ACI WORLDWIDE INC (NASDAQ:ACIW) - A Strong Candidate for GARP Investors

ACI WORLDWIDE INC (NASDAQ:ACIW) emerged from our Peter Lynch-inspired stock screen as a potential fit for growth-at-a-reasonable-price (GARP) investors. The company, which provides real-time electronic payment solutions, demonstrates solid growth, profitability, and financial health while trading at a reasonable valuation.

Key Strengths

• Strong Earnings Growth: ACIW has delivered an impressive 27.5% average annual EPS growth over the past five years, well above the 15% minimum threshold in our screen. Recent earnings growth has been even stronger, with a 89.6% increase over the past year.
• Attractive Valuation: The stock’s PEG ratio (0.66) is well below 1, indicating that its price accounts for growth without being overextended. The P/E ratio of 18.1 is also below both the industry and S&P 500 averages.
• Healthy Profitability: ACIW’s return on equity (ROE) stands at 18.2%, comfortably above the 15% benchmark, reflecting efficient use of shareholder capital. Operating margins (22%) and profit margins (16.1%) are also strong relative to peers.
• Solid Financial Health: The company maintains a current ratio of 1.5, ensuring short-term liquidity, while its debt-to-equity ratio (0.55) is within acceptable limits.

Fundamental Overview

Our fundamental analysis report rates ACIW a 6 out of 10, noting its strong profitability and reasonable valuation. While there are minor concerns about financial health, the company’s growth trajectory and cash flow generation suggest stability.

For investors seeking a balanced mix of growth and value, ACIW presents an interesting opportunity. The company operates in the expanding digital payments sector, benefiting from increasing demand for secure and efficient transaction solutions.

Our Peter Lynch Strategy screener provides more stocks that fit this investment approach.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own research before making investment decisions.