RAMBUS INC (NASDAQ:RMBS) - A Strong Contender in Affordable Growth Stocks

RAMBUS INC (NASDAQ:RMBS) was recently flagged by our stock screener as an affordable growth candidate. The company combines solid growth prospects with reasonable valuation metrics, while maintaining strong financial health and profitability. Below, we break down why RMBS stands out in these areas.

Growth Prospects

• Revenue Growth: Over the past year, revenue increased by 30.14%, well above industry averages. The five-year average annual growth sits at 19.59%, indicating sustained expansion.
• Earnings Growth: EPS grew by 25.73% in the last year, with a five-year average annual growth of 14.14%. Analysts project future EPS growth at 21.01% annually.
• Accelerating Momentum: The company’s EPS growth rate is expected to improve further, while revenue growth, though slowing slightly, remains healthy at 9.86% in forward estimates.

Valuation Considerations

• P/E Ratio: At 24.87, RMBS trades slightly below the S&P 500 average (26.25) and is cheaper than 65% of its semiconductor industry peers.
• Forward P/E: The forward P/E of 18.31 is below the sector average (26.40), suggesting room for upside.
• PEG Ratio: A low PEG ratio indicates the stock is reasonably priced relative to its expected earnings growth.

Financial Health & Profitability

• Strong Balance Sheet: RMBS carries no debt, with a current ratio of 10.15 and quick ratio of 9.52, reflecting ample liquidity.
• High Margins: Gross margin stands at 80.30%, outperforming 97% of industry peers, while operating margin (35.99%) and profit margin (34.23%) are equally impressive.
• ROIC & ROE: Return on invested capital (14.97%) and return on equity (17.87%) are well above industry averages.

For a deeper look, review the full fundamental analysis of RMBS.

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 available data at the time of writing. Always conduct your own research before making investment decisions.