EMCOR(US:EME) ZACKSยท2024-12-18 13:31Core Insights - Return on equity (ROE) is a key profitability metric favored by investors, measuring earnings generated from equity [1] - Advanced analysis of ROE through DuPont analysis can provide deeper insights into a company's financial condition by breaking down ROE into profit margin, asset turnover ratio, and equity multiplier [2][3] DuPont Analysis - DuPont analysis allows investors to assess the components affecting ROE, helping to differentiate between companies with high margins and those with high turnover [3] - It also highlights a company's leverage status, indicating that a high ROE could be misleading if it results from excessive debt [4] Screening Parameters - Screening criteria for potential investments include: - Profit margin of 3% or higher, indicating profitable business operations [6] - Asset turnover ratio of 2 or higher, reflecting management efficiency in asset utilization [6] - Equity multiplier between 1 and 3, showing the extent of debt used to finance assets [6] - Zacks Rank of 1 (Strong Buy) or 2 (Buy), suggesting better performance compared to peers [7] - Current price above $5 to filter out low-priced stocks [7] Selected Stocks - EverQuote (Zacks Rank 2) operates an online marketplace for various insurance products, with an average earnings surprise of 149.58% over the past four quarters [8][10] - EMCOR Group (Zacks Rank 1) is a leading provider of mechanical and electrical construction services, with an average earnings surprise of 32.26% [10] - Sprouts Farmers Market (Zacks Rank 1) operates in the grocery store industry with a focus on fresh produce and wellness, achieving an average earnings surprise of 15.29% [11]