis.

List sorted by distance above 200-day moving average.

1. John B Sanfilippo& Son Inc. (JBSS): Engages in processing and marketing tree nuts and peanuts in the United States. Market cap at $148.65M, most recent closing price at $14.09. The stock is currently rallying 7.32% above its 20-day moving average, 17.38% above its 50-day MA, and 53.11% above its 200-day MA. MRQ net profit margin at 4.19% vs. 2.31% y/y. MRQ sales/assets at 0.57 vs. 0.547 y/y. MRQ assets/equity at 1.998 vs. 2.187 y/y.

2. Flexsteel Industries Inc. (FLXS): Manufactures, imports, and markets residential and commercial upholstered and wooden furniture products in the United States. Market cap at $137.9M, most recent closing price at $20.50. The stock is currently rallying 7.88% above its 20-day moving average, 15.70% above its 50-day MA, and 36.24% above its 200-day MA. MRQ net profit margin at 3.65% vs. 2.89% y/y. MRQ sales/assets at 0.522 vs. 0.519 y/y. MRQ assets/equity at 1.288 vs. 1.318 y/y.

3. Polaris Industries, Inc. (PII): Designs, engineers, and manufactures off-road vehicles. Market cap at $5.32B, most recent closing price at $80.31. The stock is currently rallying 8.17% above its 20-day moving average, 14.39% above its 50-day MA, and 32.87% above its 200-day MA. MRQ net profit margin at 8.92% vs. 8.81% y/y. MRQ sales/assets at 0.551 vs. 0.508 y/y. MRQ assets/equity at 2.226 vs. 2.716 y/y.

4. Estee Lauder Companies Inc. (EL): Engages in the manufacture, marketing, and sale of skin care, makeup, fragrance, and hair care products worldwide. Market cap at $23.99B, most recent closing price at $63.75. The stock is currently rallying 3.25% above its 20-day moving average, 6.59% above its 50-day MA, and 19.16% above its 200-day MA. MRQ net profit margin at 14.49% vs. 13.8% y/y. MRQ sales/assets at 0.432 vs. 0.417 y/y. MRQ assets/equity at 2.415 vs. 2.506 y/y.

5. Elizabeth Arden, Inc. (RDEN): Engages in manufacture, distribution, marketing, and sale of fragrances, skin care, and cosmetic products to retailers and other outlets in the United States and internationally. Market cap at $1.16B, most recent closing price at $39.81. The stock is currently rallying 5.89% above its 20-day moving average, 7.68% above its 50-day MA, and 15.76% above its 200-day MA. MRQ net profit margin at 9.86% vs. 8.37% y/y. MRQ sales/assets at 0.45 vs. 0.449 y/y. MRQ assets/equity at 2.009 vs. 2.244 y/y.

6. Church & Dwight Co. Inc. (CHD): Develops, manufactures, and markets a range of household, personal care, and specialty products under various brand names in the United States and internationally. Market cap at $7.11B, most recent closing price at $50.62. The stock is currently rallying 2.27% above its 20-day moving average, 4.43% above its 50-day MA, and 14.09% above its 200-day MA. MRQ net profit margin at 8.73% vs. 7.15% y/y. MRQ sales/assets at 0.235 vs. 0.223 y/y. MRQ assets/equity at 1.528 vs. 1.574 y/y.

7. Stepan Company (SCL): Engages in the production and sale of specialty and intermediate chemicals to manufacturers in various industries worldwide. Market cap at $962.05M, most recent closing price at $90.88. The stock is currently rallying 1.68% above its 20-day moving average, 2.55% above its 50-day MA, and 12.80% above its 200-day MA. MRQ net profit margin at 2.97% vs. 2.35% y/y. MRQ sales/assets at 0.493 vs. 0.445 y/y. MRQ assets/equity at 2.246 vs. 2.322 y/y.

8. Corn Products International Inc. (CPO): Manufactures and sells various ingredients to food and industrial customers in North America, South America, Asia, Africa, and Europe. Market cap at $4.26B, most recent closing price at $57.11. The stock is currently rallying 0.77% above its 20-day moving average, 1.08% above its 50-day MA, and 12.41% above its 200-day MA. MRQ net profit margin at 6.14% vs. 3.68% y/y. MRQ sales/assets at 0.291 vs. 0.279 y/y. MRQ assets/equity at 2.527 vs. 2.552 y/y.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 8 Rallying Consumer Goods Stocks With Strong Sources Of Profitability