While growth is established for VERACYTE INC (NASDAQ:VCYT), the stock's valuation remains reasonable.

VERACYTE INC (NASDAQ:VCYT) was identified as an affordable growth stock by our stock screener. VCYT is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

Deciphering VCYT's Growth Rating

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of VCYT, the assigned 7 reflects its growth potential:

• VCYT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 129.13%, which is quite impressive.
• VCYT shows a strong growth in Revenue. In the last year, the Revenue has grown by 23.46%.
• VCYT shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 29.93% yearly.
• VCYT is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 48.79% yearly.
• The Revenue is expected to grow by 8.69% on average over the next years. This is quite good.

How do we evaluate the Valuation for VCYT?

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. VCYT was assigned a score of 6 for valuation:

• Based on the Price/Earnings ratio, VCYT is valued cheaper than 92.28% of the companies in the same industry.
• VCYT's Price/Forward Earnings ratio is rather cheap when compared to the industry. VCYT is cheaper than 91.40% of the companies in the same industry.
• Based on the Enterprise Value to EBITDA ratio, VCYT is valued cheaply inside the industry as 93.33% of the companies are valued more expensively.
• Based on the Price/Free Cash Flow ratio, VCYT is valued cheaply inside the industry as 94.21% of the companies are valued more expensively.
• VCYT has a very decent profitability rating, which may justify a higher PE ratio.
• A more expensive valuation may be justified as VCYT's earnings are expected to grow with 68.22% in the coming years.

Health Analysis for VCYT

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. VCYT has achieved a 7 out of 10:

• An Altman-Z score of 12.19 indicates that VCYT is not in any danger for bankruptcy at the moment.
• VCYT has a Altman-Z score of 12.19. This is amongst the best in the industry. VCYT outperforms 89.65% of its industry peers.
• VCYT has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
• VCYT has a Current Ratio of 4.73. This indicates that VCYT is financially healthy and has no problem in meeting its short term obligations.
• A Quick Ratio of 4.46 indicates that VCYT has no problem at all paying its short term obligations.

Analyzing Profitability Metrics

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For VCYT, the assigned 6 is a significant indicator of profitability:

• Looking at the Return On Assets, with a value of 1.86%, VCYT belongs to the top of the industry, outperforming 92.46% of the companies in the same industry.
• With an excellent Return On Equity value of 2.05%, VCYT belongs to the best of the industry, outperforming 92.81% of the companies in the same industry.
• VCYT's Return On Invested Capital of 1.26% is amongst the best of the industry. VCYT outperforms 92.98% of its industry peers.
• The Profit Margin of VCYT (5.41%) is better than 93.33% of its industry peers.
• VCYT has a better Operating Margin (4.38%) than 93.51% of its industry peers.
• With an excellent Gross Margin value of 67.54%, VCYT belongs to the best of the industry, outperforming 80.70% of the companies in the same industry.

Every day, new Affordable Growth stocks can be found on ChartMill in our Affordable Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of VCYT

Disclaimer

This article should in no way be interpreted as advice. 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.