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Gross Margin Screener — Find High-Margin Stocks
60 mid and large-cap stocks ranked by gross margin percentage, with industry benchmarks so each figure is judged against its sector. Filter by sector and minimum threshold to shortlist the most profitable businesses for deeper analysis.
Why Gross Margin Matters
Gross margin is the first line of a company's income statement that reveals its economics. It answers a simple question: after paying the direct cost of producing what it sells, how much of each sales dollar does the business keep? A company with a 70% gross margin has 70 cents left over from every dollar of revenue to cover operating expenses, research, marketing, and — ultimately — profit. A company at 15% has almost no room for error. High and stable gross margins are the clearest single signal of pricing power and a durable competitive moat.
Because gross margin sits so high on the income statement, it is harder to manipulate than net income and less sensitive to one-off financing or tax decisions. A gross margin that expands over several years usually means the company is gaining scale advantages, raising prices, or shifting toward a richer product mix. A gross margin that erodes is an early warning — of rising input costs, discounting, or competition eating into the moat — that often shows up here long before it reaches the bottom line.
Read Gross Margin Against Its Industry
A gross margin number means nothing in isolation. Different business models carry structurally different margins. Software and internet businesses commonly post gross margins around 70% or higher because the marginal cost of one more customer is close to zero. Manufacturers typically land near 35% — they buy raw materials, run factories, and carry real cost of goods sold. Retailers cluster around 25% because they resell physical inventory at a modest markup. A 40% gross margin is exceptional for a retailer and mediocre for a software company. Always sector-filter this screener to compare within a peer group.
How to Use This Screener to Find Ideas
Start by sorting by gross margin descending, then use the sector filter to narrow to one peer group at a time. Within a sector, the names at the top of the list have the strongest unit economics — a starting point for identifying pricing power and moat. Set a minimum threshold to cut the list to only the high-margin businesses that interest you. Then click any ticker to open the full Basis Report stock page for valuation, margin trend, and earnings quality analysis. Pair this screener with the Profit Margin Calculator to see how much of that gross margin survives all the way to net income.
Frequently asked questions
How is gross margin calculated?
Gross margin = (revenue − cost of goods sold) ÷ revenue, expressed as a percentage. Cost of goods sold includes the direct costs of producing what a company sells — raw materials, direct labor, and manufacturing overhead — but excludes operating expenses like R&D, sales, and administration.
What is a good gross margin?
It depends entirely on the industry. Software businesses commonly run ~70% gross margins, manufacturers around ~35%, and retailers closer to ~25%. A margin that looks excellent in one sector can be below average in another, so always compare a company against its direct peers rather than an absolute benchmark.
How is gross margin different from net margin?
Gross margin only subtracts the direct cost of goods sold. Net margin subtracts everything — operating expenses, interest, and taxes — to show the profit that actually reaches shareholders. A company can have a high gross margin but a thin net margin if its operating costs are heavy. Use both together for a full picture.
Why does a high gross margin signal a moat?
A durable high gross margin means customers pay well above the direct cost of the product and competitors have not been able to undercut that pricing. That usually reflects a real advantage — a brand, switching costs, network effects, or proprietary technology. When margins hold up over many years, the moat is likely genuine.
Can gross margin be too high?
Not on its own, but an unusually high margin can attract competition or signal underinvestment in growth. It should also be read alongside revenue growth: a very high margin on shrinking revenue is less attractive than a slightly lower margin on a business compounding its top line. Context always matters.
How do I use this screener alongside the DCF Calculator?
This screener helps you identify the most profitable businesses by gross margin. Once you have a shortlist, use the DCF Calculator to value the cash flows those margins produce, and the Profit Margin Calculator to see how much of the gross margin survives to the bottom line. High, stable gross margins tend to support more resilient DCF assumptions.