Seventeen S&P 500 companies have posted quarterly sales per share growth of at least 40% while simultaneously expanding both gross and operating profit margins. The list was compiled through a screener of recent financial filings, highlighting firms that combine top-line momentum with operational efficiency.
Among the qualifying companies, several trade at valuation multiples below their historical averages. This suggests the market has not fully priced in their recent growth trajectory, creating potential opportunities for value-focused investors.
The screener required year-over-year revenue per share growth of 40% or more. It also mandated sequential or annual improvements in gross margin, which reflects pricing power or input cost advantages, and operating margin, which indicates disciplined expense management.
Energy and materials sectors contributed heavily to the list, benefiting from commodity price tailwinds. Technology and industrial names also appeared, driven by digital transformation demand and reshoring activity.
One notable example is a semiconductor firm that grew sales per share by 52% while expanding operating margin by 300 basis points. Its stock trades at 14 times forward earnings, below its five-year median of 18.
Another qualifying company, a specialty chemical producer, increased revenue per share by 47% and improved gross margin by 200 basis points. Analysts attribute the gains to premium product mix and lower raw material costs.
The screening method excludes financials and real estate investment trusts due to their distinct capital structures. It also filters out companies with negative earnings or erratic profit histories to ensure margin expansion is genuine.
Investors should note that high growth rates often normalize. A 40% quarterly increase may reflect one-time contracts, price spikes, or easy comparisons from the prior-year period.
Valuation remains a key differentiator among the 17 names. Some trade at price-to-earnings ratios below 12, while others exceed 30. The cheaper stocks tend to come from cyclical sectors with volatile earnings histories.
For long-term holders, the combination of revenue growth and margin expansion typically signals sustainable competitive advantages. However, past performance does not guarantee future results, especially if macroeconomic conditions shifts.
The full list includes companies with market capitalizations ranging from $10 billion to over $400 billion, indicating the trend is not limited to small caps. Institutional ownership remains high across all qualifying names.
Analysts suggest investors review cash flow statements alongside income statements. Margin expansion can sometimes result from aggressive cost cuts that undermine future growth capacity.
Overall, the screener offers a starting point for fundamental research. It does not account for debt levels, management quality, or industry disruption risks, which require individual assessment.
The original article was published on MarketWatch and relied on data from FactSet. The screener parameters can be replicated using standard financial data platforms for those seeking current updates.
