Pick These 4 Solid Net Profit Margin Stocks to Boost Portfolio Returns

Investors interested in stocks from the Technology Services sector have probably already heard of Qifu Technology, Inc. (QFIN) and Amplitude, Inc. (AMPL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Qifu Technology, Inc. and Amplitude, Inc. are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that QFIN has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

QFIN currently has a forward P/E ratio of 6.09, while AMPL has a forward P/E of 196.88. We also note that QFIN has a PEG ratio of 0.42. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AMPL currently has a PEG ratio of 4.74.

Another notable valuation metric for QFIN is its P/B ratio of 1.59. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AMPL has a P/B of 4.47.

Based on these metrics and many more, QFIN holds a Value grade of A, while AMPL has a Value grade of F.

QFIN stands above AMPL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that QFIN is the superior value option right now.

Zacks Investment Research

American Public Education, Inc.’s APEI stock plunged 7.6% in the after-hour trading session after it reported mixed results for third-quarter 2024. Its earnings handily beat the Zacks Consensus Estimate and improved from the previous year.

Revenues missed the analysts’ expectations but increased year over year on the back of contributions from the American Public University System (“APUS”), Hondros College of Nursing (“HCN”) and Rasmussen University ("RU") segments. Yet, lower revenues from Graduate School ("GSUSA") partially offset the growth.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

APEI has been benefiting from consistent enrollment growth at APUS and HCN, along with improvement at RU, which saw its first enrollment growth in the third quarter since the acquisition of the business. The company expects to witness continued momentum across the segments in the fourth quarter.

Delving Deeper

APEI reported adjusted earnings per share (EPS) of 4 cents, beating the Zacks Consensus Estimate of 1 cent by 300% and increasing 100% from 2 cents reported a year ago.

American Public Education, Inc. Price, Consensus and EPS Surprise

American Public Education, Inc. price-consensus-eps-surprise-chart | American Public Education, Inc. Quote

Total revenues of $153.1 million missed the consensus mark of $153.6 million by 0.3% but grew 1.5% from the year-ago period on strong segmental results.

Total costs and expenses increased 3.2% year over year to $149 million. Adjusted EBITDA decreased 28.7% year over year to $12.9 million. Adjusted EBITDA margin of 8% contracted from 12% year over year.

Segment Discussion

APUS: Revenues of $77 million grew 0.8% from the year-ago period’s levels of $76.4 million. APUS has delivered consistent year-over-year growth in net course registrations driven by modest increases in registrations and targeted tuition and fees.

APUS’ total net course registration inched up 0.2% from the year-ago period to 92,500. Adjusted EBITDA margin of 29% contracted from 30% year over year.

RU: The segment reported revenues of $52.6 million for the quarter, up 1% from a year ago. The increase was primarily due to an increase in tuition rates effective in the first quarters of 2023 and 2024 for select programs. This was partially offset by a change in the mix of total student enrollment, resulting in a 6.3% decrease in on-ground enrollment, partially offset by a 4.2% increase in online enrollment, which has a lower revenue per student compared with the prior-year period.

RU’s total student enrollment remained flat year over year to 13,500. On-ground enrollment was 6,000, and online enrollment was 7,500 students. Adjusted EBITDA margin of negative 9% narrowed from negative 10% reported in the prior-year quarter.

HCN: The segment’s revenues rose 12.8% year over year to $15.5 million, backed by solid growth in tuition. Total student enrollment at HCN increased 10.4% from the prior-year quarter’s levels to 3,100. Adjusted EBITDA margin was negative 2%, flat year over year.

Corporate and other: It includes tuition and contract training revenues earned by GSUSA and eliminates intersegment revenues for courses taken by employees of one segment at other segments. The segment’s revenues decreased 14% year over year to $8.04 million impacted by government spending uncertainty. GSUSA revenues fell 6.3% year over year.

Adjusted EBITDA margin came in at negative 100% against 18% a year ago.

Financials

At the end of the third quarter, American Public had total cash, cash equivalents, and restricted cash of $162.2 million, up from $144.3 million at 2023-end.

Q4 Guidance

APEI expects total revenues to increase 4-8% year over year to $159-$164 million. It anticipates EPS between 47 cents and 56 cents, down 13-26% year over year. Adjusted EBITDA is expected to be within $23-$26 million, reflecting a decline of 10% to a growth of 2% year over year.

APUS’ total net course registrations are likely to be 94,400-96,100, reflecting 4-6% growth year over year. HCN’s total enrollment is expected to increase 19% from the prior-year figure to 3,700 students.

RU’s student enrollment is expected to be up 4% from the year-ago quarter’s figure of 14,600. On-ground student enrollment is likely to decline 3% to 6,300, while Online student enrollment is expected to rise 9% year over year to 8,300.

