Halozyme Therapeutics Inc (NASDAQ:HALO) Fits a Proven Growth Investing Method

A methodical way to approach growth investing can help find companies with solid fundamental momentum. One recognized method comes from Louis Navellier's "The Little Book That Makes You Rich," which lists eight particular rules for choosing leading growth stocks. These standards center on earnings revisions, sales increases, profit growth, and return on equity to identify companies displaying quickening business results. Investors applying this method look for firms that not only present solid past growth but also display positive momentum that indicates continued strong performance.

Fitting the Little Book Standards

Halozyme Therapeutics Inc (NASDAQ:HALO) shows solid agreement with Navellier's growth investing ideas in several areas. The company's recent financial results display the type of quickening measures that growth investors usually look for.

• Earnings Revisions and Surprises: Analysts have raised their next-quarter EPS estimates by 10.17% over the last three months, showing increasing optimism about short-term performance. The company has surpassed EPS estimates in all of the previous four quarters by an average of 16.87%, showing a reliable capacity to beat forecasts.

• Sales and Earnings Growth: Halozyme displays solid increases across main growth measures:

  • Revenue growth (TTM): 34.97%
  • Quarterly revenue growth: 40.79%
  • EPS growth (TTM): 58.41%
  • Quarterly EPS growth: 69.23%

• Profitability Growth: The company's operating margin has grown by 25.01% over the past year, showing better efficiency as sales increase. This growth is especially notable given the already high operating margin of 57.92%.

• Cash Flow and Returns: Free cash flow has increased by 84.66% over the past year, offering financial room for continued growth projects. The return on equity is at a notable 167.48%, well above the method's lowest limit of 10%.

Fundamental Health Evaluation

The full fundamental analysis report for Halozyme gives the company a solid score of 8 out of 10, pointing out a few areas of notable performance. The analysis mentions exceptional health and profit scores that are some of the top in the biotechnology field. The company shows both very good growth features and appealing valuation measures, forming what the report calls a "rare mix" that makes it worth considering for value, growth, and quality investing methods.

Halozyme's valuation seems attractive compared to both its industry competitors and wider market indexes. The company trades at a P/E ratio of 12.60, much lower than the industry average of 61.63 and the S&P 500's present multiple of 26.76. The forward P/E ratio of 8.02 further supports the valuation argument, indicating possible gain if growth forecasts are achieved.

Investment Points

While the fundamental view seems solid, investors should be aware that Halozyme works in the competitive biotechnology industry, where development schedules can be long and regulatory obstacles important. The company's ENHANZE drug delivery technology system has received commercial acceptance through partnerships with several biopharmaceutical companies, providing revenue variety beyond its own products.

The company's debt-to-equity ratio of 4.54 shows considerable borrowing, though this is partly balanced by solid current and quick ratios of 8.36 and 7.01 respectively, indicating good short-term cash availability. The downward direction in operating and profit margins, while still at notable levels, needs watching to make sure the company keeps its competitive position.

Looking at Other Possibilities

For investors curious about using similar growth standards to other possible options, the Little Book strategy screen offers a beginning point for finding companies meeting these strict growth requirements. The screen can be adjusted based on personal risk comfort and investment goals, allowing for either stricter or more relaxed use of the eight rules depending on market situations and investor choices.

Disclaimer: This article presents factual information and analysis for educational purposes only and does not constitute investment advice, recommendation, or endorsement of any particular 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, and all investments carry risk including potential loss of principal.