RAMBUS INC (NASDAQ:RMBS) – A Strong Growth Stock with Solid Fundamentals

Rambus Inc (NASDAQ:RMBS) was identified as an affordable growth stock by our screener, which looks for companies with strong growth, reasonable valuations, and solid financial health. RMBS stands out with excellent profitability, a strong balance sheet, and attractive growth prospects—all while trading at a valuation that doesn’t appear stretched. Below, we break down why this semiconductor and IP solutions provider fits the criteria.

Growth Prospects

• Revenue & Earnings Growth: RMBS has demonstrated strong performance, with revenue growing 30.14% over the past year and earnings per share (EPS) increasing by 25.73%. Over the last several years, revenue has grown at an annualized rate of 19.59%, while EPS has expanded by 14.14%.
• Future Expectations: Analysts project continued growth, with EPS expected to rise by 21.01% annually in the coming years. Revenue is also forecast to increase by 9.86% per year, indicating sustained momentum.

Valuation

• P/E Ratio: At 27.62, RMBS trades slightly above the S&P 500 average (26.34) but remains cheaper than 65% of its semiconductor industry peers.
• Forward P/E: The forward P/E of 20.33 is in line with the broader market and below the industry average, suggesting the stock is reasonably priced relative to future earnings.
• PEG Ratio: A low PEG ratio indicates that RMBS’s valuation is justified by its expected earnings growth, making it an attractive option for growth investors.

Financial Health & Profitability

• Strong Balance Sheet: RMBS has no debt, a current ratio of 10.15, and a quick ratio of 9.52—signaling exceptional liquidity and financial stability.
• High Profit Margins: The company boasts a gross margin of 80.30%, an operating margin of 35.99%, and a net margin of 34.23%, all ranking near the top of its industry.
• ROIC & ROE: Return on invested capital (14.97%) and return on equity (17.87%) are well above industry averages, reflecting efficient capital allocation.

For a deeper look at RMBS’s fundamentals, review the full analysis here.

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, and investors should conduct their own research before making decisions.