Inspire Medical Systems Inc (NYSE:INSP): A Top Affordable Growth Stock with Strong Fundamentals

Affordable Growth Stock Highlight: Inspire Medical Systems Inc (NYSE:INSP)

The "Affordable Growth" investment strategy focuses on companies that offer solid growth potential without excessive valuations, helping investors avoid overpaying for future earnings. This method looks for stocks with high growth scores (above 7), good profitability and financial stability, and valuations that remain reasonable (valuation score above 5). Inspire Medical Systems Inc (NYSE:INSP) meets these criteria, positioning it as an attractive option for those looking for growth at a fair price.

Growth: Strong Performance

Inspire Medical’s growth figures are impressive, receiving a Growth score of 7/10 in ChartMill’s fundamental analysis. Key points include:

• Revenue Growth: The company has achieved a 57.78% average yearly revenue growth in recent years, with a 27.11% rise in the last year.
• Earnings Growth: EPS jumped by 494.55% over the past year, showing strong operational efficiency.
• Future Outlook: Analysts expect 33.18% annual EPS growth and 15.93% revenue growth in the near term, supporting its continued growth path.

For an Affordable Growth approach, consistent and scalable growth is essential—INSP’s ability to sustain high growth rates while moving toward profitability makes it a strong contender.

Valuation: Fair for the Growth Potential

Despite its fast growth, INSP’s Valuation score of 5/10 indicates it isn’t overpriced compared to peers:

• P/E Ratio: At 58.11, INSP is higher than the S&P 500 (26.82) but lower than 67.38% of its Health Care Equipment & Supplies industry competitors.
• Forward P/E: The 38.21 forward P/E aligns with the S&P 500 average (36.21) and is below the industry’s 62.86, suggesting its growth is priced more fairly than sector standards.
• PEG Ratio: The neutral PEG ratio implies earnings growth balances its P/E multiple, a key consideration for Affordable Growth investing.

While not inexpensive outright, INSP’s valuation is supported by its growth path and industry standing.

Profitability and Financial Health: Strengthening the Growth Case

• Profitability (6/10): INSP’s margins are solid, with a 7.92% net margin (top 21% of peers) and 84.65% gross margin (top 5% of industry). ROE (10.46%) and ROA (9.10%) also exceed most competitors.
• Financial Health (8/10): The company carries no debt, a current ratio of 9.01, and a quick ratio of 7.44, showing strong liquidity. The Altman-Z score of 25.13 suggests very low bankruptcy risk.

These factors reduce risks commonly tied to high-growth stocks, such as cash flow issues or high debt, making INSP a more stable growth choice.

Why This Matches the Affordable Growth Strategy

The Affordable Growth screen selects companies where growth isn’t outweighed by high valuations or weak finances. INSP’s mix of strong growth, fair valuation, and solid financial health fits this approach. Its higher pricing is balanced by industry-leading growth rates and improving profitability—a sign of lasting growth investments.

For a closer look at INSP’s fundamentals, check the full fundamental analysis report here.

Find More Affordable Growth Stocks

INSP is one example of a stock that fits the Affordable Growth criteria. Investors can discover other options using ChartMill’s predefined Affordable Growth screen, which identifies similarly balanced growth and value opportunities.

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.