Profit margin, English is PropitMargin It can be used to measure the operating status of listed companies, so as to analyze the fundamentals of listed companies.How should investors use profit margins when using profit margins?
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Directory of this article
- What is profit margin?How is the profit margin calculated?
- What are the categories of profit margins?
- What is the effect of profit margins?
- What is the difference between gross profit margin and net interest rate?
- How much is the profit margin for a listed company?
- The profit margin of the first 30 technology company?
- How to check the profit rate of listed companies?
- What are the high profit margins?
- common problem
- More company valuation
What is profit margin?How is the profit margin calculated?
The profit margin English is Profit Margin.The profit margin is one of the common indicator data that measures the degree of profit in the company’s operation.
The profit margin represents the percentage of sales into profit, that is, the ratio of profit income to total income, the calculation formula is as follows:
Propit margin = propit / revenue
Among them, Revenue is a total income, and Profit refers to profits.The profit can be calculated according to the following company:
Propit = revenue-expense
Among them, Expense is expensive or cost.
Profit margin shows the percentage of pure profits in the total sales of enterprises.For example, if a listed company achieves a profit margin of 35%, which means that the company’s income per 100 US dollars has a profit of $ 35.Note that the income and cost information of a boss company can be from the company’s Balance sheet Obtained.
What are the categories of profit margins?
But for a company, there are several profits, such as gross profit, operating profit and net profit.
After minusing different categories from the total income, the profit obtained is different, so as to generate different profit margins.
The key is that the method of calculating profits is different.There are three different profits here, called: gross profit, operating profit, and net profit.Calculated as follows:
- Fool profit = total income-sales cost
- Business profit = total income- (sales cost+operating cost)
- Net profit = total income- (sales cost+business cost+other expenditure costs)
1.GROSS Profit Margin
The gross profit margin, also known as “gross profit margin”, English is the GROSS Profit Magin, which refers to the ratio of gross profit to total income.The calculation formula is as follows:
Gross profit margin = Gross Profit / Revenue
Among them, GROSS Profit refers to hair profit, and the calculation formula is as follows:
Gross propit = revenue – Cost of goods sol it
Among them, Cost of Goods Sold, referred to as COGS, refers to sales costs, including material costs, labor costs in the production process, and warehousing costs.
The profit margin is one of the simplest profit indicators, because it defines profit as the difference between total income and sales costs (such as raw materials and workers’ costs).
For example, a listed company sold 100 shirts at a price of $ 25 /piece, and the sales cost of each shirt was $ 10 /piece.
The gross profit margin is:
Mao profit margin = [(total income-sales cost) / total income] x 100% = [($ 25- $ 10) / $ 25] x 100% = 60%.
That is, the company can earn a gross profit of $ 60 every time the company earns $ 100 by selling shirts.
2.Operating Profit Margin
Operating profit margin, English is Operating Profit Margin.It is the ratio of operating profit to income.It is also called pre-interest taxation profit, or Earnings Before Interest and TAX, referred to as eBit, reflects the company’s income from business activities.Calculated as follows:
Operating Profit Margin = Operating Profit / Revenue
Among them, Operating Profit refers to operating profits, and the calculation formula is as follows:
Operating propit = revenue -Operating Cost
Among them, Operating Cost refers to operating costs, which is all operations, management, and sales costs required for the company’s daily business operations.However, it does not include corporate debt, taxation, and non-operating expenses.
Banks and analysts often use operating profit margins to evaluate the potential acquisition value of the entire company.
Similarly, the above example, the sales cost of the shirt is $ 10, and it will also have operating fees, management fees and other costs during the sales process.
Business profit margin = [Business profit / income] x 100% = [($ 25- $ 10- $ 5) / $ 25] x 100% = 40%.
That is, the company can earn a $ 40 operating profit by earning a $ 100 by selling a shirt, which is lower than the gross profit margin calculated before.
3.Net Profit Margin
Net profit margin, also known as “net interest rate”, English is Net Profit Margin, the ratio of the company’s net profit to total income.The calculation formula is as follows:
Net Profit Margin = Net Profit / Revenue
Among them, Net Profit refers to the net profit, which is the remaining profit after deducting all the costs from the total income.
Net profit = total income- (COGS + depreciation and amortization + bond interest cost + tax + other expenses)
Net profit is the most important and most commonly used one of all the profit standards, so when investors want to understand the overall profit margin of a company, they will use net profit margins to measure.
