NerdWallet Inc (NASDAQ:NRDS) Excels Against Louis Navellier's "Little Book" Growth Strategy

A growth investing strategy outlined in Louis Navellier's "The Little Book That Makes You Rich" uses eight fundamental rules to find companies with superior growth potential. This method focuses on firms displaying strong and accelerating financial metrics across earnings, sales, and profitability. The strategy aims to identify stocks that are not just growing but are showing positive momentum that could lead to significant price appreciation. By systematically applying these filters, investors can create a shortlist of companies worth more investigation for a growth-oriented portfolio.

Performance Against the Little Book Criteria

NerdWallet Inc (NASDAQ:NRDS) appears as a noteworthy candidate when measured against Navellier's eight rules. The company, which provides an online platform offering financial information and product comparisons, shows strong alignment with the strategy's core principles.

• Positive Earnings Revisions: The EPS estimate for the next quarter has been revised upward by 87.76% over the last three months. This is a critical signal within the strategy, as upward revisions often indicate that analysts have received positive new information, increasing the likelihood of future earnings beats.
• Positive Earnings Surprises: NRDS has reported four consecutive positive earnings surprises, with an average surprise of a remarkable 1197.48%. Consistent earnings beats force the market to re-evaluate a company's growth trajectory, a key part of Navellier's approach for driving stock price momentum.
• Increasing Sales Growth: The company demonstrates solid top-line expansion.
  • Revenue growth (TTM) is 28.75%.
  • Quarterly sales growth (Q2Q) is 24.10%. This accelerating sales growth is fundamental to the strategy, confirming that the company is successfully expanding its market reach and customer base.
• Expanding Operating Margin: NRDS shows a large improvement in profitability, with its operating margin growing by 405.81% over the past year. This expansion is crucial as it indicates the company is growing sales without a proportional increase in costs, leading to greater operational efficiency and higher profits.
• Strong Cash Flow: The company's free cash flow grew by 350.0% over the past year. Strong and growing cash flow provides financial flexibility, allowing a company to fund expansion, pay down debt, or invest in new opportunities without relying on external financing.
• Earnings Growth: NRDS exhibits high bottom-line growth.
  • EPS growth (TTM) is 646.15%.
  • Quarterly EPS growth (Q2Q) is 191.67%. Sustained and significant earnings growth is the primary engine for stock price appreciation in growth investing.
• Positive Earnings Momentum: The current quarterly EPS growth of 191.67% is substantially higher than the growth rate from the comparable quarter a year ago (14.29%). This acceleration in the rate of growth, or positive earnings momentum, is a strong indicator that the company's growth cycle is strengthening.
• High Return on Equity: NRDS has a Return on Equity (ROE) of 12.08%. This meets the strategy's minimum requirement and indicates that the company is efficiently generating profits from the equity shareholders have invested.

Fundamental Rating Overview

A review of the full fundamental analysis for NRDS provides a wider context. The stock holds an overall fundamental rating of 5 out of 10. Its strongest pillar is Financial Health, which scores an 8, reflecting a solid balance sheet with high liquidity and low debt levels. The Growth pillar is also solid with a score of 7, supported by the impressive historical growth rates in revenue and EPS. However, the report notes some concerns within the Profitability pillar, where margins, while expanding, are still considered low relative to industry peers. The Valuation score of 3 suggests the stock may be fully or even richly priced based on current metrics, a common characteristic of high-growth companies.

Finding More Potential Candidates

The screen that identified NerdWallet Inc (NASDAQ:NRDS) is a practical application of a proven growth strategy. For investors interested in discovering other companies that meet these strict criteria, the screen is publicly available. You can access the Little Book screening template here to view the current results and adjust the filters based on your own investment parameters.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented should not be used as the sole basis for making any investment decision. Investors should conduct their own research and consult with a qualified financial advisor before making any investment.