Most Profitable Stocks by Net Margin
100 stocks · Updated May 9, 2026
This screen identifies companies with the highest net profit margins — the percentage of revenue retained as earnings after all expenses, taxes, and interest. High net margins indicate pricing power, operational efficiency, or business model advantages that translate revenue into earnings. Software, financial exchanges, and asset-light businesses typically dominate this screen, while capital-intensive industries with thin margins rarely appear.
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Frequently Asked Questions
What is a good net profit margin?
Net margins above 20% are exceptional. Software businesses often achieve 25-35%+ net margins. Financial royalty companies and exchanges can exceed 40%. Capital-intensive businesses like airlines and retailers may have margins below 5%.
How does gross margin differ from net margin?
Gross margin subtracts only cost of goods sold from revenue — it reflects production economics. Net margin subtracts all operating expenses, interest, and taxes. The gap between them reflects the burden of overhead, R&D, sales costs, and debt.
Can a company have a high gross margin but low net margin?
Yes — many companies invest heavily in R&D and sales (especially growth-stage software) that compresses net margins well below gross margins. High gross margin with low net margin is acceptable if the sales and R&D investment is building future earnings power.
Are high-margin businesses always good investments?
Not necessarily — high margins attract competition. Barriers to entry (patents, network effects, regulation, switching costs) determine whether high margins are sustainable. Analyze the source of the margin advantage, not just its level.