2024 Guidance Updated

APEI has reduced the upper limit of the previously guided range for total revenues to $620-$625 million from $620-$630 million. This reflects growth of 3-4% compared with previous range of 3-5% year over year.

The company has also narrowed its adjusted EBITDA guidance to $64-$67 million (compared with the prior projection of $60-$70 million), reflecting 7-12% growth (compared with the prior expectation of 1-17%) year over year.

Capital expenditures are now expected to be in the range of $19-$22 million, up from $17-$20 million expected earlier. The new range reflects 37-58% growth compared with 22-44% expected earlier.

Zacks Rank & Peer Releases

APEI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Lincoln Educational Services Corporation LINC reported mixed results for third-quarter 2024. Its earnings missed the Zacks Consensus Estimate, but revenues topped the same.

Nonetheless, both metrics increased year over year, driven by a 10.6% increase in the average student population. This uptick resulted from four consecutive quarters of double-digit start growth and the recently opened East Point, GA campus, which generated $3.4 million in revenues in the third quarter.

Strategic Education, Inc. STRA, or SEI, reported impressive results for third-quarter 2024. Its quarterly earnings and revenues topped the Zacks Consensus Estimate and increased year over year.

The company witnessed strong employer affiliated enrollment in the U.S. Higher Education segment, strong growth from Sophia subscriptions in the Education Technology Services segment and another quarter of total enrollment growth in the Australia/New Zealand segment.

Adtalem Global Education Inc. ATGE posted better-than-expected results in first-quarter fiscal 2025. Earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year, given strong enrollment growth and strategic initiatives.

ATGE raised its fiscal 2025 guidance, projecting revenues between $1.69 billion and $1.73 billion, reflecting confidence in sustained growth momentum.

Zacks Investment Research

The Industrial Products group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Is Graham (GHM) one of those stocks right now? By taking a look at the stock's year-to-date performance in comparison to its Industrial Products peers, we might be able to answer that question.

Graham is one of 213 individual stocks in the Industrial Products sector. Collectively, these companies sit at #12 in the Zacks Sector Rank. The Zacks Sector Rank includes 16 different groups and is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors.

The Zacks Rank is a proven model that highlights a variety of stocks with the right characteristics to outperform the market over the next one to three months. The system emphasizes earnings estimate revisions and favors companies with improving earnings outlooks. Graham is currently sporting a Zacks Rank of #1 (Strong Buy).

Over the past three months, the Zacks Consensus Estimate for GHM's full-year earnings has moved 8.4% higher. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive.

Based on the most recent data, GHM has returned 114.7% so far this year. Meanwhile, stocks in the Industrial Products group have gained about 19.5% on average. As we can see, Graham is performing better than its sector in the calendar year.

One other Industrial Products stock that has outperformed the sector so far this year is Kornit Digital (KRNT). The stock is up 67.2% year-to-date.

For Kornit Digital, the consensus EPS estimate for the current year has increased 25.5% over the past three months. The stock currently has a Zacks Rank #2 (Buy).

Breaking things down more, Graham is a member of the Manufacturing - General Industrial industry, which includes 42 individual companies and currently sits at #80 in the Zacks Industry Rank. On average, this group has gained an average of 18.5% so far this year, meaning that GHM is performing better in terms of year-to-date returns.

Kornit Digital, however, belongs to the Commercial Printing industry. Currently, this 5-stock industry is ranked #25. The industry has moved +47.8% so far this year.

Investors interested in the Industrial Products sector may want to keep a close eye on Graham and Kornit Digital as they attempt to continue their solid performance.

Zacks Investment Research

Perdoceo Education Corporation PRDO posted better-than-expected results in third-quarter 2024, with earnings and revenues surpassing the Zacks Consensus Estimate.

However, on a year-over-year basis, both metrics declined due to the lagging impact of 2023 operational changes at the American InterContinental University System (“AIUS”) and the simplification of professional development offerings at Colorado Technical University (“CTU”).

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Following the results, the company’s shares rose 7.4% in yesterday’s after-hours trading session. Positive Investor sentiments were witnessed as the company increased its 2024 guidance for adjusted operating income and adjusted earnings.

The company reported strong operating performance for the quarter, with both academic institutions showing solid student retention and engagement. Perdoceo remains focused on investing in student support resources and technology to enhance academic outcomes. The acquisition of the University of St. Augustine is on track to close in December, positioning the company to expand significantly in the health sciences sector and to serve a greater number of students.

PRDO’s Q3 Earnings & Revenue Discussion

Adjusted earnings of 59 cents per share surpassed the consensus mark of 53 cents by 11.3%, but decreased 7.8% from 64 cents in the year-ago quarter.

Perdoceo Education Corporation Price, Consensus and EPS Surprise

Perdoceo Education Corporation price-consensus-eps-surprise-chart | Perdoceo Education Corporation Quote

Revenues of $169.8 million beat the consensus mark of $164.6 million by 3.2%, but decreased 5.6% year over year.

