In our last Number Cruncher we discussed how A10 Networks (ATEN), PayPal (PYPL) & Power Integrations (POWI) were stocks with improving fundamentals and full of potential.
Here is the screener we used to find these stocks and that you can add to your personalized screeners.
Please note that this article was not written at the same time as the Number Cruncher. The numbers in the graphs may vary from the article as our score system is dynamic particularly during earnings season.
Let’s start with ATEN
The company has a score of 60 in our system with a 90 days increase of 16. The SP score is derived from the performance (59.5) and risk (36.4) score. The company has a small growth bias with a score of 70, but as we see, the company needs to prove itself. The short-term earnings per share growth shows that the company passed from being little to not profitable to a more comfortable position.
For a long time, our system considered the company to be overvalued given its low profitability and growth opportunies. We can see the large increase in the intrinsic value in the last quarter. The magnitude of the increase is intriguing and would require more research to better understand.
Let’s continue with PYPL
The company has a score of 64 in our system with a 90 days increase of 1. The SP score is derived from the performance (72.8) and risk (38.7) score. The company has a quality and growth bias with a score of 85 and 80 respectively. The company has achieved healthy five-year sales and EPS growth of 19.5% and 34.9% respectively.
One issue with Paypal is its absolute valuation specifically since the beginning of the pandemic. The future growth value (FGV) represents the growth that the market expects from the company. We see that the FGV attributed by the market grew quickly during this period and now it is falling back. Is it a healthy pullback from high valuations or an overreaction? It is hard to tell because the current operating value, the tangible value of the company, also grew a lot during the period.
The company has a score of 70 in our system with a 90 days increase of 4. The SP score is derived from the performance (83.9) and risk (35.2) score. The company has a quality, yield and growth bias with a score of 79, 78 and 76 respectively. Annual sales jumped vigorously in the last year and the company maintained a solid 14.5% annualized sales growth in the last 5 years. We see that earnings fell -26.9% since last year and we should investiguate this further.
As we see, the decrease in the EPS over the one-year horizon seems to be caused by an extraordinary event that boosted the previous EPS. When we look at the last 3 EPS, we observe a healthy trend. Thankfully, nothing seems scary here.
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