After a shirt sales gain, the company also needs to pay other fees, such as taxes, the dividend of the issue of preferred shares, and other expenses, a total of $ 5.At this time, the net profit margin at this time is:
Net profit margin = [net profit / income] x 100% = [($ 25 -$ 10 -$ 5 – $ 5) / $ 25] x 100% = 20%.
That is, if the company earns $ 100 by selling shirts, it can earn $ 20 for business profits.This is lower than the previously calculated business profit margin.
What is the effect of profit margins?
The profit margin is usually used as an indicator of the financial status, management skills, and growth potential of the company’s financial status, management skills, and growth potential.
In essence, profit margins have become the standard for measuring corporate profitability for global traffic, and are top indicators to measure corporate potential.It is one of the earliest key data quoted in the performance report released by an enterprise.
Zero or negative profit margin indicates that the company does not properly manage its cost or fails to obtain good sales revenue.Companies that operate multiple business departments, product lines, stores, or geographical distribution institutions can use profit margins to evaluate the performance of each department and compare them.
When the company seek external funds, profit margins play an important role.Individual enterprises, such as local retail stores, may need to provide their own profit margins to seek loans from banks and other lenders to expand scale or upgrade business.When large companies want to raise funds through bonds, they need to disclose the expected use of their raised funds and provide investors with analysis reports on profit margins.
What is the difference between gross profit margin and net interest rate?
It can be seen from the above that the main difference between gross profit margin and net profit margin is that the profit calculation formula used by the two is different.
- Mao’s profit margin uses hair profit, which is the profit after the total income minus the cost of sales, and the sales cost is controllable costs, that is, the cost price of manufacturing products.Therefore, the gross profit value usually reflects the company’s own value.
- The profit margin uses the net profit value, which is the profit that the sales income minus all the required expenses.All expenditures include controllable sales costs, as well as the uncontrollable costs such as taxes and dividends.Because the stock price is usually the company’s value experience in the market, it is not that the company can control it at will, and the costs such as dividends and other costs have become uncontrollable costs.Therefore, the cost of net profit is more about the overall performance of the company in the market.
How much is the profit margin for a listed company?
When investors use profits to analyze the operation of different companies, they need to pay attention to, and the profit margin is more meaningful between the same type of companies.
Because companies in different industries have different operating models, the costs generated will be very different.For example, a company producing chairs is a factory building and a large number of employees.Most of the costs are only technical staff.
Due to the difference in costs, the difference in profit calculation is great, and the significance of comparing the company’s value with each other.
The net profit margin and gross profit margin of various industries are shown below:
Industry name | Number of firms | Gross margin | Net Margin |
|---|---|---|---|
| Advertising | 61 | 23.99% | 0.34% |
| Aerospace/defense | 72 | 17.61% | 2.49% |
| Air Transport | 17 | 5.38% | -25.03% |
| Apparel | 51 | 49.77% | -3.94% |
| Auto & Truck | 19 | 9.04% | 1.40% |
| Auto Parts | 52 | 13.69% | -4.45% |
| Bank (Money Center) | 7 | 100.00% | 20.98% |
| Banks (Regional) | 598 | 99.75% | 23.79% |
| Beverage (alcoholic) | twenty three | 47.10% | 11.95% |
| Beverage (soft) | 41 | 55.73% | 14.10% |
| Broadcasting | 29 | 45.75% | 0.12% |
| Brokerage & Investment Banking | 39 | 60.83% | 12.71% |
