Don't overlook NASDAQ:AEHR—a stock with solid growth prospects and a reasonable valuation.

Last update: Jan 3, 2024

Consider AEHR TEST SYSTEMS (NASDAQ:AEHR) as an affordable growth stock, identified by our stock screening tool. NASDAQ:AEHR is showcasing impressive growth figures and is well-positioned in terms of profitability, solvency, and liquidity. Moreover, it seems to be priced reasonably. Let's dive deeper into the analysis.

Understanding NASDAQ:AEHR's Growth Score

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NASDAQ:AEHR has earned a 9 for growth:

The Earnings Per Share has grown by an impressive 55.32% over the past year.
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!
Measured over the past years, AEHR shows a quite strong growth in Revenue. The Revenue has been growing by 17.05% on average per year.
Based on estimates for the next years, AEHR will show a very strong growth in Earnings Per Share. The EPS will grow by 50.12% on average per year.
The Revenue is expected to grow by 51.97% on average over the next years. This is a very strong growth
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Deciphering NASDAQ:AEHR's Valuation Rating

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NASDAQ:AEHR scores a 5 out of 10:

Based on the Price/Forward Earnings ratio, AEHR is valued cheaper than 83.81% of the companies in the same industry.
AEHR's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 20.90.
AEHR's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
AEHR has a very decent profitability rating, which may justify a higher PE ratio.
AEHR's earnings are expected to grow with 50.12% in the coming years. This may justify a more expensive valuation.

Health Assessment of NASDAQ:AEHR

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:AEHR was assigned a score of 8 for health:

AEHR has an Altman-Z score of 18.53. This indicates that AEHR is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 18.53, AEHR belongs to the best of the industry, outperforming 87.62% 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 74.29% 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.
AEHR has a better Quick ratio (3.35) than 66.67% of its industry peers.

Understanding NASDAQ:AEHR's Profitability

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 84.76% of its industry peers.
With an excellent Return On Equity value of 23.27%, AEHR belongs to the best of the industry, outperforming 80.95% of the companies in the same industry.
AEHR has a Return On Invested Capital of 15.62%. This is in the better half of the industry: AEHR outperforms 79.05% of its industry peers.
Looking at the Profit Margin, with a value of 24.88%, AEHR belongs to the top of the industry, outperforming 81.90% of the companies in the same industry.
AEHR's Profit Margin has improved in the last couple of years.
AEHR has a Operating Margin of 22.74%. This is in the better half of the industry: AEHR outperforms 76.19% of its industry peers.
In the last couple of years the Operating Margin of AEHR has grown nicely.
Looking at the Gross Margin, with a value of 51.05%, AEHR is in the better half of the industry, outperforming 65.71% of the companies in the same industry.
In the last couple of years the Gross Margin of AEHR has grown nicely.

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 AEHR

Keep in mind

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