Atour Lifestyle Holdings-ADR (NASDAQ:ATAT) Embodies Affordable Growth with Strong Profitability

Investors looking for growth chances at fair prices often consider methods that balance development possibility with good financial basics. The "Affordable Growth" method looks for companies with good growth paths while keeping up solid profitability and financial soundness, all without high valuation premiums. This process tries to find businesses that mix operational quality with appealing prices, possibly providing lasting returns without paying too much for future potential. One example coming from this screening is Atour Lifestyle Holdings-ADR (NASDAQ:ATAT), a Chinese hotel company displaying interesting features for investors focused on growth.

Growth Path

Atour Lifestyle shows very good expansion numbers that are central to its investment case. The company's recent results display notable speed in important growth measures:

• Revenue jumped 55.34% over the last year, with a three-year average yearly growth rate of 35.84%
• Earnings per share grew 36.58% per year, speeding up to 138.03% over several years
• Future estimates point to continued growth with EPS predicted to increase 22.98% and revenue expected to grow 24.93% each year

These growth levels are much higher than industry standards and back the company's high growth score of 9 out of 10. While future growth will likely slow from recent high levels, the expected rates stay well above market averages, giving a good base for ongoing development.

Valuation Picture

The valuation situation shows a varied but finally acceptable view when seen alongside growth. Atour's current Price/Earnings ratio of 25.17 seems high on its own but becomes more interesting when thinking about growth forecasts:

• Forward P/E of 18.14 looks good compared to both industry averages and S&P 500 measures
• The PEG ratio, which includes growth estimates, suggests fair valuation relative to expansion possibilities
• Price/Free Cash Flow numbers show the company is valued lower than 67.91% of industry competitors

The valuation score of 5 shows a measured view where higher pricing is partly explained by better growth features and profitability. This match with the Affordable Growth method's need for fair valuation alongside strong growth makes ATAT especially noteworthy.

Profitability and Financial Soundness

Beyond growth and valuation, Atour shows basic strengths that lower investment risk. The company's profitability numbers are very good, scoring 8 out of 10:

• Return on Invested Capital of 22.51% is better than 94.03% of industry rivals
• Operating margin of 21.51% and profit margin of 16.41% are in the top group industry-wide
• Gross margin of 84.19% shows good pricing ability and operational effectiveness

Financial soundness measures are similarly strong with a score of 9, featured by:

• Very low debt with Debt/Equity ratio of 0.02 and Debt/FCF of 0.05
• Good cash position with Current Ratio of 2.29 and Quick Ratio of 2.23
• Altman-Z score of 7.31 showing very little chance of bankruptcy

These features give important stability under the company's growth story, making sure expansion happens from a place of financial power.

Strategic Match

Atour's mix of qualities fits well with Affordable Growth requirements. The company's solid growth supports its valuation premium while its very good profitability and financial soundness offer protection against losses. The hospitality company's spread across 151 Chinese cities with 834 hotels shows it can grow efficiently, while its special hotel ideas show new thinking in market division.

For investors using growth-at-fair-price methods, ATAT is an interesting case where strong basics support ambitious growth goals. The company's skill in keeping high profitability numbers while growing quickly points to lasting advantages in China's changing hospitality sector.

View the complete fundamental analysis report for specific numbers and comparative industry study.

Investors wanting to find comparable chances can look at more Affordable Growth screen outcomes that fit these investment needs.

Disclaimer: This analysis is an impartial evaluation based on fundamental data and should not be seen as investment advice. Investors should perform their own research and think about their personal financial situation before making investment choices.