Supernus Pharmaceuticals Inc (NASDAQ:SUPN) Fits the Affordable Growth Strategy with Strong Fundamentals and Attractive Valuation

Investors looking for growth opportunities at fair prices often consider the "Affordable Growth" strategy, which focuses on companies with strong growth potential and reasonable valuations. This method combines solid fundamentals with good pricing, selecting stocks with high growth scores (above 7), strong profitability, stable finances, and fair valuations (above 5). The aim is to find companies capable of steady earnings growth while reducing the risk of overpaying.

Supernus Pharmaceuticals Inc (NASDAQ:SUPN) matches this approach, as shown in its fundamental analysis. The company, known for its work in central nervous system (CNS) treatments, performs well in key areas that fit the Affordable Growth standards.

Growth: A Key Advantage

Supernus shows a Growth score of 7, highlighting strong earnings and revenue growth. Key points include:

• Earnings Per Share (EPS) rose 86.29% year-over-year, a notable achievement in the pharmaceuticals industry.
• Revenue growth has averaged 11% over the past five years, with forecasts suggesting 10.7% annual growth in the future.
• Analysts predict EPS growth of 22.07% per year, indicating solid progress ahead.

These figures highlight the company’s success in growing its CNS drug portfolio, including ADHD treatment Qelbree and Parkinson’s therapy GOCOVRI. For Affordable Growth investors, this steady growth is important, as it lessens dependence on high valuations.

Valuation: Attractive Pricing

Despite its growth, Supernus remains fairly priced, with a Valuation score of 6:

• A P/E ratio of 13.1 is much lower than the S&P 500 average (26.8) and cheaper than 88.6% of pharmaceutical competitors.
• Its forward P/E of 17.7 is also lower than the broader market (35.3).
• The Enterprise Value/EBITDA and Price/Free Cash Flow ratios rank in the top 12% for affordability in the industry.

This mix suggests the market has not fully recognized Supernus’s growth potential, a core idea of the Affordable Growth strategy. Investors avoid paying too much while positioning for future gains.

Profitability and Stability: A Strong Base

The strategy values financial strength, and Supernus meets this standard:

• Profitability (8/10): High gross margins (89.9%, better than 94% of peers) and solid operating margins (11%) show effective pricing and cost control.
• Financial Health (7/10): No debt and strong liquidity (Current Ratio of 2.58) allow for flexibility in R&D and acquisitions.

These factors reduce risk, ensuring growth is not hindered by financial strain—a must for Affordable Growth picks.

Why These Standards Matter

The Affordable Growth screen favors companies like Supernus because:

1. Growth drives returns, but only if valuations leave room for improvement.
2. Profitability and stability ensure long-term success, avoiding reckless growth strategies.

For a closer look at Supernus’s fundamentals, see the full analysis here.

Finding More Affordable Growth Options

Supernus is one of several stocks that meet these criteria. Investors can use the same screen here to discover similar opportunities.

Disclaimer: This analysis is not investment advice. Conduct your own research or consult a financial advisor before making decisions.