As of Sept. 30, 2024, enrollment of total students rose 11% year over year to 40,400. Student enrollments under CTU and AIUS segments increased 13.6% and 4% year over year to 30,000 and 10,400, respectively.

In the quarter, adjusted operating income increased 2.8% from the prior-year quarter’s level to $48.6 million.

PRDO’s Segment Details

CTU: Revenues in this segment were down 4% from the year-ago quarter’s level, totaling $115.7 million.

Operating income increased 28.1% from the prior-year quarter’s level to $44.2 million. Operating margin expanded 960 basis points (bps) year over year to 38.2%.

AIUS: The segment generated revenues of $53.9 million, down 9% year over year.

Operating income was $9.1 million, down 41.9% year over year. Operating margin contracted 950 bps year over year to 16.8%.

PRDO’s Liquidity & Cash Flow

As of Sept. 30, 2024, Perdoceo had cash and cash equivalents of $238 million, up from $118 million at the end of 2023.

Net cash provided by operations was $144 million in the first nine months of 2024, up from $98.8 million a year ago.

Q4 Guidance of PRDO

In fourth-quarter 2024, the company expects adjusted operating income to be within $39-$42 million, up from $19.4 million reported in the year-ago quarter. Adjusted earnings per share is expected to be in the range of 46 cents to 49 cents compared with 27 cents in the year-ago quarter.

PRDO’s 2024 Guidance Raised

For 2024, PRDO now expects adjusted operating income within $188-$191 million (compared with $179-$190 million expected earlier), up from $174.9 million in 2023.

It now expects adjusted earnings of $2.25 to $2.28 per share compared with $2.13-$2.25 of earlier projection. The estimated figure indicates an increase from $2.10 per share reported in 2023

PRDO’s Zacks Rank & Peer Releases

Perdoceo currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Adtalem Global Education Inc. ATGE posted better-than-expected results in first-quarter fiscal 2025. Earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year, given strong enrollment growth and strategic initiatives.

The company raised its fiscal 2025 guidance, expecting revenues between $1.69 billion and $1.73 billion, indicating confidence in sustained growth momentum.

Strategic Education, Inc. STRA reported impressive results for third-quarter 2024. Its quarterly earnings and revenues topped the Zacks Consensus Estimate and increased year over year.

The company witnessed strong employer-affiliated enrollment in the U.S. Higher Education segment, strong growth from Sophia subscriptions in the Education Technology Services segment and another quarter of total enrollment growth in the Australia/New Zealand segment.

Lincoln Educational Services Corporation LINC reported mixed results for third-quarter 2024. Its earnings missed the Zacks Consensus Estimate, but revenues topped the same.

Nonetheless, both metrics increased year over year, driven by a 10.6% increase in the average student population. This uptick resulted from four consecutive quarters of double-digit start growth and the recently opened East Point, GA campus, which generated $3.4 million in revenues in the third quarter.

Zacks Investment Research

Lincoln Educational Services Corporation LINC reported mixed results for third-quarter 2024. Its earnings missed the Zacks Consensus Estimate, but revenues topped the same.

Nonetheless, both metrics increased year over year, driven by a 10.6% increase in the average student population. This uptick resulted from four consecutive quarters of double-digit start growth and the recently opened East Point, GA campus, which generated $3.4 million in revenues in the third quarter.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Shares of this diversified career-oriented post-secondary education provider gained 3.6% on Monday. Investors’ sentiments might have got a boost after the company raised its 2024 guidance.

Strong demand for its programs, impressive graduation and placement rates, new campus development strategy, and improving efficiencies position Lincoln well to achieve its long-term objectives. In 2027, LINC expects to generate approximately $550 million in revenues and $90 million in adjusted EBITDA.

Inside the Headlines

LINC reported adjusted earnings per share (EPS) of 13 cents, which missed the Zacks Consensus Estimate of 14 cents by 7.1% but rose 18.2% from the year-ago quarter.

Lincoln Educational Services Corporation Price, Consensus and EPS Surprise

Lincoln Educational Services Corporation price-consensus-eps-surprise-chart | Lincoln Educational Services Corporation Quote

Total revenues of $114.4 million surpassed the consensus estimate of $111.1 million by 3% and increased 14.8% from the prior year.

Student starts grew 21.1% to 6,243 and quarter-end student population rose 13.3% to 15,887 from the year-ago quarter. Average population was 14,309 compared with 12,942 a year ago.

Selling, general and administrative expense increased 16.3% year over year to $63.3 million, mainly due to costs associated with new programs, new campuses and campus relocations. Also, costs associated with a larger student population and increased marketing investments, which helped drive student starts, were additional headwinds.

Adjusted EBITDA was $10.2 million, up 66.7% year over year.

