ACI Worldwide Inc (NASDAQ:ACIW) – A Strong Candidate for GARP Investors

ACI Worldwide Inc (NASDAQ:ACIW) emerged from our Peter Lynch-inspired screen as a potential fit for investors seeking growth at a reasonable price. The company, which provides real-time electronic payment solutions, demonstrates solid financial health, profitability, and sustainable growth—key traits Lynch favored. Below, we examine why ACIW stands out.

Why ACIW Fits the Peter Lynch Strategy

• Earnings Growth: ACIW has delivered an impressive 5-year average EPS growth of 27.49%, well within Lynch’s preferred range of 15-30%. This indicates strong, sustainable expansion.
• Attractive Valuation: With a PEG ratio (5Y) of 0.68, the stock is priced favorably relative to its growth, meeting Lynch’s criterion of PEG ≤ 1.
• Healthy Balance Sheet: The company maintains a debt-to-equity ratio of 0.55, below the screen’s threshold of 0.6, suggesting prudent financial management.
• Strong Profitability: ACIW’s return on equity (ROE) of 18.19% exceeds the 15% minimum Lynch sought, reflecting efficient use of shareholder capital.
• Liquidity: A current ratio of 1.50 ensures the company can comfortably meet short-term obligations.

Fundamental Highlights

ACIW’s financial strength is further supported by:

• High Profit Margins: An operating margin of 22% ranks in the top 10% of its software industry peers.
• Improving Cash Flow: Recent years show growth in profit margins and free cash flow.
• Reasonable Valuation: While the P/E of 18.65 may seem elevated, it’s below industry averages, and the forward P/E of 16.64 suggests better value ahead.

For a deeper dive, review the full fundamental analysis report here.

Our Peter Lynch Strategy screener lists more stocks matching these criteria and is updated regularly.

Disclaimer

This is not investing advice. The observations here are based on data available at the time of writing. Always conduct your own research before making investment decisions.