Hippo Holdings Inc (NYSE:HIPO) Shows Explosive Growth Metrics in "Little Book" Stock Screen

Investors are always looking for methods to find companies that might achieve greater growth. One organized method is described in Louis Navellier's The Little Book That Makes You Rich, which lists eight basic rules for choosing growth stocks. These rules center on earnings momentum, sales growth, rising profitability, and solid financial returns. A recent filter using this method has identified Hippo Holdings Inc (NYSE:HIPO) as a possible choice, deserving more examination from investors focused on growth.

How Hippo Holdings Fits the "Little Book" Method

The central idea of Navellier's method is to locate companies showing speeding financial results. Here is how Hippo Holdings compares to several important rules, using the newest data:

• Positive Earnings Revisions & Surprises: A key part of the method is that higher revisions and regular earnings beats frequently come before more good momentum. Hippo displays solid signs here, with analysts' EPS estimates for the next quarter raised by 277.8% over the past three months. Also, the company has reported a positive earnings surprise in three of its past four quarterly results, with an average beat of 215.4%.

• Speeding Sales and Earnings Growth: The method looks for companies not only growing, but growing faster. Hippo displays strong momentum here:

  • Revenue increased 34.5% year-over-year and 26.3% quarter-over-quarter.
  • More significantly, earnings growth is speeding up noticeably. EPS jumped 662.7% in the latest quarter compared to the same quarter last year, a large rise from the 70.1% growth seen in the similar period a year before.

• Growing Profitability and Solid Cash Flow: Growth should be efficient. The method appreciates growing operating margins, which show a company is scaling with profit. Hippo's operating margin growth of 79.2% over the last year points to major gains in turning sales into operating income. Also, the company's free cash flow increased by 90.3% over the last year, giving financial room to support operations and growth from within.

• High Return on Equity (ROE): This measures how well a company creates profit from shareholder equity. Navellier's method prefers high and rising ROE. Hippo's ROE of 22.75% is seen as very good, doing better than almost 90% of similar companies in the insurance field.

Basic Financial Health and Valuation Background

Beyond the specific filter rules, a wider view of Hippo's basic finances gives needed background. According to ChartMill's detailed basic analysis report, Hippo gets a total rating of 4 out of 10. The report notes a combined view: strong growth and fair valuation on some measures, balanced by worries about profitability and financial soundness.

The company's growth picture is its most notable feature, with a "Growth" score of 7/10. The report agrees with the strong past revenue and earnings gains. From a valuation view, the stock seems fairly priced based on its trailing P/E ratio of 8.42, which is lower than both field and S&P 500 averages. However, its forward P/E ratio is very high, showing both high future growth hopes and the company's current small earnings base.

The main points of care are in profitability and financial health (scores of 3/10 and 5/10). While Hippo has lately reported positive earnings, it has a past of yearly losses and negative operating cash flow. Its Altman-Z score also shows some financial risk. These points highlight that, while the company is displaying strong momentum per the "Little Book" rules, it is still a higher-risk, possibly changing growth story instead of a steady, profitable business.

A Choice for Investors Focused on Growth

Hippo Holdings offers a notable example of a company now showing the fast financial momentum that methods like Navellier's try to find early. Its high earnings growth rates, higher analyst revisions, and growing margins match closely with the organized rules for finding better growth stocks. For investors using this method, HIPO shows the kind of active, speeding business profile they look for.

It is important to note that such high-growth paths often include changeability and risk, as seen in the company's mixed basic health score. The "Little Book" filter is made as a beginning for finding stocks, not a final signal to buy. Investors should do complete research, thinking about both the notable momentum and the basic financial risks.

Interested in seeing other companies that pass this growth-focused filter? You can locate and adjust the "Little Book" method screener yourself here.

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Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer to buy or sell any securities. Investing has risk, including the possible loss of your investment. You should do your own research and talk to a qualified financial advisor before making any investment choices.