Is NASDAQ:SHLS on the Verge of a Major Breakout as a Strong Growth Stock?

Last update: Sep 26, 2023

For growth-minded investors, high revenue and EPS growth are key criteria. Today, we'll examine whether SHOALS TECHNOLOGIES GROUP -A (NASDAQ:SHLS) fits the bill for growth investing, particularly as it forms a base and hints at a potential breakout. Remember, due diligence is essential, but SHOALS TECHNOLOGIES GROUP -A has caught our attention on our screen for growth with base formation. It may warrant additional investigation.

Understanding NASDAQ:SHLS's Growth

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NASDAQ:SHLS scores a 9 out of 10:

SHLS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 130.43%, which is quite impressive.
SHLS shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 71.85% yearly.
Looking at the last year, SHLS shows a very strong growth in Revenue. The Revenue has grown by 64.33%.
The Revenue has been growing by 31.28% on average over the past years. This is a very strong growth!
SHLS is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 37.39% yearly.
Based on estimates for the next years, SHLS will show a very strong growth in Revenue. The Revenue will grow by 36.26% on average per year.

Health Assessment of NASDAQ:SHLS

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:SHLS was assigned a score of 7 for health:

SHLS has an Altman-Z score of 8.33. This indicates that SHLS is financially healthy and has little risk of bankruptcy at the moment.
SHLS has a better Altman-Z score (8.33) than 91.86% of its industry peers.
SHLS has a debt to FCF ratio of 2.68. This is a good value and a sign of high solvency as SHLS would need 2.68 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 2.68, SHLS belongs to the best of the industry, outperforming 87.21% of the companies in the same industry.
A Debt/Equity ratio of 0.39 indicates that SHLS is not too dependend on debt financing.
SHLS has a Current Ratio of 2.59. This indicates that SHLS is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 2.59, SHLS is in the better half of the industry, outperforming 66.28% of the companies in the same industry.
With a decent Quick ratio value of 1.71, SHLS is doing good in the industry, outperforming 66.28% of the companies in the same industry.

Looking at the Profitability

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:SHLS has earned a 8 out of 10:

SHLS's Return On Assets of 18.78% is amongst the best of the industry. SHLS outperforms 95.35% of its industry peers.
SHLS has a Return On Equity of 29.05%. This is amongst the best in the industry. SHLS outperforms 93.02% of its industry peers.
With an excellent Return On Invested Capital value of 10.77%, SHLS belongs to the best of the industry, outperforming 86.05% of the companies in the same industry.
SHLS's Profit Margin of 37.53% is amongst the best of the industry. SHLS outperforms 98.84% of its industry peers.
In the last couple of years the Profit Margin of SHLS has grown nicely.
With an excellent Operating Margin value of 24.67%, SHLS belongs to the best of the industry, outperforming 95.35% of the companies in the same industry.
SHLS's Operating Margin has improved in the last couple of years.
SHLS has a better Gross Margin (42.76%) than 93.02% of its industry peers.
In the last couple of years the Gross Margin of SHLS has grown nicely.

How does the Setup look for NASDAQ:SHLS

Besides the Technical Rating, ChartMill also assign a Setup Rating to every stock. This setup score also ranges from 0 to 10 and determines to which extend the stock is consolidating. This is achieved by evaluating multiple short term technical indicators. NASDAQ:SHLS currently has a 7 as setup rating:

Although the technical rating is bad, SHLS does present a nice setup opportunity. Prices have been consolidating lately and the volatility has been reduced.

More Strong Growth stocks can be found in our Strong Growth screener.

Our latest full fundamental report of SHLS contains the most current fundamental analsysis.

Our latest full technical report of SHLS contains the most current technical analsysis.

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.