As Real Money Pro subscribers have come to realize over the last year, I tend to put a number of things under the microscope when looking at an industry or company. One of the key factors that I look at first is the company's operating margin profile and the prospects for margin expansion. As I learned years ago when covering machinery and cyclical companies, the outlook for a company's operating margins are an indicator of where its earnings per share are likely to head.
As any student of rudimentary accounting knows, calculating a company's operating profit means tallying its revenues against its costs (cost to manufacture, market and sell as well as any research and development efforts). That's why I tend to look at the factors that influence the cost of manufacturing....365 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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