NerdWallet Inc (NASDAQ:NRDS) Tops Growth Screen with Strong Earnings Momentum

Growth investing strategies often focus on identifying companies showing strong financial momentum and operational quality. One systematic method comes from Louis Navellier's "The Little Book That Makes You Rich," which lists eight specific rules for choosing leading growth stocks. These rules focus on earnings revisions, sales and earnings growth, margin improvement, cash flow, and high returns on equity. A recent screen using this method has identified NerdWallet Inc - Class A (NASDAQ:NRDS) as a company that meets these strict standards.

Earnings Revisions and Surprises

The Little Book method places great importance on analyst sentiment and a company's ability to beat expectations. Positive earnings revisions mean analysts are becoming more confident in the company's future, while repeated earnings beats show the company is regularly doing better than expected.

• The average EPS estimate beat over the last four quarters is a notable 1,197.48%.
• The company has reported four straight positive EPS surprises.
• The EPS estimate for the next quarter has been increased by 87.76% in the last three months.

These numbers show that NerdWallet not only regularly beats analyst predictions but is also seeing a large rise in forward-looking analyst confidence, a strong mix for growth investors.

Strong Sales and Earnings Growth

A central idea of growth investing is finding companies with increasing top and bottom-line expansion. The method requires important year-over-year and quarter-over-quarter growth in both revenue and earnings.

• Revenue grew 28.75% over the past year and 24.10% in the last quarter.
• Earnings per share jumped 646.15% over the past year and 191.67% in the last quarter.

This fast growth, especially on the bottom line, shows the company is effectively scaling its business and turning sales into significant profits.

Improving Profitability and Good Cash Flow

For growth to last, it must be profitable. The method focuses on widening operating margins, which shows better cost management, and good cash flow creation, which offers financial room to maneuver.

• The operating margin widened by 405.81% over the past year.
• Free cash flow increased by 350.0% over the past year.

The large improvement in operating margin points to much better operational efficiency. At the same time, the big rise in free cash flow gives NerdWallet plenty of means to fund growth, reduce debt, or follow other value-creating projects without needing outside money.

Earnings Momentum and Return on Equity

The final parts of the method look for positive earnings momentum and good use of shareholder money. Earnings momentum confirms that growth is speeding up, while a high Return on Equity (ROE) shows management is good at creating profits from equity.

• The current quarterly EPS growth of 191.67% is much higher than the growth from the same quarter a year ago (14.29%), confirming good positive momentum.
• The company holds a good ROE of 12.08%, meeting the method's minimum need and showing efficient use of investor money.

Fundamental Analysis Overview

A look at the full fundamental analysis for NerdWallet gives a wider picture. The company has an overall fundamental rating of 5 out of 10. Its best feature is very good health, with high scores for solvency and liquidity, pointing to a solid balance sheet. The growth rating is also good at 7 out of 10, backed by the strong revenue and EPS gains mentioned before. The main points to consider are profitability, which is rated as medium, and valuation, which seems somewhat high compared to its industry group, though acceptable next to the wider market.

For investors wanting to find other companies that fit this established growth method, the screen used to find NerdWallet is publicly available. You can view and adjust the screen here to locate more possible investment choices.

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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. Always conduct your own due diligence and consult with a qualified financial advisor before making any investment.