Profitability

Gross Margin

Unit: Percentage

A company’s total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company.

Operating Margin

Unit: Percentage

A company’s operating income as a percent of net sales. This measures a company’s pricing strategy and operating efficiency; the higher the margin, the better.

EBITDA Margin

Unit: Percentage

A company’s total sales revenue minus expenses (excluding interest, taxes, depreciation and amortization), as a percent of sales.

Net Margin

Unit: Percentage

A company’s net income as a percent of sales. The higher the percentage the more money the company earns per dollar of sales.

Gross Profit / Total Assets

Unit: Ratio

Gross Profit divided by Total Assets is a valuation measure used in the Novy-Marx screener and referred to as gross profitability. A high value is purported to have as much power in value based investing as a low price/book ratio.

Return on Assets

Unit: Percentage

A profitability measure calculated as net income as percent of total assets, also called ROA. A high ROA shows an effective allocation of capital.

Return on Equity

Unit: Percentage

A profitability measure calculated as net income as a percent of shareholders equity, also called ROE. A high ROE shows an effective use of investor’s money but it does not account for any risks associated with high Financial Leverage.

ROIC

Unit: Percentage

ROIC, or Return on Invested Capital, quantifies how well a company generates cash flow relative to the capital it has invested in its business. It is defined as Net Income / (Total Equity + Long-term Debt and Capital Lease Obligation + Short-term Debt and Capital Lease Obligation)

Sustainable Growth Rate

Unit: Percentage

The Sustainable Growth Rate attempts to measure how much a firm could grow without borrowing more money. If the firm exceeds this rate of growth, it must borrow funds from another source to facilitate growth. It is calculated by multiplying a company’s Return on Equity by (100 – Payout Ratio Percent).

5‑Year ROA Range (Premium)

Unit: Current Percent of Range

The 5-year high and low ROA compared to the current ROA. This metric is graphical.

5‑Year ROE Range (Premium)

Unit: Current Percent of Range

The 5-year high and low ROE compared to the current ROE. This metric is graphical.

5‑Year ROIC Range (Premium)

Unit: Current Percent of Range

The 5-year high and low ROIC compared to the current ROIC. This metric is graphical.

Research Margin (Premium Library)

Unit: Percentage

The company’s research and development as a percentage of sales.

Depreciation and Amortization Margin (Premium Library)

Unit: Percentage

The company’s depreciation and amortization as a percentage of sales.

Selling General and Administrative Margin (Premium Library)

Unit: Percentage

The company’s selling, general and administrative expense as a percentage of sales.

Asset Turnover (Premium Library)

Unit: Ratio

This efficiency measure show how much revenue is earned for every dollar of assets. Higher values are better.

Greenblatt ROC (Premium)

Unit: Percentage

This variation of Return on Capital takes Operating Income (a.k.a EBIT) as a percent of NetPPandE plus Current Assets. It is used by Joel Greenblat in his bestselling book The Little Book That Beats the Market.