| Building Materials | 42 | 28.38% | 5.06% |
| Business & Consumer Services | 169 | 36.81% | 2.47% |
| Cable TV | 13 | 62.88% | 8.50% |
| Chemical (BASIC) | 48 | 14.13% | -0.72% |
| Chemical (DIVERSIFIED) | 5 | 19.75% | 6.43% |
| Chemical (Specialty) | 97 | 34.66% | 2.21% |
| Coal & Related Energy | 29 | 19.73% | -31.79% |
| Computer service | 116 | 27.16% | 3.62% |
| Computers/Peripherals | 52 | 33.82% | 12.48% |
| Construction support | 46 | 21.47% | 5.86% |
| DIVERSIFIED | 29 | 25.07% | 12.18% |
| Drags (biotechnology) | 547 | 64.20% | -0.94% |
| Drugs (PHARMACEUTICAL) | 287 | 70.68% | 14.10% |
| Education | 38 | 41.15% | -4.82% |
| Electrical Equipment | 122 | 34.57% | 7.63% |
| Electronics (consumer & office) | twenty two | 35.69% | -1.53% |
| Electronics (General) | 157 | 26.53% | 3.49% |
| Engineering/Construction | 61 | 14.09% | 0.75% |
| Entertainment | 118 | 39.25% | -3.00% |
| Environmental & Waste Services | 86 | 33.29% | 3.52% |
| Faring/agriculture | 32 | 14.14% | 3.81% |
| Financial svcs.(Non-BANK & Insurance) | 235 | 77.76% | 20.13% |
| Food Processing | 101 | 27.13% | 6.38% |
| FOOD WHOLESALERS | 18 | 15.49% | -0.36% |
| Furn/home furnishings | 40 | 27.03% | 4.63% |
| Green & Renewable Energy | 25 | 58.83% | -34.82% |
| Healthcare Products | 265 | 56.94% | 10.91% |
| Healthcare Support Services | 129 | 15.51% | 2.63% |
| Healthcare Information and Technology | 139 | 49.38% | 10.61% |
| Homebuilding | 30 | 21.82% | 9.04% |
| HOSPITALS/HealthCare Facilities | 32 | 35.50% | 3.70% |
| Hotel/Gaming | 66 | 46.41% | -30.78% |
| Household Products | 140 | 50.87% | 11.71% |
| Information Services | 77 | 52.66% | 15.76% |
| Insurance (general) | twenty one | 30.71% | 1.43% |
| Insurance (Life) | 26 | 27.58% | 6.54% |
| Insurance (PROP/CAS.) | 55 | 29.03% | 6.68% |
| Investments & Asset Management | 348 | 69.23% | 19.51% |
| Machinery | 125 | 34.50% | 6.58% |
| Metals & Mining | 86 | 24.02% | 1.64% |
| Office Equipment & Services | twenty two | 35.26% | 1.95% |
| OIL/GAS (Integrated) | 3 | 37.41% | -7.20% |
| OIL/GAS (Production and Exploration) | 278 | 50.97% | -78.85% |
| Oil/Gas Distribution | 57 | 29.23% | 0.96% |
| Oilfield SVCS/EQUIP. | 135 | 9.07% | -10.98% |
| Packaging & Container | 26 | 22.39% | 2.98% |
| Paper/Forest Products | 15 | 17.79% | 2.27% |
| POWER | 55 | 43.68% | 8.80% |
| Precious metals | 93 | 50.17% | 15.79% |
| Publishing & newSpapers | 29 | 40.81% | -6.27% |
| R.E.I.T. | 238 | 58.12% | 6.72% |
| Real Estate (Development) | 25 | 23.68% | -0.32% |
| Real Estate (General/DIVERSIFIED) | 11 | 49.31% | 5.12% |
| Real Estate (Operations & Services) | 61 | 32.88% | 1.53% |
| Recuction | 69 | 37.58% | -2.12% |
| Reinsurance | 2 | 17.87% | 2.16% |
| Restaurant/dining | 79 | 27.60% | 5.69% |
| Retail (Automotive) | 30 | 23.06% | 3.84% |
| Retail (Building Supply) | 15 | 34.48% | 7.53% |
| Retail (Distributors) | 85 | 28.39% | 2.74% |
| Retail (general) | 17 | 24.27% | 2.79% |
| Retail (Grocery and Food) | 14 | 26.25% | 2.20% |
| Retail (online) | 75 | 42.53% | 4.95% |
| Retail (SPECIAL LINES) | 85 | 28.16% | -0.10% |
| Rubber & Tires | 3 | 16.92% | -10.40% |
| Semiconductor | 70 | 54.93% | 20.49% |
| Semiconductor Equip | 40 | 43.25% | 17.06% |
| Shipbuilding & marine | 11 | 23.66% | -5.99% |
| Shoe | 11 | 43.71% | 6.86% |
| Software (Entertainment) | 101 | 62.68% | 20.30% |
| Software (Internet) | 36 | 58.58% | -5.60% |
| Software (System & Application) | 388 | 72.19% | 19.99% |
| Steel | 32 | 13.53% | -1.28% |
| Telecom (Wireless) | 16 | 59.47% | 4.60% |
| Telecom.Equipment | 96 | 55.35% | 10.79% |
| Telecom.Services | 58 | 56.39% | 8.52% |
| Tobacco | 15 | 62.00% | 15.31% |
| Transportation | twenty one | 19.91% | 3.88% |
| Transportation (railroids) | 6 | 53.56% | 25.07% |
| Trucking | 35 | 21.80% | -9.27% |
| Utility (general) | 16 | 40.78% | 8.59% |
| Utility (Water) | 17 | 56.57% | 16.24% |
| Total Market | 7582 | 36.22% | 5.05% |
| Total Market (without Financials) | 6253 | 33.13% | 4.01% |
source:New York University
However, the evaluation of the profit margin of the specific company needs to be returned to the industry for comparison.