Segment Details

Campus Operations Segment: The segment’s revenues increased 15% year over year to $114.4 million. Adjusted EBITDA increased 38.6% to $19.9 million from the prior year.

Transitional Segment: In the fourth quarter of 2023, the completed teach-out of its Somerville, MA, campus.

Financial Details

As of Sept. 30, 2024, LINC had total liquidity of $93.96 million, including cash and cash equivalents of $53.96 million.

Cash provided by operating activities was $5.6 million in the third quarter of 2024 versus net cash used in operating activities of $6.8 million in the year-ago period.

2024 Guidance Raised

LINC expects revenues between $430 and $435 million, up from previously guided range of $423-$430. Adjusted EBITDA is now expected to be in the $41-$43 million range, up from $39-$42 million expected earlier. Adjusted net income is likely to be within $16-$18 million compared with $14-$17 million anticipated previously. In 2023, the company reported revenues of $378.1 million, adjusted EBITDA of $26.5 million and adjusted net income of $14.8 million.

The company has also increased the low-end range for capital expenditures to $50-$55 million (earlier it projected $45-$55 million). Student Starts growth is also projected in 13-15% range, up from 9-12% expected earlier.

Zacks Rank

LINC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Releases

Adtalem Global Education Inc. ATGE posted better-than-expected results in first-quarter fiscal 2025. Earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year, given strong enrollment growth and strategic initiatives.

ATGE raised its fiscal 2025 guidance, projecting revenues between $1.69 billion and $1.73 billion, reflecting confidence in sustained growth momentum.

Leggett & Platt, Inc. LEG reported lower-than-expected results for the third quarter of 2024. Adjusted earnings and sales missed the Zacks Consensus Estimate and declined year over year.

Legget believes that the weakness in demand will continue into the fourth quarter, based on which it lowered its 2024 sales and EPS guidance.

Mohawk Industries, Inc. MHK reported strong third-quarter 2024 results (ended Sept. 30). Its earnings surpassed the Zacks Consensus Estimate and improved from the prior year despite pricing pressures and a negative mix.

As global conflicts, political uncertainty and inflation are weighing on consumer confidence and discretionary spending around the world, MHK does not see an industry improvement this year. It also expects recent U.S. hurricanes to negatively impact its fourth-quarter sales by $25-$40 million.

Zacks Investment Research

As of Nov. 12, 2024, three stocks in the industrials sector could be flashing a real warning to investors who value momentum as a key criteria in their trading decisions.

The RSI is a momentum indicator, which compares a stock’s strength on days when prices go up to its strength on days when prices go down. When compared to a stock’s price action, it can give traders a better sense of how a stock may perform in the short term. An asset is typically considered overbought when the RSI is above 70, according to Benzinga Pro.

Here's the latest list of major overbought players in this sector.

Redwire Corp

• On Nov. 6, Redwire posted weaker-than-expected results for the third quarter. “Mergers and acquisitions are a core strength of Redwire and important to our growth strategy. During the third quarter, Redwire returned to our M&A roots by closing on the purchase of Hera Systems – our tenth acquisition. Hera Systems brings a highly competent team and two new platforms to Redwire’s spacecraft portfolio, expanding our ability to execute larger missions, particularly in our national security segment,” stated Peter Cannito, Chairman and Chief Executive Officer of Redwire. The company's stock gained around 34% over the past five days and has a 52-week high of $10.50.
• RSI Value: 81.89
• RDW Price Action: Shares of Redwire gained 15.1% to close at $10.38 on Monday.

American Superconductor Corporation

• On Oct. 30, American Superconductor posted better-than-expected quarterly earnings. “AMSC delivered fiscal second quarter net income of nearly $5 million and grew revenue by 60% when compared to the same period last year,” said Daniel P. McGahn, Chairman, President and CEO, AMSC. The company's stock gained around 35% over the past five days and has a 52-week high of $37.00.
• RSI Value: 80.60
• AMSC Price Action: Shares of American Superconductor gained 7.8% to close at $36.81 on Monday.

Graham Corp

• On Nov. 8, Graham reported better-than-expected second-quarter financial results and raised its FY25 gross margin guidance. “Our team’s efforts to diversify and strengthen the business over the past few years are clearly yielding results, as shown by our record second-quarter performance,” commented Daniel J. Thoren, President and Chief Executive Officer. “Strong sales growth in our markets, along with exceptional execution throughout the business, have driven meaningful margin expansion. Our strategic emphasis on higher-margin opportunities and operational efficiencies has been a key driver of this success.” The company's stock gained around 46% over the past five days and has a 52-week high of $41.19.
• RSI Value: 85.02
• GHM Price Action: Shares of Graham gained 5% to close at $41.02 on Monday.

Read This Next:

• Jim Cramer: This Tech Stock Can ‘Go To 160,’ Recommends Buying Domino’s Pizza

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.