SPS Commerce Inc (NASDAQ:SPSC) Presents an Appealing Profile for Affordable Growth Investors

Investors looking for growth options at fair prices often use screening methods that find companies with good expansion prospects that are not too costly. The "Affordable Growth" method focuses on stocks showing good growth features while keeping reasonable prices, sufficient profitability, and sound financial condition. This system helps investors prevent paying too much for growth while making sure companies have the basic strength to continue their expansion.

SPS Commerce Inc (NASDAQ:SPSC) is a good candidate in this investment structure. The cloud-based supply chain management provider has shown steady results across several basic areas while keeping a price that does not seem too high compared to its growth path.

Growth Path

SPS Commerce shows the kind of continued expansion that growth investors usually want. The company's past results and future estimates both point to better-than-average growth rates that build the base of its investment story.

• Earnings Per Share has grown by 20.72% over the past year
• Average EPS growth of 22.07% each year over recent years
• Revenue increased by 19.28% in the last year
• Average revenue growth of 17.97% each year in the past
• Expected future EPS growth of 15.51% per year
• Projected revenue growth of 11.71% each year

While future growth estimates show some slowing compared to past rates, they stay well above market averages, giving assurance about the company's continued expansion potential.

Price Evaluation

The company's price measures show a balanced view that fits with the affordable growth idea. While not very cheap, SPSC trades at levels that seem fair considering its growth story and industry place.

• P/E ratio of 20.17 looks good next to industry average of 49.01
• More costly than only 24.65% of software industry companies
• Forward P/E of 17.49 is lower than S&P 500 average of 22.27
• Enterprise Value/EBITDA ratio lower than 81.34% of industry rivals
• Price/Free Cash Flow ratio better than 77.82% of similar companies
• PEG ratio indicates payment for growth seems acceptable

These price features suggest investors are not paying top prices for better-than-average growth, creating the kind of risk-reward balance that affordable growth methods aim to find.

Financial Condition and Profitability

Beyond growth and price, SPSC shows the basic stability that backs lasting expansion. The company maintains a balance sheet with no debt and good cash measures, while profitability numbers point to efficient operations.

The financial condition score of 7/10 shows several positive traits, including no debt, a strong Altman-Z score of 10.82 pointing to bankruptcy safety, and acceptable current and quick ratios around 1.97. These factors lower financial risk while giving room for continued spending on growth projects.

Profitability numbers show space for getting better but stay competitive within the software sector. The company reaches an 11.66% profit margin and 14.85% operating margin, doing better than large parts of industry peers. Return measures including ROA of 7.34% and ROE of 8.87% place the company in the top half of its competitive field.

Investment Points

For investors using affordable growth methods, SPSC presents a good profile that balances several investment points. The company's strong past growth gives proof of performance ability, while fair prices prevent overpaying for future potential. The balance sheet with no debt and acceptable profitability create a base for continued expansion without too much financial risk.

The detailed fundamental analysis report gives more information on these measures and their meaning for investment choices.

Investors looking for similar options can review more candidates using our Affordable Growth screening tool, which finds companies meeting these specific needs across different market areas.

Disclaimer: This analysis is an objective review based on public fundamental data and should not be taken as investment advice. Investors should do their own research and think about their personal money situation before making investment choices.