For different companies in the same industry, a better profit margin shows that the company has a good ability to control costs.
The profit margin of startups may be low because startups will continue to increase investment.But once the initial period is over and entering a good and stable operating state, the company’s profit rate may rise rapidly.Therefore, those investors who buy stocks when the profit margin may have a generous return.
The profit margin of the first 30 technology company?
according to Macrotrends Data statistics, the current profit margin of some companies is:
Company Name/Stock Code | Total income (million) | Mao profit (million) | Business profit (million) | Net profit (million) | Gross profit margin | Operating profit margin | Net profit rate |
|---|---|---|---|---|---|---|---|
| Salesforce/CRM | 22,350 | 16,611 | 949 | 4,442 | 74% | 4% | 20% |
| Adobe/adbe | 14,389 | 12,643 | 5,144 | 5,582 | 88% | 36% | 39% |
| Intel/intc | 77,712 | 42,450 | 20,334 | 18,599 | 55% | 26% | twenty four% |
| Verizon/vz | 129,549 | 77,122 | 29,989 | 18,890 | 60% | twenty three% | 15% |
| Comcast/cmcsa | 104,160 | 37,297 | 17,680 | 11,716 | 36% | 17% | 11% |
| Netflix/nflx | 26,392 | 10,847 | 5,587 | 3,759 | 41% | twenty one% | 14% |
| PayPal/Pypl | 22,869 | 11,079 | 3,933 | 5,215 | 48% | 17% | twenty three% |
| Mastercard/ma | 15,447 | 15,447 | 8,067 | 6,546 | 100% | 52% | 42% |
| Nvidia/nvda | 19,256 | 12,021 | 5,512 | 5,327 | 62% | 29% | 28% |
| Visa/v | 21,354 | 21,354 | 13,566 | 10,662 | 100% | 64% | 50% |
| Facebook/FB | 94,399 | 76,035 | 38,156 | 33,741 | 81% | 40% | 36% |
| Alphabet/Goog | 196,682 | 106,829 | 49,684 | 51,363 | 54% | 25% | 26% |
| Amazon/amzn | 419,130 | 167,677 | 27,775 | 26,903 | 40% | 7% | 6% |
| Microsoft/MSFT | 159,969 | 109,389 | 64,228 | 56,015 | 68% | 40% | 35% |
| Apple/Aapl | 325,406 | 129,776 | 88,903 | 76,311 | 40% | 27% | twenty three% |
| Square/sq | 13,174 | 3,158 | 139 | 358 | twenty four% | 1% | 3% |
| Intuit/intu | 8,888 | 7,357 | 2,581 | 2,127 | 83% | 29% | twenty four% |
| AMD/AMD | 11,422 | 5,116 | 1,854 | 2,883 | 45% | 16% | 25% |
| Servicenow/Now | 4,833 | 3,770 | 247 | 153 | 78 | 5% | 3% |
| IBM/IBM | 73,779 | 35,856 | 7,217 | 5,370 | 49 | 10% | 7% |
| Zoom/zm | 3,279 | 2,296 | 863 | 872 | 70 | 26% | 27% |
| Airbnb/ABNB | 1,729 | 1,196 | -772 | -1,513 | 69 | -45% | -88% |
| Charter Communications/chtr | 48,881 | 18,672 | 8,671 | 3,633 | 38 | 18% | 7% |
| Texas Instruments/TXN | 15,421 | 9,978 | 6,589 | 6,147 | 65 | 43% | 40% |
| T-Mobile US/TMUS | 77,043 | 44,419 | 7,236 | 3,046 | 58 | 9% | 4% |
| Qualcomm/qcom | 29,408 | 17,642 | 8,926 | 8,022 | 60 | 30% | 27% |
| Oracle/ORCL | 40479 | 32624 | 15213 | 13746 | 81 | 38% | 34% |
| Broadcom/AVGO | 25553 | 15072 | 6346 | 4585 | 59 | 25% | 18% |
| Cisco/CSCO | 48846 | 31234 | 12505 | 10218 | 64 | 26% | twenty one% |
How to check the profit rate of listed companies?
