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Interested in gaining exposure to the small-cap sector? For a look at some interesting small-cap names, we ran a screen.

We began by screening the small-cap sector for stocks that appear undervalued relative to earnings growth, with PEG below 1.

Then to analyze these companies' profitability, we ran DuPont analysis on the names. 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.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

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

List sorted by PEG.

1. Meritor, Inc. (MTOR): Provides drivetrain mobility and braking solutions for original equipment manufacturers of trucks, trailers, and specialty vehicles. Market cap at $487.27M, most recent closing price at $5.05. PEG at 0.13. MRQ net profit margin at 1.72% vs. 1.45% y/y. MRQ sales/assets at 0.452 vs. 0.44 y/y. MRQ assets/equity at -2.604 vs. -2.557 y/y.

2. GT Advanced Technologies Inc. (GTAT): Provides polysilicon production technology and multicrystalline ingot growth systems, and related photovoltaic manufacturing services for the solar industry worldwide. Market cap at $514.78M, most recent closing price at $4.35. PEG at 0.3. MRQ net profit margin at 22.34% vs. 19.1% y/y. MRQ sales/assets at 0.312 vs. 0.241 y/y. MRQ assets/equity at 3.416 vs. 5.577 y/y.

3. American Axle & Manufacturing Holdings Inc. (AXL): Engages in the manufacture, engineering, design, and validation of driveline and drivetrain systems, and related components and chassis modules for automotive industry in the United States. Market cap at $686.28M, most recent closing price at $9.17. PEG at 0.33. MRQ net profit margin at 6.81% vs. 5.84% y/y. MRQ sales/assets at 0.3 vs. 0.298 y/y. MRQ assets/equity at -6.648 vs. -5.083 y/y.

4. Boise Inc. (BZ): Engages in the manufacture and sale of paper and packaging products. Market cap at $676.3M, most recent closing price at $6.73. PEG at 0.47. MRQ net profit margin at 3.31% vs. 3.29% y/y. MRQ sales/assets at 0.287 vs. 0.274 y/y. MRQ assets/equity at 2.917 vs. 3.116 y/y.

5. TPC Group Inc (TPCG): Produces specialized lines of chemical products to chemical and petroleum based companies worldwide. Market cap at $502.05M, most recent closing price at $32.08. PEG at 0.49. MRQ net profit margin at 2.96% vs. 2.05% y/y. MRQ sales/assets at 0.571 vs. 0.565 y/y. MRQ assets/equity at 3.455 vs. 3.641 y/y.

6. Sonic Automotive Inc. (SAH): Operates as an automotive retailer in the United States. Market cap at $733.86M, most recent closing price at $13.81. PEG at 0.56. MRQ net profit margin at 1.03% vs. 0.82% y/y. MRQ sales/assets at 0.823 vs. 0.784 y/y. MRQ assets/equity at 4.43 vs. 4.848 y/y.

7. Valassis Communications Inc. (VCI): Operates as a media and marketing services company primarily in the United States. Market cap at $820.99M, most recent closing price at $19.20. PEG at 0.57. MRQ net profit margin at 5.09% vs. 3.91% y/y. MRQ sales/assets at 0.325 vs. 0.31 y/y. MRQ assets/equity at 3.292 vs. 3.432 y/y.

8. DFC Global Corp. (DLLR): Provides retail financial services to unbanked and under-banked consumers, and small businesses. Market cap at $736.5M, most recent closing price at $16.75. PEG at 0.59. MRQ net profit margin at 11.67% vs. 7.94% y/y. MRQ sales/assets at 0.153 vs. 0.127 y/y. MRQ assets/equity at 3.618 vs. 5.611 y/y.

9. Insperity, Inc. (NSP): Provides various personnel management services in the United States. Market cap at $650.5M, most recent closing price at $25.0. PEG at 0.66. MRQ net profit margin at 2.33% vs. 1.64% y/y. MRQ sales/assets at 0.803 vs. 0.736 y/y. MRQ assets/equity at 2.892 vs. 2.935 y/y.

10. Astec Industries, Inc. (ASTE): Engages in the design, engineering, manufacture, and marketing of equipment and components used in road building, utility, and related construction activities worldwide. Market cap at $627.36M, most recent closing price at $27.54. PEG at 0.68. MRQ net profit margin at 4.59% vs. 4.41% y/y. MRQ sales/assets at 0.367 vs. 0.34 y/y. MRQ assets/equity at 1.338 vs. 1.35 y/y.

11. DXP Enterprises, Inc. (DXPE): Distributes maintenance, repair, and operating products, equipment, and services to industrial customers in the U. Market cap at $616.4M, most recent closing price at $43.50. PEG at 0.69. MRQ net profit margin at 4.62% vs. 3.46% y/y. MRQ sales/assets at 0.597 vs. 0.548 y/y. MRQ assets/equity at 2.506 vs. 2.555 y/y.

12. Finish Line Inc. (FINL): Operates as a mall-based specialty retailer in the United States. Market cap at $982.56M, most recent closing price at $18.91. PEG at 0.81. MRQ net profit margin at 9.19% vs. 8.91% y/y. MRQ sales/assets at 0.641 vs. 0.578 y/y. MRQ assets/equity at 1.344 vs. 1.356 y/y.

13. Koppers Holdings Inc. (KOP): Provides carbon compounds and commercial wood treatment products to aluminum, railroad, specialty chemical, utility, rubber, concrete, and steel industries. Market cap at $653.83M, most recent closing price at $31.51. PEG at 0.84. MRQ net profit margin at 4.1% vs. 2.61% y/y. MRQ sales/assets at 0.505 vs. 0.473 y/y. MRQ assets/equity at 6.703 vs. 7.106 y/y.

14. Apollo Commercial Real Estate Finance, Inc. (ARI): Operates as a commercial real estate finance company in the United States. Market cap at $327.27M, most recent closing price at $15.91. PEG at 0.91. MRQ net profit margin at 62.99% vs. 47.35% y/y. MRQ sales/assets at 0.02 vs. 0.012 y/y. MRQ assets/equity at 2.084 vs. 3.065 y/y.

15. Navigant Consulting Inc. (NCI): Provides dispute, investigative, economic, operational, risk management, and financial and risk advisory solutions to governmental agencies, legal counsels, and large companies facing the challenges of uncertainty, risk, distress, and significant change in the United States, the United Kingdom, and internationally. Market cap at $580.61M, most recent closing price at $11.20. PEG at 0.91. MRQ net profit margin at 5.63% vs. 4.65% y/y. MRQ sales/assets at 0.232 vs. 0.216 y/y. MRQ assets/equity at 1.689 vs. 1.843 y/y.

16. Standex International Corp. (SXI): Operates as a diversified manufacturing company in the United States and internationally. Market cap at $494.07M, most recent closing price at $39.15. PEG at 0.95. MRQ net profit margin at 6.05% vs. 3.79% y/y. MRQ sales/assets at 0.331 vs. 0.281 y/y. MRQ assets/equity at 1.768 vs. 2.14 y/y.

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

Source: 16 Undervalued Small-Caps With Strong Sources Of Profitability