Profitability Ratio Analysis; Top Five S&P 500 Stocks in Review with Impressive Net Profit Margin – YHOO, CME, PSA, ICE, AIG

  on Dec 24,2012 Posted in Finance ,Investment Ideas
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Every firm is most concerned with its profitability. Profitability ratios are among key and frequently used tools of financial ratio, which are used to gauge the firm’s bottom line and its return to its investors. Profitability ratios are significant tools for company’s managers and owners or shareholders.

Profitability ratios of the company show efficiency and performance. Profit margin and return on equity are key profitability ratios. Profit margin shows the percentage of revenue that a corporation keeps as profit after accounting for fixed and variable outlays. Profit margin is measured by dividing net income by revenue.

On the other hand, return on equity shows the rate of return on the money invested by shareholders and retained by the corporation thanks to earlier profitable years. ROE shows a firm’s ability to produce profits from shareholders’ wealth. Return on equity demonstrates how well a company uses investment funds to generate growth.

In this article we will discuss S&P 500 stocks with impressive net profit margin and higher ROE ratio.

Yahoo! Inc (NASDAQ:YHOO) offered 28.33% return on equity while the company has 1902% value in Return on Assets. The Sunnyvale, California based company has market capitalization of 22.89 billion while its P/E ratio of 5.87. Institutional ownership of the company was 73% while its 1.18 billion shares were outstanding. Net profit margin of Yahoo was 66.94% while gross profit margin was 67.71%.

CME Group Inc (NASDAQ:CME) has market capitalization of 16.92 billion. The company’s institutional investors own 71% shares and its price to earnings ratio was 11.14. PEG ratio, which measures growth also, was 1.01. Net profit margin of CME was 49.67% while gross profit margin was 96.87%. In the liquidity analysis, current ratio was booked as 1.19. Shares of the company were lagging behind its 50 days simple moving average with -7.04%.

Public Storage (NYSE:PSA) has market capitalization of 24.93 billion while its price to earnings (P/E) ratio was 40.79. Public Storage offered EPS of 3.56 and its 171.65 million shares were outstanding while the 78% stock was owned by institutional investors. The Glendale, California based company has return on equity ratio of 11.89 while return on assets ratio was 9.55%.

IntercontinentalExchange Inc (NYSE:ICE) has return on equity ratio of 16.76% while its return on investment ratio was 13.32%. The financial company offered 1.47% as return on assets. The company has market capitalization of $9.18 billion while its EPS was 7.48. Net profit margin of the company was 40.93% while operating profit margin was 60.69%. IntercontinentalExchange recently acquire NYSE Euronext (NYSE:NYX).

Finally let’s have a quick look on American International Group, Inc (NYSE:AIG) profitability ratios. The blue chip company has market capitalization of 51.29 billion while offered P/E ratio of 2.41. The Beta factor, which is used as a measure of a company’s volatility in relation to the market, was 3.44 while the PEG ratio of the stock was 0.14. The company has ROE ratio of 28.82% while ROA value remained 5.01%. Net profit margin of the bank was 38.83% while operating profit margin was 16.70%.

Disclosure: Opinions expressed in this article are those of the authors alone who have no stake in any stocks mentioned, and did not plan to acquire any stake within the next 72 hours.



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