Comfort Systems USA Inc (NYSE:FIX) Emerges as a Top Growth Stock Candidate

A mechanical and electrical contracting services provider has appeared as a strong candidate for investors using a disciplined growth strategy. The selection process is based on the principles in Louis Navellier's "The Little Book That Makes You Rich," which finds superior growth stocks through a methodical review of eight fundamental rules. This approach concentrates on companies showing solid and quickening earnings power, favorable analyst opinion, and high operational effectiveness. The strategy intends to capture stocks positioned for major price gains by selecting for those showing outstanding financial momentum.

Earnings Revisions and Surprises

A central part of the growth strategy is finding companies where Wall Street analysts are actively raising their earnings forecasts, as this frequently comes before price momentum. Comfort Systems USA Inc (NYSE:FIX) shows this strongly, with analyst EPS forecasts for the next quarter being raised by 17.28% over the last three months. This shows increasing belief in the company's short-term future. Also, the company has a flawless history of beating forecasts, having reported positive earnings surprises in all of the last four quarterly reports, with an average beat of 25.70%. Reliable earnings surprises often make analysts reconsider their future models, starting a positive pattern of increasing estimates.

Solid Sales and Earnings Growth

For a company to be seen as a genuine growth stock, it must show considerable and quickening expansion in its top and bottom lines. Comfort Systems USA displays this trait clearly, with performance measures that greatly exceed the strategy's minimum needs.

• Revenue Growth: Year-over-year sales growth is at a notable 27.71%, while quarterly revenue has increased 35.24% compared to the same period last year.
• Earnings Growth: The growth in profitability is even more marked, with EPS growing 80.72% over the past year and quarterly EPS increasing by 101.71%.

This difference between revenue and earnings growth shows that the company is not just selling more, but is becoming much more profitable in the process.

Increasing Profitability and Strong Cash Generation

Quickening sales are most valuable when a company can turn them into profit at a growing rate, which is measured by increasing operating margins. Comfort Systems USA has reached an operating margin growth of 36.11% over the past year, showing very good cost control and operational leverage. This increase is a main sign of a high-quality business model. The company also produces significant cash flow, with free cash flow increasing by 54.98% over the past year. Solid and increasing cash flow gives the financial freedom to fund future growth, reduce debt, or give capital to shareholders without needing outside financing.

Positive Earnings Momentum and High Returns

The strategy looks for companies whose earnings growth is not just solid, but quickening. The data indicates that Comfort Systems USA's most recent quarterly EPS growth of 101.71% is much greater than the 49.27% growth it reported for the same quarter a year before. This positive earnings momentum is a strong sign of increasing business traction. Lastly, the company produces outstanding returns on shareholder capital, shown by a return on equity (ROE) of 37.50%. A high ROE shows that management is very effective at using capital to create profits.

Fundamental Analysis Overview

A look at the detailed fundamental analysis report for Comfort Systems USA matches the results from the growth screen. The report gives FIX a high overall fundamental rating of 8 out of 10, emphasizing its very good profitability and strong financial health. It states that the company is growing firmly while not being overvalued considering its growth outlook and industry peers. The analysis specifically commends FIX's first-class return on equity, increasing profit margins, and a solid solvency position with little debt reliance.

Find More Potential Candidates

Comfort Systems USA acts as a leading example of the kind of company the "Little Book" strategy aims to find. For investors wanting to find other stocks that meet these strict growth standards, the screen used for this analysis is publicly available. You can access and adjust the screen to see all current results by using this link: View the Louis Navellier "Little Book" Screen.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy or sell any security, or an endorsement of any investment strategy. All investment decisions involve risk, including the loss of principal. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.