Profitability is a key measure of business strength. Companies with high margins have proven they can generate consistent earnings while maintaining financial discipline.
Even among profitable businesses, only a select few truly maximize their potential - and StockStory is here to help you find them. Keeping that in mind, here are three profitable companies that leverage their financial strength to beat the competition.
Ross Stores (ROST)
Trailing 12-Month GAAP Operating Margin: 12.2%
Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.
Why Is ROST a Good Business?
- New store openings and solid same-store sales performance have boosted its top-line growth
- Same-store sales growth averaged 5.4% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Industry-leading 30.7% return on capital demonstrates management’s skill in finding high-return investments
Ross Stores’s stock price of $228.30 implies a valuation ratio of 2.9x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Wingstop (WING)
Trailing 12-Month GAAP Operating Margin: 27%
The passion project of two chicken wing aficionados in Texas, Wingstop (NASDAQ:WING) is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.
Why Are We Bullish on WING?
- Customers are lining up to eat at its restaurants as the company’s same-store sales growth averaged 4.8% over the past two years
- Healthy operating margin of 25.9% shows it’s a well-run company with efficient processes, and its operating leverage amplified its profits over the last year
- WING is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its growing cash flow gives it even more resources to deploy
At $143.43 per share, Wingstop trades at 30.1x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Tetra Tech (TTEK)
Trailing 12-Month GAAP Operating Margin: 14.1%
With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ:TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.
Why Do We Like TTEK?
- Impressive 13.3% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 30.1% to outpace its revenue gains
- Free cash flow margin expanded by 3.6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Tetra Tech is trading at $28.31 per share, or 17.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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