Macrotrends As an information analysis website of financial investment products, it will integrate all investment-related data and information.Financial investment varieties include: stocks, precious metals, exchange rates, interest rates, etc., the scope involves the territory and international in the United States.
When querying the analysis data of the stock, you only need to enter the company name or stock code on the homepage search box, which will automatically jump out related data, such as income, gross profit, etc.After clicking the required information, enter the analysis page of the stock.
In addition to the target data in the page, other related information will be displayed together.
Among them, large categories include: price, finance, income and profit, assets and liabilities, price ratio and other ratio.
Under the category of income and profits, the company can show the company’s data in the last quarter, the last twelve months, and the previous three years of data and the year-on -year increase ratio.The data includes: income, gross profit, operating income, and pre-downturn before tax rates.Prior to amortia, net income, net income, earnings per share and the number of tradable shares.
What are the high profit margins?
The gross profit margin of different enterprises is very different.Under normal circumstances, stocks used to compare different industries may not be particularly useful.However, when the market conditions deteriorate, companies with relatively high gross profit margins are usually more likely to maintain profit, because companies can increase gross profit margins by reducing costs such as labor and other costs and/or increasing products and services.
The following is 10 company stocks with the highest profit margin
Company Name (( Stock code) | Gross profit margin |
|---|---|
| Dominion Energy Inc (D) | 99% |
| WellCare Health Plans Inc.(WCG) | 98.5% |
| Sempra Energy (SRE) | 98.1% |
| Celgene Corporation (Celg) | 96.2% |
| Incete Corporation (Ince) | 95.9% |
| Marketaxess Holdings Inc.(mktx) | 94.7% |
| Realty Income Corp (O) | 94.5% |
| Tripadvisor Inc (TRIP) | 94.4% |
| Regneron Pharmaceuticals Inc (Regn) | 93.4% |
| Alliant Energy Corporation (LNT) | 93.4% |
Another comparison can analyze the company’s operating conditions by comparing the operating profit margins of different companies.Companies with good operating profit can often operate for a long time and bring more stable benefits to investors.
Here are ten companies with the best operating profit margin
Company name (stock code) | Operating profit margin |
|---|---|
| ESSENT Group (ESNT) | 76% |
| Visa (v) | 66.4% |
| Aspen Technology (AZPN) | 56.3% |
| MasterCard (ma) | 55.7% |
| CNX MIDSTREAM PRTNRS (CNXM) | 55.2% |
| PHILLIPS 66 PARTNERS (PSXP) | 53.8% |
| Jazz Pharmaceuticals (Jazz) | 52.3% |
| Marketaxess Holdings (MKTX) | 51.8% |
| NMI Holdings (NMIH) | 51.7% |
| Biogen (biib) | 50.7% |
common problem
Question 1: What is profit margin in English?Profit margin English is Profit Margin, which can be used to measure the operating status of listed companies, thereby analyzing the fundamentals of listed companies.
See More
The profit margin represents the percentage of sales into profit, that is, the ratio of profit income to total income, the calculation formula is as follows:
Propit margin = propit / revenue
See More
The main difference between gross profit margin and net profit margin is that the profit calculation formula used by the two is different:
The hair profit margin uses hair profit, which is the profit after the total income minus the sales cost, and the sales cost is controllable costs, that is, the cost price of manufacturing products; and the net profit margin uses the net profit value, which is the sales revenueSubtract all the profits after all necessary expenditures, all expenditures include controllable sales costs, as well as unprecedented costs such as taxes and dividends.
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As a financial investment information analysis website, Macrotrends & nbsp; as a financial investment product information analysis website, it will integrate all investment-related data and information.Financial investment varieties include: stocks, precious metals, exchange rates, interest rates, etc.The scope involves the United States and international.
When querying the analysis data of the stock, you only need to enter the company name or stock code on the homepage search box, which will automatically jump out related data, such as income, gross profit, etc.After clicking the required information, enter the analysis page of the stock.
See More
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