In the world of growth stocks, ONTO INNOVATION INC (NYSE:ONTO) shines as a value proposition.

Discover ONTO INNOVATION INC (NYSE:ONTO), an undervalued growth gem identified by our stock screener. ONTO 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.

A Closer Look at Growth for ONTO

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. ONTO scores a 9 out of 10:

• The Earnings Per Share has grown by an impressive 43.43% over the past year.
• The Earnings Per Share has been growing by 36.96% on average over the past years. This is a very strong growth
• ONTO shows a strong growth in Revenue. In the last year, the Revenue has grown by 21.00%.
• The Revenue has been growing by 26.41% on average over the past years. This is a very strong growth!
• ONTO is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 21.31% yearly.
• The Revenue is expected to grow by 16.21% on average over the next years. This is quite good.

Assessing Valuation for ONTO

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. ONTO has received a 5 out of 10:

• ONTO's Price/Earnings ratio is a bit cheaper when compared to the industry. ONTO is cheaper than 69.72% of the companies in the same industry.
• When comparing the Price/Earnings ratio of ONTO to the average of the S&P500 Index (28.29), we can say ONTO is valued slightly cheaper.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of ONTO indicates a somewhat cheap valuation: ONTO is cheaper than 74.31% of the companies listed in the same industry.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ONTO indicates a somewhat cheap valuation: ONTO is cheaper than 72.48% of the companies listed in the same industry.
• Based on the Price/Free Cash Flow ratio, ONTO is valued a bit cheaper than the industry average as 71.56% of the companies are valued more expensively.
• The decent profitability rating of ONTO may justify a higher PE ratio.
• ONTO's earnings are expected to grow with 18.17% in the coming years. This may justify a more expensive valuation.

Health Examination for ONTO

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. ONTO was assigned a score of 9 for health:

• ONTO has an Altman-Z score of 19.59. This indicates that ONTO is financially healthy and has little risk of bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 19.59, ONTO belongs to the top of the industry, outperforming 92.66% of the companies in the same industry.
• There is no outstanding debt for ONTO. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
• ONTO has a Current Ratio of 8.69. This indicates that ONTO is financially healthy and has no problem in meeting its short term obligations.
• With an excellent Current ratio value of 8.69, ONTO belongs to the best of the industry, outperforming 95.41% of the companies in the same industry.
• ONTO has a Quick Ratio of 7.00. This indicates that ONTO is financially healthy and has no problem in meeting its short term obligations.
• Looking at the Quick ratio, with a value of 7.00, ONTO belongs to the top of the industry, outperforming 91.74% of the companies in the same industry.

Understanding ONTO's Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, ONTO has achieved a 7:

• Looking at the Return On Assets, with a value of 9.53%, ONTO is in the better half of the industry, outperforming 77.98% of the companies in the same industry.
• ONTO has a Return On Equity of 10.47%. This is in the better half of the industry: ONTO outperforms 67.89% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 9.57%, ONTO is in the better half of the industry, outperforming 77.06% of the companies in the same industry.
• The Profit Margin of ONTO (20.43%) is better than 82.57% of its industry peers.
• In the last couple of years the Profit Margin of ONTO has grown nicely.
• With a decent Operating Margin value of 20.64%, ONTO is doing good in the industry, outperforming 79.82% of the companies in the same industry.
• ONTO has a better Gross Margin (53.88%) than 75.23% of its industry peers.
• In the last couple of years the Gross Margin of ONTO has grown nicely.

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

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

Disclaimer

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.