NASDAQ:RMBS is showing decent growth, but is still valued reasonably.

Last update: Oct 19, 2023

Discover RAMBUS INC (NASDAQ:RMBS), an undervalued growth gem identified by our stock screener. NASDAQ:RMBS 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.

Growth Assessment of NASDAQ:RMBS

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NASDAQ:RMBS has received a 7 out of 10:

The Earnings Per Share has grown by an impressive 146.03% over the past year.
Measured over the past years, RMBS shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.36% on average per year.
Looking at the last year, RMBS shows a quite strong growth in Revenue. The Revenue has grown by 19.06% in the last year.
Based on estimates for the next years, RMBS will show a very strong growth in Earnings Per Share. The EPS will grow by 23.94% on average per year.
Based on estimates for the next years, RMBS will show a quite strong growth in Revenue. The Revenue will grow by 11.71% 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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

Evaluating Valuation: NASDAQ:RMBS

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:RMBS has earned a 5 for valuation:

Based on the Price/Earnings ratio, RMBS is valued a bit cheaper than 66.04% of the companies in the same industry.
When comparing the Price/Earnings ratio of RMBS to the average of the S&P500 Index (25.55), we can say RMBS is valued slightly cheaper.
RMBS's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. RMBS is cheaper than 68.87% of the companies in the same industry.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
RMBS has a very decent profitability rating, which may justify a higher PE ratio.
RMBS's earnings are expected to grow with 23.94% in the coming years. This may justify a more expensive valuation.

ChartMill's Evaluation of Health

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:RMBS has earned a 9 out of 10:

An Altman-Z score of 21.62 indicates that RMBS is not in any danger for bankruptcy at the moment.
The Altman-Z score of RMBS (21.62) is better than 89.62% of its industry peers.
RMBS has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
RMBS has a Current Ratio of 5.29. This indicates that RMBS is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of RMBS (5.29) is better than 77.36% of its industry peers.
A Quick Ratio of 4.96 indicates that RMBS has no problem at all paying its short term obligations.
Looking at the Quick ratio, with a value of 4.96, RMBS belongs to the top of the industry, outperforming 82.08% of the companies in the same industry.

Profitability Assessment of NASDAQ:RMBS

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 NASDAQ:RMBS, the assigned 6 is noteworthy for profitability:

The Return On Assets of RMBS (16.77%) is better than 83.02% of its industry peers.
RMBS has a better Return On Equity (19.99%) than 73.58% of its industry peers.
RMBS's Profit Margin of 40.38% is amongst the best of the industry. RMBS outperforms 95.28% of its industry peers.
RMBS's Operating Margin has improved in the last couple of years.
With an excellent Gross Margin value of 75.30%, RMBS belongs to the best of the industry, outperforming 94.34% of the companies in the same industry.

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

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

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.