ACI WORLDWIDE INC (NASDAQ:ACIW) – A GARP Candidate Worth Considering

ACI WORLDWIDE INC (NASDAQ:ACIW) emerged from our Peter Lynch-inspired screen as a potential candidate for long-term investors seeking growth at a reasonable price. The company, which provides real-time electronic payment solutions, meets several key criteria for sustainable growth and sound financial health.

Why ACIW Fits the GARP Profile

• Strong Earnings Growth: ACIW has delivered an impressive 5-year average EPS growth of 27.49%, well above the 15% minimum threshold in our screen. This indicates consistent profitability and operational efficiency.
• Attractive Valuation: With a PEG ratio (5-year) of 0.65, the stock appears undervalued relative to its growth prospects. A PEG below 1 suggests the market may not be fully pricing in future earnings potential.
• Healthy Profitability: The company’s Return on Equity (ROE) stands at 18.19%, exceeding the 15% benchmark, reflecting effective use of shareholder capital.
• Solid Financial Position: ACIW maintains a current ratio of 1.50, indicating sufficient liquidity to cover short-term obligations. Its debt-to-equity ratio of 0.55 is within acceptable limits, though slightly higher than Lynch’s preferred threshold of 0.25.

Fundamental Snapshot

Our fundamental analysis rates ACIW 6 out of 10, highlighting strengths in profitability and valuation but noting minor concerns in financial health. Key takeaways:

• Profitability: High marks for ROE, operating margins (22.00%), and profit margins (16.12%).
• Valuation: P/E of 17.91 is below industry peers, and the Price/Free Cash Flow ratio is favorable.
• Growth: Revenue growth has been steady, with a 13.11% increase in the past year.

For a deeper dive, review the full fundamental report.

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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.