Pinterest Inc (NYSE:PINS) Stands Out as an Affordable Growth Stock

Investors looking for expansion chances at fair prices often consider methods that find firms with good development potential that are not yet too expensive. The "Affordable Growth" method focuses on stocks showing good growth features while keeping stable financial condition and earnings, all at prices that do not demand high costs. This system helps investors steer clear of the usual mistake of pursuing costly growth stocks that might already reflect their future gains in their current price.

Pinterest Inc - Class A (NYSE:PINS) offers a noteworthy example in affordable growth investing, achieving a good 7 out of 10 in ChartMill's fundamental review. The visual discovery platform, which aids about 553 million monthly active users in finding ideas and purchasing from brands, displays the balanced traits that growth-focused investors usually want.

Growth Path

The firm's growth profile is notable with a high 8 out of 10 score, indicating good past results and encouraging future outlook. Recent financial data reveal significant progress in important measures:

• Sales increase of 17% over the last year, with a higher 26.12% average yearly growth rate over several years
• Earnings per share rising by 16.92% each year, showing the firm's capacity to turn sales growth into net income
• Projected future EPS growth of 15.41% and sales growth of 13.30% per year, pointing to continued development potential

This steady growth in both sales and earnings is especially relevant for affordable growth methods, as it implies the firm is effectively growing its activities while keeping operational effectiveness.

Price Evaluation

Pinterest receives a price rating of 6 out of 10, placing it as fairly valued compared to its growth outlook. Several numbers back this view:

• Trading at a P/E ratio of 21.92, which is less expensive than 62% of similar firms and under the S&P 500 average of 27.67
• Forward P/E ratio of 15.28 indicates better value as earnings growth appears
• Price/Free Cash Flow ratio stands lower than 68% of industry rivals
• Low PEG ratio shows the present price sufficiently accounts for anticipated growth

For affordable growth investors, this price picture is key—it means the market has not completely accounted for the firm's growth possibilities, allowing space for gain as the growth narrative develops.

Financial Condition and Earnings

Besides growth and price, Pinterest shows good basic business foundations. The firm gets a high 9 out of 10 financial condition score, emphasized by:

• No existing debt, offering financial freedom and lowering risk
• Current ratio of 8.76 and quick ratio of 8.76, showing sufficient cash for near-term needs
• Altman-Z score of 24.48, meaning very little chance of failure

Earnings measures are similarly good with a 7 out of 10 score:

• High profit margin of 49.30%, doing better than 97% of similar firms
• Return on assets of 35.64% and return on equity of 40.02%, both placed in the top group of the industry
• Gross margin of 79.86% shows good pricing ability and operational effectiveness

These condition and earnings numbers provide the base that makes growth lasting. Firms with poor finances or low earnings often find it hard to maintain growth, making these parts essential for affordable growth methods.

Investment Points

While Pinterest displays good fundamental traits, investors should be aware that the firm does not offer dividends, which could be important for income-seeking investors. Also, the operating margin of 5.53%, though positive, has displayed some recent drop and sits in the middle group of industry peers. However, the firm's return on invested capital, though positive at 3.41%, is below its capital cost, indicating space for better capital use effectiveness.

The mix of good growth, fair price, high financial condition, and stable earnings makes Pinterest a notable option for investors using affordable growth methods. The firm's place in the competitive social media field, with its special visual discovery angle, gives a distinct platform that keeps drawing users and advertisers.

For investors wanting to find more firms that match the affordable growth model, extra screening outcomes can be found through ChartMill's Affordable Growth Stock Screener. This tool allows more search of stocks fitting similar standards across various industries and company sizes.

This article gives fundamental review for information only and is not investment guidance, suggestion, or backing of any security. Investors should do their own study and talk to financial experts before making investment choices. Past results do not ensure future outcomes, and all investments hold risk including possible loss of original funds.