Sales, Margins & ROE, continued
Key Points To Remember
- Strong sales growth is one key indicator of a company's success. Quarterly sales growth should be up at least 25% in the most recent quarter. Otherwise, they should be accelerating.
- Profit margins tell you how much of a company's sales end up as earnings after expenses. Generally, the higher profit margins, the better.
- Return on equity measures how well a growth company can produce earnings with shareholders' capital. Look for ROEs of at least 17%.
- You don't have to check the company's financials to be sure a company's sales, margins and ROE are acceptable. Just check the SMR Rating, making sure your stocks are rated "A" or "B."
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Related Resources:
Click here to get the 7 Steps For Selecting Winning Stocks, according to the CAN SLIMTM Investment Research Tool.
Go to the Investor's Corner Archives to read IBD's "editor picks" of classic Investor's Corner columns.
Search our archive of Ask Bill O'Neil Q & A's organized by topic.
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