Companies with solid operating margins have a competitive edge, allowing them to reinvest for sustainable expansion. The best of these businesses balance profitability with reinvestment, setting themselves up for long-term success.
Identifying the most compelling profitable companies isn’t always straightforward, and that’s why we started StockStory. That said, here are three profitable companies that generate reliable profits without sacrificing growth.
Woodward (WWD)
Trailing 12-Month GAAP Operating Margin: 14.8%
Initially designing controls for water wheels in the early 1900s, Woodward (NASDAQ: WWD) designs, services, and manufactures energy control products and optimization solutions.
Why Is WWD a Good Business?
- Market share has increased this cycle as its 13% annual revenue growth over the last five years was exceptional
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Share repurchases over the last two years enabled its annual earnings per share growth of 19.9% to outpace its revenue gains
At $395.96 per share, Woodward trades at 39.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Kratos (KTOS)
Trailing 12-Month GAAP Operating Margin: 1.7%
Established with a commitment to supporting national security, Kratos (NASDAQ: KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.
Why Do We Watch KTOS?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 14.6% over the past two years
- Exciting sales outlook for the upcoming 12 months calls for 29.9% growth, an acceleration from its two-year trend
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 15.8% annually
Kratos is trading at $51.28 per share, or 58.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Gulfport Energy (GPOR)
Trailing 12-Month GAAP Operating Margin: 49.1%
With drilling operations focused on the Utica Shale in eastern Ohio and the SCOOP play in central Oklahoma, Gulfport Energy (NYSE: GPOR) drills for and produces natural gas from underground shale formations.
Why Are We Positive on GPOR?
- Market share has increased this cycle as its 9.2% annual revenue growth over the last ten years was exceptional
- Attractive asset base leads to wonderful unit economics and a premier gross margin of 69.6%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Gulfport Energy’s stock price of $151.68 implies a valuation ratio of 6.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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