AIFU INC - CL A (NASDAQ:AIFU) - A Potential Fit for GARP Investors

AIFU INC - CL A (NASDAQ:AIFU) emerged from our Peter Lynch-inspired screen as a candidate for long-term growth at a reasonable price (GARP) investors. The company, a Chinese financial services provider specializing in insurance and asset management, meets several key criteria for sustainable growth and sound valuation.

Why AIFU Fits the GARP Profile

• Strong Earnings Growth: AIFU has delivered a 5-year average EPS growth of 19.76%, comfortably within Lynch’s preferred range of 15-30%. This suggests steady, sustainable expansion rather than overheated growth.
• Attractive Valuation: With a PEG ratio of 0.27 (well below Lynch’s threshold of 1), the stock appears undervalued relative to its earnings growth. The P/E ratio of 5.25 also compares favorably to both industry peers and the broader market.
• Healthy Balance Sheet: A debt-to-equity ratio of 0.05 indicates minimal reliance on borrowing, aligning with Lynch’s preference for conservatively financed companies. The current ratio of 2.50 further confirms strong liquidity.
• Profitability: A return on equity (ROE) of 17.87% exceeds Lynch’s 15% benchmark, reflecting efficient use of shareholder capital.

Fundamental Overview

AIFU’s fundamental report highlights a mixed but promising profile:

• Strengths: High profit margins (25.15%), improving gross margins, and solid solvency metrics (Altman-Z score of 2.46).
• Weaknesses: Declining revenue (-43.45% YoY) and lack of dividend payments.
• Valuation: The stock trades at a discount to industry averages, with a forward P/E of 10.87.

Our Peter Lynch Strategy screener lists more stocks that fit this strategy and is updated regularly.

Disclaimer

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