Power Solutions International (NASDAQ:PSIX) Excels in Key Navellier Growth Metrics

In growth investing, few strategies have received as much focus as the one presented by Louis Navellier in his 2007 work, "The Little Book That Makes You Rich." The method centers on finding companies showing solid, quickening growth using eight specific fundamental measures. These consist of positive earnings revisions and surprises, rising sales growth, widening operating margins, strong cash flow, earnings growth, positive earnings momentum, and high return on equity. The system is made to find stocks with the possibility for major gains by using quantitative screens that show basic business health and market outlook.

Power Solutions International (NASDAQ:PSIX) appears as a notable candidate when measured against Navellier’s structure. The company, which designs and makes power systems and electrical generation equipment, shows several traits that match closely with the growth screens given in the book.

• Positive Earnings Revisions: Analyst outlook has gotten better significantly, with EPS estimates for the next quarter changed upward by 24.05% over the last three months. This points to rising belief in short-term results, a main sign in Navellier’s plan as it frequently comes before real earnings beats.

• Positive Earnings Surprises: PSIX has exceeded analyst predictions in each of the previous four quarters, with an average beat of 69.52%. Steady positive surprises frequently cause upward changes in future estimates, supporting the stock’s growth story and investor trust.

• Increasing Sales Growth: The company has reached an impressive 73.54% quarter-over-quarter sales growth and 40.10% year-over-year revenue growth. Quickening top-line growth is important for growth investors, as it shows market need and scalability.

• Expanding Operating Margins: Operating margins have gotten better by 21.35% over the past year, showing improved profitability and operational effectiveness. This widening is especially useful when sales are rising quickly, as it indicates the company can turn revenue gains into higher earnings without equal cost rises.

• Strong Cash Flow: Free cash flow growth of 35.81% year-over-year gives financial adaptability, allowing reinvestment in the business, debt paydown, or other value-building actions. Good cash flow is a sign of lasting growth companies.

• Earnings Growth: PSIX displays explosive bottom-line growth, with EPS growing 211.11% quarter-over-quarter and 175.57% year-over-year. Such powerful profit growth is a main part of Navellier’s system, showing a company’s capacity to benefit from revenue increases.

• Positive Earnings Momentum: The quickening in EPS growth, from 157.14% in the earlier comparative quarter to 211.11% lately, shows building momentum. This measure aids in finding companies that are not only growing, but growing at a rising pace.

• High Return on Equity: With an ROE of 81.77%, the company effectively creates profits from shareholder equity. High and getting better ROE is frequently linked to competitive edges and able management.

A look at the detailed fundamental analysis gives more support to the investment thesis. PSIX gets a good fundamental rating of 6/10, with top profitability measures, including industry-leading return on assets, equity, and invested capital, and improving margins. The company’s valuation seems fair compared to peers, and while there are some mixed signs in liquidity ratios, solid solvency and cash flow measures lessen these worries. Growth forecasts stay solid, with expected EPS and revenue growth close to 20% each year.

For investors wanting to look into other companies that meet these strict growth measures, the pre-configured screen built on Navellier’s method gives a changing list of possible candidates. Regular checking and more adjustment of the screen can aid in matching choices with current market situations.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider their financial situation and risk tolerance before making any investment decisions.