APPLOVIN CORP-CLASS A (NASDAQ:APP) – A Strong Growth Stock with Reasonable Valuation

APPLOVIN CORP-CLASS A (NASDAQ:APP) was identified as an affordable growth stock by our stock screener. The company combines strong growth metrics with solid profitability and financial health while maintaining a reasonable valuation. Here’s why APP stands out as a candidate for investors seeking growth at a sensible price.

Growth Prospects

APP demonstrates impressive growth, scoring a 9 out of 10 in the Growth category. Key highlights include:

• Earnings Per Share (EPS) growth of 262.5% over the past year.
• Revenue growth of 41.6% in the last year, with a 36.5% average annual increase over multiple years.
• Expected future EPS growth of 32% and revenue growth of 24.9% annually, based on analyst estimates.

These figures suggest that APP is expanding rapidly and is well-positioned to sustain its upward trajectory.

Valuation

With a Valuation score of 5, APP is not cheap but remains reasonably priced relative to its growth potential:

• The P/E ratio of 55 is in line with industry peers, though higher than the S&P 500 average.
• The PEG ratio, which accounts for growth, indicates the stock may be undervalued given its earnings expansion.
• 68% of industry peers are more expensive based on Enterprise Value to EBITDA.

While not a deep-value pick, the valuation appears justified by APP’s strong earnings and revenue expansion.

Profitability & Financial Health

APP scores 8 out of 10 in both Profitability and Financial Health, reinforcing its stability:

• Return on Equity (ROE) of 333.5% and Return on Invested Capital (ROIC) of 43.9% are among the best in the industry.
• Operating margin of 46.5% and profit margin of 37.4% highlight efficient operations.
• A strong Altman-Z score of 16.2 suggests low bankruptcy risk, though the debt-to-equity ratio is elevated.

These metrics indicate a financially sound business with high profitability, making it a lower-risk growth play.

For a deeper look, review the full fundamental analysis of APP.

Our Affordable Growth screener lists more stocks with strong growth and reasonable valuations, updated daily.

Disclaimer

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