ONTO INNOVATION INC (NYSE:ONTO) – A Strong Growth Stock with Attractive Valuation

ONTO INNOVATION INC (NYSE:ONTO) was identified as an affordable growth stock by our screener, which looks for companies with solid growth, reasonable valuations, and healthy financials. The company operates in the semiconductor equipment sector, providing metrology and inspection systems critical for advanced chip manufacturing.

Growth Prospects

• Strong Historical Growth: ONTO has delivered impressive revenue growth, with a 21.2% increase in the past year and a 26.4% average annual growth rate over recent years. Earnings per share (EPS) grew by 42.4% last year, with a 37% average annual growth rate.
• Positive Future Estimates: Analysts expect continued growth, with projected annual EPS growth of 16.6% and revenue growth of 12.7% in the coming years.

Valuation

• Reasonable P/E Ratio: ONTO trades at a P/E ratio of 17.4, below both the industry average (43.8) and the S&P 500 (27.5).
• Attractive Forward Multiples: Its forward P/E of 16.2 is also favorable compared to the broader market and sector peers.
• Strong Free Cash Flow: The company’s price-to-free cash flow ratio is better than 84.6% of its industry peers.

Financial Health & Profitability

• Excellent Balance Sheet: ONTO has no debt, a current ratio of 8.4, and a quick ratio of 6.7, indicating strong liquidity.
• High Profit Margins: The company boasts a 21.4% net profit margin and a 54.6% gross margin, outperforming most competitors.
• Strong Returns: ONTO’s return on invested capital (10.7%) and return on equity (11.4%) are well above industry averages.

For a deeper look, review the full fundamental analysis report for ONTO.

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

Disclaimer

This is not investing advice. The observations here are based on data available at the time of writing. Always conduct your own research before making investment decisions.