Profitability is one of the most important parts of a stock analysis, but there are tens if not hundreds of different ways to look at a company's profitability numbers. For ideas on how to start your own profitability analysis, we ran a screen.
We began by screening the utilities sector for stocks rallying above their 20-day, 50-day, and 200-day moving averages, indicating that these stocks have strong upward momentum.
We then screened for those with strong profitability compared to industry peers, with higher gross, operating, and pretax margins than their industry averages by at least 5% on each margin. This indicates that these companies are taking a greater percentage of their revenues as profits, and they also have stronger control over their cost structures.
Interactive Chart: Press Play to compare changes in market cap over the last two years for the 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 companies have strong profitability? Use this list as a starting point for your own analysis.
List sorted by difference between pretax profit margin and industry average.
1. Public Service Enterprise Group Inc. (PEG): Operates in the energy industry primarily in the northeastern and mid Atlantic United States. Market cap at $15.84B, most recent closing price at $31.24. The stock is currently trading 3.84% above its 20-day moving average, 5.44% above its 50-day MA, and 2.55% above its 200-day MA. TTM gross margin at 36.12% vs. industry average at 27.%. TTM operating margin at 27.% vs. industry average at 17.57%. TTM pretax margin at 21.15% vs. industry average at 12.49%.
2. Southern Company (SO): Operates as a utility company that provides electric service in the southeastern United States. Market cap at $39.72B, most recent closing price at $45.42. The stock is currently trading 1.00% above its 20-day moving average, 2.45% above its 50-day MA, and 7.10% above its 200-day MA. TTM gross margin at 34.11% vs. industry average at 26.42%. TTM operating margin at 24.02% vs. industry average at 17.84%.TTM pretax margin at 19.72% vs. industry average at 12.85%.
3. NextEra Energy, Inc. (NEE): Engages in the generation, transmission, distribution, and sale of electric energy in the United States and Canada. Market cap at $26.78B, most recent closing price at $63.90. The stock is currently trading 2.52% above its 20-day moving average, 5.38% above its 50-day MA, and 14.13% above its 200-day MA. TTM gross margin at 34.66% vs. industry average at 26.42%. TTM operating margin at 24.68% vs. industry average at 17.84%.TTM pretax margin at 18.19% vs. industry average at 12.85%.
*Profitability data sourced from Fidelity, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
