Investors should take note of NASDAQ:AEHR, a growth stock that remains attractively priced.

Last update: Dec 4, 2023

Discover AEHR TEST SYSTEMS (NASDAQ:AEHR), an undervalued growth gem identified by our stock screener. NASDAQ:AEHR is shining in terms of growth metrics, and it's also displaying strong financial health and profitability. What's more, it retains an appealing valuation. We'll break it down further.

Looking at the Growth

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:AEHR has achieved a 9 out of 10:

AEHR shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 55.32%, which is quite impressive.
The Earnings Per Share has been growing by 53.68% on average over the past years. This is a very strong growth
The Revenue has grown by 34.15% in the past year. This is a very strong growth!
AEHR shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 17.05% yearly.
AEHR is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 50.12% yearly.
The Revenue is expected to grow by 51.97% on average over the next years. This is a very strong growth
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

A Closer Look at Valuation for NASDAQ:AEHR

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NASDAQ:AEHR has received a 5 out of 10:

Based on the Price/Forward Earnings ratio, AEHR is valued a bit cheaper than 71.15% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of AEHR to the average of the S&P500 Index (20.08), we can say AEHR is valued slightly cheaper.
AEHR's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of AEHR may justify a higher PE ratio.
A more expensive valuation may be justified as AEHR's earnings are expected to grow with 50.12% in the coming years.

Looking at the Health

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:AEHR has received a 8 out of 10:

AEHR has an Altman-Z score of 17.93. This indicates that AEHR is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 17.93, AEHR belongs to the top of the industry, outperforming 90.38% of the companies in the same industry.
AEHR has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
AEHR has a Current Ratio of 4.98. This indicates that AEHR is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 4.98, AEHR is in the better half of the industry, outperforming 74.04% of the companies in the same industry.
AEHR has a Quick Ratio of 3.35. This indicates that AEHR is financially healthy and has no problem in meeting its short term obligations.
The Quick ratio of AEHR (3.35) is better than 66.35% of its industry peers.

How do we evaluate the Profitability for NASDAQ:AEHR?

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NASDAQ:AEHR scores a 7 out of 10:

AEHR has a better Return On Assets (17.67%) than 84.62% of its industry peers.
The Return On Equity of AEHR (23.27%) is better than 80.77% of its industry peers.
AEHR's Return On Invested Capital of 15.62% is fine compared to the rest of the industry. AEHR outperforms 78.85% of its industry peers.
AEHR's Profit Margin of 24.88% is amongst the best of the industry. AEHR outperforms 81.73% of its industry peers.
In the last couple of years the Profit Margin of AEHR has grown nicely.
The Operating Margin of AEHR (22.74%) is better than 75.96% of its industry peers.
AEHR's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 51.05%, AEHR is in the better half of the industry, outperforming 65.38% of the companies in the same industry.
AEHR's Gross Margin has improved in the last couple of years.

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

Check the latest full fundamental report of AEHR for a complete fundamental analysis.

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.