RAMBUS INC (NASDAQ:RMBS) – A Strong Growth Stock with Reasonable Valuation

RAMBUS INC (NASDAQ:RMBS) stands out as an affordable growth stock based on our screening criteria. The company demonstrates strong growth potential, solid profitability, and excellent financial health, all while trading at a reasonable valuation. Below, we examine why RMBS fits the profile of a growth-at-a-reasonable-price opportunity.

Growth Prospects

• Earnings & Revenue Growth: RMBS has delivered impressive growth, with earnings per share (EPS) increasing by 25.73% over the past year and revenue growing by 30.14%. Over the last several years, EPS has grown at an annualized rate of 14.14%, while revenue has expanded by 19.59% per year.
• Future Expectations: Analysts project continued strength, with EPS expected to grow by 21.01% annually and revenue by 9.86% over the coming years.

Valuation Considerations

• P/E Ratio: At 31.07, RMBS trades at a premium compared to the S&P 500 average (27.29), but it remains cheaper than 64.55% of its semiconductor industry peers.
• Forward P/E: The forward P/E of 23.14 suggests a more reasonable valuation, below the S&P 500 average (36.06) and the industry norm.
• PEG Ratio: A low PEG ratio indicates that RMBS’s valuation is justified by its expected earnings growth.

Financial Health & Profitability

• Strong Balance Sheet: RMBS has no debt, a current ratio of 10.15, and a quick ratio of 9.52, reflecting excellent liquidity and solvency.
• 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%, ranking near the top of its industry.
• Return Metrics: ROA (15.02%), ROE (17.87%), and ROIC (14.97%) all outperform most peers, reinforcing its profitability.

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

Our Affordable Growth screener lists more stocks with strong growth and reasonable valuations, updated daily.

Disclaimer

This is not investing advice. The observations here are based on current data, but investors should conduct their own research before making decisions.