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It Pays To Be Happy: 10 Profitable Stocks With High Employee Ratings

Do you subscribe to the idea that happy employees lead to happy shareholders? Here we present a list of publicly traded companies that score highly on employee ratings and have more profitable margins than their industry average. 

PROFITABLE MARGINS

We began by screening for firms more profitable than their industry average on the basis of trailing twelve month (TTM) gross, operating and pre-tax margins.

TTM Gross margin: This metric that tells us the percentage of a company’s revenue is left after paying all production expenses. Costs include overhead, payroll and taxation. ((Revenues – cost of goods sold) / Revenue) *100 = Gross margin %

TTM Operating margin: This tells us the percentage remaining after all operating expenses are paid. Operating expenses include: supplies, repairs, research and development, and depreciation. (Operating Income / Net Operating Revenue) *100 = Operating Margin %

TTM Pretax margin: A company’s earnings before taxes. This incorporates all of the expenses associated with business excluding taxes. It can help to determine the overall operating efficiency of the firm. The higher the pretax margin, the more profitable the company. (Net profit before taxes / net sales) *100 = Pretax Margin

EMPLOYEES

Next, we looked for a fundamental reason these stocks are performing so well compared to their industry peers.  Perhaps there is wisdom in the idea that happy employees make productive employees and thriving companies.

With this in mind we used  CSRHub's  database to identify the top rated companies in the area of Employees.  The Employees score is calculated by aggregating ratings in the area of diversity, labor rights, treatment of unions, compensation, benefits, training, health, and worker safety. On a scale of 0-100, 100 being the highest, we pulled the top ten names that overlapped with our profitable names, all with scores above 60.

We approached this list with the CSRHub user average profile, which represents the average importance placed on the four main categories, Community, Employees, Environment, and Governance. This helps to compile the overall score also listed below.  

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