Why HEALTHEQUITY INC (NASDAQ:HQY) Is a Standout High-Growth Stock in a Consolidation Phase.

In this article we will dive into HEALTHEQUITY INC (NASDAQ:HQY) as a possible candidate for growth investing. Investors should always do their own research, but we noticed HEALTHEQUITY INC showing up in our strong growth, ready to breakout screen, which makes it worth to investigate a bit more.

Understanding HQY's Growth

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 HQY, the assigned 8 reflects its growth potential:

• HQY shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 38.50%, which is quite impressive.
• HQY shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 12.72% yearly.
• HQY shows a strong growth in Revenue. In the last year, the Revenue has grown by 20.03%.
• The Revenue has been growing by 17.66% on average over the past years. This is quite good.
• HQY is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 19.79% yearly.
• Based on estimates for the next years, HQY will show a quite strong growth in Revenue. The Revenue will grow by 10.09% on average per year.
• When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Deciphering HQY's Health Rating

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For HQY, the assigned 5 for health provides valuable insights:

• An Altman-Z score of 4.03 indicates that HQY is not in any danger for bankruptcy at the moment.
• The Altman-Z score of HQY (4.03) is better than 78.30% of its industry peers.
• A Debt/Equity ratio of 0.50 indicates that HQY is not too dependend on debt financing.
• HQY has a Current Ratio of 3.06. This indicates that HQY is financially healthy and has no problem in meeting its short term obligations.
• Looking at the Current ratio, with a value of 3.06, HQY belongs to the top of the industry, outperforming 87.74% of the companies in the same industry.
• A Quick Ratio of 3.06 indicates that HQY has no problem at all paying its short term obligations.
• With an excellent Quick ratio value of 3.06, HQY belongs to the best of the industry, outperforming 87.74% of the companies in the same industry.

Profitability Insights: HQY

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of HQY, the assigned 7 is noteworthy for profitability:

• HQY has a Return On Assets of 2.80%. This is in the better half of the industry: HQY outperforms 65.09% of its industry peers.
• The Return On Equity of HQY (4.57%) is better than 60.38% of its industry peers.
• The 3 year average ROIC (3.06%) for HQY is below the current ROIC(4.86%), indicating increased profibility in the last year.
• HQY's Profit Margin of 8.06% is amongst the best of the industry. HQY outperforms 86.79% of its industry peers.
• HQY's Profit Margin has improved in the last couple of years.
• HQY's Operating Margin of 16.91% is amongst the best of the industry. HQY outperforms 96.23% of its industry peers.
• HQY has a better Gross Margin (64.78%) than 86.79% of its industry peers.

Looking at the Setup

The Setup Rating of a stock determines to which extend the stock is consolidating. This score also ranges from 0 to 10 and is updated daily. The setup score evaluates various short term technical indicators. For HQY this score is currently 7:

Although the technical rating is bad, HQY does present a nice setup opportunity. We see reduced volatility while prices have been consolidating in the most recent period. There is a resistance zone just above the current price starting at 84.53. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 78.80, a Stop Loss order could be placed below this zone.

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

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

Our latest full technical report of HQY contains the most current technical analsysis.

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.