NASDAQ:EXTR, a growth stock which is not overvalued.

EXTREME NETWORKS INC (NASDAQ:EXTR) was identified as an affordable growth stock by our stock screener. NASDAQ:EXTR 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.

A Closer Look at Growth for NASDAQ:EXTR

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:EXTR has achieved a 7 out of 10:

• The Earnings Per Share has grown by an impressive 39.74% over the past year.
• Measured over the past years, EXTR shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.55% on average per year.
• The Revenue has grown by 17.99% in the past year. This is quite good.
• Based on estimates for the next years, EXTR will show a very strong growth in Earnings Per Share. The EPS will grow by 31.86% on average per year.
• EXTR is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 13.79% yearly.
• The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
• 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.

ChartMill's Evaluation of Valuation

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NASDAQ:EXTR, the assigned 6 reflects its valuation:

• When comparing the Price/Forward Earnings ratio of EXTR to the average of the S&P500 Index (18.74), we can say EXTR is valued slightly cheaper.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of EXTR indicates a rather cheap valuation: EXTR is cheaper than 90.00% of the companies listed in the same industry.
• The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• The decent profitability rating of EXTR may justify a higher PE ratio.
• EXTR's earnings are expected to grow with 31.86% in the coming years. This may justify a more expensive valuation.

Analyzing Health Metrics

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NASDAQ:EXTR has earned a 5 out of 10:

• EXTR has a Altman-Z score of 2.16. This is in the better half of the industry: EXTR outperforms 71.67% of its industry peers.
• The Debt to FCF ratio of EXTR is 0.94, which is an excellent value as it means it would take EXTR, only 0.94 years of fcf income to pay off all of its debts.
• The Debt to FCF ratio of EXTR (0.94) is better than 78.33% of its industry peers.
• Even though the debt/equity ratio score it not favorable for EXTR, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

Looking at the Profitability

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 NASDAQ:EXTR, the assigned 7 is a significant indicator of profitability:

• The Return On Assets of EXTR (6.84%) is better than 78.33% of its industry peers.
• EXTR has a better Return On Equity (66.87%) than 98.33% of its industry peers.
• EXTR has a Return On Invested Capital of 16.53%. This is amongst the best in the industry. EXTR outperforms 91.67% of its industry peers.
• The last Return On Invested Capital (16.53%) for EXTR is above the 3 year average (11.07%), which is a sign of increasing profitability.
• EXTR's Profit Margin of 5.95% is fine compared to the rest of the industry. EXTR outperforms 70.00% of its industry peers.
• With a decent Operating Margin value of 8.50%, EXTR is doing good in the industry, outperforming 71.67% of the companies in the same industry.
• In the last couple of years the Operating Margin of EXTR has grown nicely.
• EXTR's Gross Margin of 57.50% is amongst the best of the industry. EXTR outperforms 81.67% of its industry peers.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

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

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.