Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) Shows Strong Growth Traits in Fundamental Analysis

A systematic method for growth investing can help investors find companies with solid expansion possibilities before they are widely known in the market. One such method comes from Louis Navellier's "The Little Book That Makes You Rich," which lists eight specific rules for choosing better growth stocks. This plan concentrates on finding companies showing positive earnings revisions, steady earnings surprises, quickening sales growth, widening profit margins, solid cash flow creation, strong earnings growth, positive earnings momentum, and high returns on equity. When used through systematic screening, this method can find companies like Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) that show several traits of good growth investments.

Earnings Revisions and Surprises

The base of Navellier's method starts with analyst sentiment and earnings performance. Positive earnings revisions show that analysts are becoming more confident in a company's future, while steady earnings surprises show management's skill in beating expectations. Aurinia Pharmaceuticals shows strength in both areas:

• Next quarter EPS estimates have been moved up by 14.29% over the past three months
• The company has beaten EPS estimates in all of the last four quarters
• Average earnings surprise over the past four quarters is at a notable 194.67%

These numbers indicate that analysts might be adjusting to Aurinia's real performance, creating a chance for continued positive momentum as expectations move up.

Growth Metrics

Important to the growth investing idea is finding companies with quickening business basics. Aurinia shows solid growth across several measures:

• Quarterly revenue growth of 22.41% year-over-year
• Annual revenue growth of 25.59%
• Quarterly EPS growth of 1500% year-over-year
• Annual EPS growth of 243.33%

The large earnings growth shows both operational gains and the company's change toward profitability, a key stage for growth companies where valuation multiples often increase a lot.

Profitability and Efficiency

Widening operating margins and solid returns on equity show that growth is turning into better profitability and efficient use of capital. Aurinia's performance in these areas is notable:

• Operating margin growth of 203.78% over the past year
• Return on equity of 18.08%, doing better than 95.34% of biotechnology industry peers
• Free cash flow growth of 329.13% each year

The mix of margin widening and high ROE indicates the company is not just increasing revenue but doing so profitably and efficiently, building shareholder value along the way.

Earnings Momentum

Navellier highlights the value of earnings speed-up, where current growth rates are higher than past performance. Aurinia shows clear positive momentum:

• Current quarterly EPS growth of 1500% is much higher than the 112.5% growth rate from the same quarter one year before
• This speed-up pattern suggests the company's growth path is getting steeper instead of leveling off

For growth investors, this kind of speed-up often comes before notable price increases as the market sees the improving basic trends.

Fundamental Assessment

A full fundamental analysis of Aurinia Pharmaceuticals shows a mixed but mostly positive view. The company gets an overall fundamental rating of 6 out of 10, with specific strength in financial health and valuation measures. The balance sheet looks solid with good liquidity ratios and workable debt levels. From a valuation view, Aurinia trades at good multiples compared to both industry peers and the wider market, especially when thinking about its growth profile. The mix of solid growth and fair valuation makes a good chance for investors looking for exposure to the biotechnology sector.

Investment Considerations

While Aurinia shows many traits liked by growth investors, several factors need thought. The company works in the biotechnology sector, which has built-in regulatory and clinical development risks. However, its commercialized product LUPKYNIS for lupus nephritis gives a revenue base while the pipeline gives more growth chances. The company's partnership with Otsuka Pharmaceutical gives geographic spread and lowers some commercial execution risks. Investors should watch the company's ability to keep its growth path and widen margins as it grows commercial operations.

For investors wanting to find more companies that meet the Little Book rules, the pre-configured screen gives a starting point for more research. This screening method lets investors systematically find companies showing the growth traits listed in Navellier's method.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or recommendation to buy or sell any security. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance does not guarantee future results, and investing in equities carries risk of loss.