ONTO INNOVATION INC (NYSE:ONTO) - A Strong Candidate for Affordable Growth Investors

ONTO INNOVATION INC (NYSE:ONTO) stands out as an attractive option for investors seeking growth at a reasonable price. The company, which specializes in metrology and inspection systems for semiconductor manufacturing, has been flagged by our Affordable Growth screener due to its solid fundamentals. ONTO demonstrates strong growth potential, healthy profitability, and a reasonable valuation, making it a compelling candidate for further research.

Growth Prospects

ONTO has shown impressive growth metrics, with a ChartMill Growth Rating of 8/10. Key highlights include:

• Earnings Per Share (EPS) grew by 42.36% over the past year, with a 3-year average growth rate of 36.96%.
• Revenue increased by 21.23% in the last year, supported by a strong 3-year average growth rate of 26.41%.
• Analysts expect continued growth, with projected annual EPS expansion of 16.55% and revenue growth of 12.71% in the coming years.

Valuation

Despite its strong growth, ONTO remains reasonably priced, earning a ChartMill Valuation Rating of 6/10:

• The Price/Earnings (P/E) ratio of 17.08 is below the industry average of 39.49, making it cheaper than 82.73% of its peers.
• Its Forward P/E of 16.10 is also favorable compared to the S&P 500 average of 21.29.
• The Enterprise Value to EBITDA and Price/Free Cash Flow ratios suggest ONTO is undervalued relative to most competitors.

Profitability & Financial Health

ONTO’s fundamentals are further strengthened by high marks in profitability and financial stability:

• Profitability Rating: 8/10 – The company boasts a 21.36% profit margin, outperforming 83.64% of industry peers. Operating margins (22.14%) and return metrics (ROIC of 10.70%) are also strong.
• Health Rating: 9/10 – ONTO has no debt, a robust Current Ratio of 8.42, and an Altman-Z score of 16.58, indicating minimal bankruptcy risk.

For a deeper dive into ONTO’s fundamentals, review the full analysis report here.

Our Affordable Growth screener lists more stocks with similar characteristics and is updated daily.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.