Carvana Co (NYSE:CVNA) Fits Louis Navellier’s Growth Investing Strategy with Strong Earnings Momentum and Rising Revenue

Louis Navellier's The Little Book That Makes You Rich describes a growth investing method centered on finding stocks with strong earnings momentum, rising revenue, and better profitability. The strategy uses eight main rules to identify companies with solid fundamental growth traits. These factors include upward earnings revisions, regular earnings beats, growing sales and margins, healthy cash flow, high returns on equity, and faster earnings momentum. By focusing on these qualities, investors seek stocks likely to continue rising in price.

Carvana Co (NYSE:CVNA) appears as a potential match for Navellier’s approach, meeting many of the important growth measures detailed in the strategy. Here is a breakdown of how CVNA matches the key screening factors:

1. Positive Earnings Revisions

Analysts have increased their next-quarter EPS forecasts for CVNA by 36.8% in the last three months, showing rising optimism about the company’s short-term earnings. This upward adjustment is a clear sign that Wall Street expects stronger performance, a crucial element in Navellier’s method for spotting stocks with momentum.

2. Strong Earnings Surprises

CVNA has exceeded earnings estimates in each of the past four quarters, with an average beat of 96.2%. Repeated earnings surprises indicate that management is outperforming cautious analyst predictions, supporting the stock’s growth path.

3. Accelerating Sales Growth

Revenue growth remains strong, with year-over-year sales rising 39.5% and quarter-over-quarter growth at 41.9%. Navellier highlights faster sales growth as a key trait of successful growth stocks, as it shows rising market demand and scalability.

4. Expanding Operating Margins

Operating margins have jumped 168.6% over the last year, reflecting better cost control alongside revenue growth. Growing margins are vital in Navellier’s approach, as they reveal a company’s capacity to turn sales growth into higher profits.

5. Strong Cash Flow Generation

Free cash flow growth is 203.4% year-over-year, emphasizing CVNA’s ability to produce cash from operations. Solid cash flow supports reinvestment, debt repayment, and shareholder returns—important factors for long-term growth.

6. Earnings Growth Momentum

EPS growth has been rapid, with year-over-year growth of 466.1% and quarter-over-quarter growth of 814.3%. Such sharp earnings increases fit Navellier’s emphasis on companies showing faster profitability gains.

7. High Return on Equity (ROE)

CVNA’s ROE of 32.5% ranks among the best in its industry, showing effective use of shareholder funds. High and improving ROE is a core part of Navellier’s strategy, as it suggests a company’s ability to grow earnings efficiently.

Fundamental Rating Summary

ChartMill’s fundamental analysis report gives CVNA a neutral profitability score (5/10) but notes its outstanding growth metrics (7/10). While the valuation remains high (P/E of 87.7), the company’s growth path—including projected EPS growth of 42.9% per year—may warrant the premium for growth-focused investors.

Exploring More Growth Candidates

For investors looking for other stocks that fit Navellier’s criteria, the pre-configured screen offers a live list of companies meeting these growth standards.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a financial advisor before making decisions.