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. Keeping that in mind, here are three profitable companies that leverage their financial strength to beat the competition.
Uber (UBER)
Trailing 12-Month GAAP Operating Margin: 9.2%
Notoriously funded with $7.7 billion from the Softbank Vision Fund, Uber (NYSE: UBER) operates a platform of on-demand services such as ride-hailing, food delivery, and freight.
Why Should UBER Be on Your Watchlist?
- Monthly Active Platform Consumers are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 212% outpaced its revenue gains
- Free cash flow margin expanded by 15.7 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Uber is trading at $81.19 per share, or 16.9x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Amgen (AMGN)
Trailing 12-Month GAAP Operating Margin: 24.1%
Founded in 1980 during the early days of the biotechnology revolution, Amgen (NASDAQ: AMGN) is a biotechnology company that discovers, develops, and manufactures innovative medicines to treat serious illnesses like cancer, osteoporosis, and autoimmune diseases.
Why Are We Positive On AMGN?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 15.8% annual sales growth over the last two years
- Revenue base of $35.97 billion gives it economies of scale and some negotiating power
- Robust free cash flow margin of 29.9% gives it many options for capital deployment, and its recently improved profitability means it has even more resources to invest or distribute
Amgen’s stock price of $333.75 implies a valuation ratio of 15.8x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
LPL Financial (LPLA)
Trailing 12-Month GAAP Operating Margin: 9.5%
As the nation's largest independent broker-dealer with no proprietary products of its own, LPL Financial (NASDAQ: LPLA) provides technology, compliance, and business support services to independent financial advisors and institutions who manage investments for retail clients.
Why Are We Bullish on LPLA?
- Market share has increased this cycle as its 26.4% annual revenue growth over the last two years was exceptional
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 23.7% outpaced its revenue gains
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
At $372.05 per share, LPL Financial trades at 16.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
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