Futu Holdings Ltd.-ADR (NASDAQ:FUTU) Matches Key Growth Stock Criteria

Growth investors looking for organized methods to pick stocks frequently use proven systems to find companies with solid expansion prospects. One framework is from Louis Navellier's "The Little Book That Makes You Rich," which lists eight basic rules for finding leading growth stocks. These rules concentrate on earnings revisions, surprises, sales and earnings growth, margin expansion, cash flow generation, earnings momentum, and return on equity. A recent filter using these ideas has found Futu Holdings Ltd.-ADR (NASDAQ:FUTU) as matching the strategy's strict needs.

Earnings Revisions and Surprises

The strategy highlights positive earnings revisions as a main signal, because upward changes by analysts usually point to solid underlying business momentum. Futu shows notable strength in this area, with next-quarter EPS estimates increased by 450.86% during the last three months. This large revision implies analysts are becoming more confident about the company's short-term outlook.

The method also appreciates steady earnings surprises, since companies that often beat estimates usually lead analysts to raise future projections. Futu has surpassed EPS estimates in three of the past four quarters, with an average surprise of 11.8%. This history of beating estimates points to management's skill in performing better than market forecasts.

Growth Measurements

Sales growth is the base of any growth investment case, and Futu's figures are notable:

• Year-over-year revenue growth: 66.35%
• Quarter-over-quarter revenue growth: 69.73%

These solid growth rates are much higher than the strategy's 20% minimum, showing firm demand for Futu's digital brokerage services in both present and recent times.

Profitability and Efficiency

Increasing operating margins show better operational efficiency, which is especially key when sales are rising quickly. Futu's operating margin has grown by 19.55% over the last year, well above the strategy's 2% need. This implies the company is scaling in a profitable way, not just increasing top-line revenue.

The strategy highlights strong cash flow generation because it offers financial flexibility and self-funding ability. Futu performs well here with free cash flow growth of 580.56% over the past year, greatly exceeding the 15% minimum level and indicating sound financial condition.

Earnings Momentum

The method needs both earnings growth and a quickening pace:

• Year-over-year EPS growth: 80.47%
• Quarter-over-quarter EPS growth: 103.67%
• Earnings momentum: Current quarterly EPS growth of 103.67% is higher than the 8.81% growth from the same quarter one year ago

This pattern of acceleration is especially prized by the method as it shows a rise in growth speed instead of just keeping existing growth rates.

Return on Equity

The strategy looks for companies producing high returns on shareholder equity, and Futu provides a 23.77% ROE, more than twice the 10% minimum. This points to effective use of investor money to create profits.

Fundamental Assessment Overview

According to ChartMill's detailed fundamental analysis, Futu gets an overall score of 6 out of 10. The company shows outstanding profitability with a score of 9/10, fueled by notable margins and returns. Its growth score of 9/10 mirrors the solid expansion measurements noted before. However, the analysis points out some issues about financial health, which investors should watch carefully. Valuation seems fair considering the company's growth path and profitability.

Investment Considerations

Although Futu matches many of the "Little Book" rules notably, investors should be aware that the strategy centers mainly on growth traits rather than valuation or financial steadiness. The current filter finds companies displaying strong growth signals but does not include wider market situations or technical factors that could affect timing.

For investors wanting to review more companies matching these growth rules, the full screening results offer several possible choices for more study.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions. Past performance does not guarantee future results.