Investors looking for growth chances at fair prices often use screening methods that find companies with good expansion possibilities that are not yet too expensive. The "Affordable Growth" method focuses on stocks showing solid growth paths while keeping good financial condition and earnings, all trading at prices that do not completely account for their future possibilities. This strategy tries to find companies set for continued growth without paying high multiples that allow for little mistake.
Pinterest Inc - Class A (NYSE:PINS) stands as one such candidate found by this screening method. The visual discovery service, which lets users find ideas across different lifestyle areas, has created a large worldwide user group of about 553 million monthly active users who interact with material from shops, brands, creators, and publishers.
Growth Path
Pinterest shows the kind of expansion features that growth investors usually look for. The company's sales growth has been especially notable, with a 17% rise over the last year and an average yearly growth rate of 26.12% over recent years. This solid top-line growth is supported by good earnings performance, with Earnings Per Share rising nearly 17% in the last year and showing an 8.67% average yearly gain over several years. Looking ahead, experts predict continued strength with EPS expected to grow at 15.41% each year and sales forecast to rise by 13.30% per year. While future sales growth is expected to slow from past levels, the quickening in EPS growth points to better operational effectiveness along with continued expansion.
Price Assessment
The price situation shows an interesting picture for Pinterest. With a Price/Earnings ratio of 22.01, the stock trades below the S&P 500 average of 27.67 and many similar companies, with 62.86% of interactive media companies having higher multiples. The forward P/E ratio of 15.34 seems more appealing, sitting under the market average and indicating possible low pricing compared to growth expectations. Especially noteworthy is the Price/Earnings to Growth (PEG) ratio, which suggests the stock may be fairly priced when considering its expected earnings growth. This mix of growth possibility and fair price multiples fits well with the affordable growth strategy's main idea of finding companies whose growth expectations are not fully shown in their current market price.
Financial Condition and Earnings
Beyond growth and price, Pinterest displays good basic features that support its investment case. The company's financial condition score of 9 out of 10 shows outstanding cash availability, with current and quick ratios both at 8.76, doing much better than 94% of similar companies. The lack of debt gives more financial freedom and lowers risk. Earnings measures are equally notable, including a significant 49.30% profit margin that puts Pinterest in the top group of its industry. The company produces good returns on assets (35.64%) and equity (40.02%), although the return on invested capital of 3.41% shows an area for possible betterment. These good condition and earnings measures give important support for the growth story, showing the company has the financial base to maintain its expansion without high risk.
Investment Points
The complete fundamental analysis report shows a company with several appealing qualities for growth-focused investors. Pinterest mixes quickening earnings growth with fair price multiples, especially when considering future expansion. The outstanding financial condition, shown by strong cash availability and no debt, lowers possible loss while giving enough resources to pay for growth projects. High profit margins suggest the company has competitive benefits and price strength within its market area.
For investors wanting to look into similar chances, other affordable growth candidates can be found using our specialized stock screener that finds companies with good growth features, fair prices, and solid financial basics.
Disclaimer: This article presents factual information for educational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance does not guarantee future results, and all investments carry risk including potential loss of principal.
