Profitability Roundup of Blue Chip Stocks; Just Four Lives in Green Land – IBM, BA, CAT, MCD

  on Dec 31,2012 Posted in Finance ,Investment Ideas
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Profitability ratios are a group of financial metrics that are used to assess a business’s ability to produce earnings as evaluated against its outlays and other relevant expenses incurred during a specific period of time.

For most of profitability ratios, having a superior value relative to a competitor’s ratio or the same ratio from an earlier period is indicative that the corporation is doing well.

Dow Jones Industrial Average is a financial index that is widely used to measure the overall performance and health of the United States stock market. DJIA consists of 30 companies picked by the editors of the Wall Street Journal. In this article we will discuss profitability ratios of best four blue chip stocks. We took return on equity ratio as key criteria of our selection.

International Business Machines Corp (NYSE:IBM) offered net profit margin of 15.53% and return on equity ratio of 74.18. IBM is the best return on equity ratio holder among blue chip stocks. The century old computer maker has return on assets ratio of 14.39%. The company has the market capitalization of 214.50 billion while its P/E ratio of 13.66. Institutional ownership of the stock was 60% while its 1.13 billion shares were outstanding.

The Boeing Company (NYSE:BA) has market capitalization of 56.32 billion and offered 63.62% return on equity. The world’s biggest airplane maker’s institutional ownership was 73% and its price to earnings ratio was 13.18. PEG ratio, which measures growth also, was 1.14. Net profit margin of the company was 5.46% while gross profit margin was 16.58%.

Caterpillar Inc (NYSE:CAT) has market capitalization of 56.77 billion while its Price to earnings ratio was 8.89. The world’s biggest mining equipment maker offered earning per share of 9.77 and its 653.93 million shares were outstanding while the 63% shares of the company were owned by institutional investors. The company has return on equity ratio of 40.76 while ROA was 7.81%. Net profit margin of the company was 9.80%.

In the profitability analysis of McDonald’s Corporation (NYSE:MCD) return on equity ratio was booked as 40.01% while its return on investment ratio was 19.15%. The world’s biggest fast food chain owner offered 16.48% as return on assets. The company has market capitalization of $87.93 billion while its EPS was 5.31. Net profit margin was 19.85% while gross profit margin was 39.37%.

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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