4 Pro-ENDA Stocks More Profitable Than Their Peers

Mary-Lynn Cesar, Kapitall: Last month in a 15 to 7 vote, the Senate Committee on Health, Education, Labor, and Pensions passed the Employment Non-Discrimination Act (ENDA), a bill prohibiting workplace discrimination based on sexual orientation and gender identity. The vote had bipartisan support with all 12 Democrat committee members voting in favor of the bill along with Republican Senators Orrin Hatch of Utah, Mark Kirk of Illinois, and Lisa Murkowski of Alaska.

[Read more from Kapitall: Boston Globe Sold for the Price of an Infielder]

Earlier in June, Senate Majority leader Harry Reid – one of ENDA’s 53 co-sponsors – stated that the Senate would take up the bill in the near future. However, the Senate left for its August recess on Friday, putting the bill’s future on hold. If the Senate does vote on ENDA during the fall session, it will mark only the second time that the Senate has voted on the legislation.

LGBT Anti-Discrimination Laws and the Workplace

ENDA was first proposed in 1994 and has since been introduced in every Congress aside from the 109th Congress during 2005 – 2006. The bill came closest to passing in 1996, when it was defeated in the Senate by a single vote. In its latest iteration, ENDA aims to extend fair employment practices – which protect employees from discrimination on the basis of age, disability, gender, nationality, race, and religion – to lesbian, gay, bisexual, and transgendered people.

Currently, per USA Today, 22 states along with Washington DC prohibit sexual orientation discrimination in the workplace and 17 of those states have also banned discrimination on the basis of gender identity. If ENDA passes, all 50 states will have to put provisions in place to protect the rights of LGBT employees.

While the bill has yet to reach the Senate floor, many have asked President Obama to set a discrimination-ending mandate by signing an executive order banning sexual orientation and gender identity discrimination by federal contractors. In February, 37 Senators sent a letter to the President calling for the Executive Order; 110 members of Congress signed an open letter to the President in March; and The Washington Post criticized the President’s inaction in an editorial on Sunday.

Investing Ideas

The list below is comprised of S&P 100 companies that have expressed support of the Employment Non-Discrimination Act, as listed by Calvert in its A Survey of Corporate Diversity Practices of the S&P 100. The following four stocks have more profitability than the industry average as indicated on the basis of three trailing twelve month (TTM) profitability margins.

TTM Margins:

TTM Gross Margin: The percent of revenue that remains after paying expenses. This margin measures the percent change in trailing 12 month revenue and trailing 12 month cost.

TTM Operating Margin: The percent of revenue left after paying variable costs associated with the production of a good.

TTM Pretax Margin: The company’s earnings, with all expenses incorporated, before taxes. Also expressed as a percentage.

When firms have higher margins than their industry averages, they are operating more efficiently than their peers.

 

Click on the image below to see sales data over time. Quarterly sales data sourced from Zacks Investment Research.

Dig Deeper:  Compare analyst ratings to annual returns for stocks mentioned.

Do profitability margins higher than the industry average make these ENDA-supporting stocks a buy? Use this list as a starting point for your own analysis.

 

The List

1. Intel Corporation ( INTC ): Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide.

Market cap at $114.21B, most recent closing price at $22.92.

TTM gross margin at 73.63% vs. industry average at 55.94%.

TTM operating margin at 23.38% vs. industry average at 15.31%.

TTM pretax margin at 23.43% vs. industry average at 16.67%.
 

2. QUALCOMM Incorporated ( QCOM): Engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services.

Market cap at $114.41B, most recent closing price at $66.25.

TTM gross margin at 66.7% vs. industry average at 59.52%.

TTM operating margin at 31.45% vs. industry average at 19.85%.

TTM pretax margin at 33.96% vs. industry average at 19.43%.
 

3. JPMorgan Chase & Co. ( JPM): Provides various financial services worldwide.

Market cap at $212.19B, most recent closing price at $56.10.

TTM gross margin at 87.91% vs. industry average at 63.24%.

TTM operating margin at 52.81% vs. industry average at 38.3%.

TTM pretax margin at 30.5% vs. industry average at 20.37%.

 

4. Wells Fargo & Company ( WFC): Provides retail, commercial, and corporate banking services primarily in the United States.

Market cap at $235.21B, most recent closing price at $44.34.

TTM gross margin at 88.95% vs. industry average at 75.62%.

TTM operating margin at 48.57% vs. industry average at 42.74%.

TTM pretax margin at 34.08% vs. industry average at 25.55%.

 

 

( List compiled by Mary-Lynn Cesar, Kapitall contributor. Profitability data sourced from Fidelity. All other data sourced from Finviz.)

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