3 Reasons Growth Investors Will Love Perion Network (PERI) – May 30, 2022
Growth-oriented investors focus on stocks that are experiencing above-average financial growth, as this characteristic helps these stocks capture market attention and generate strong returns. But finding a growth stock that can realize its true potential can be a difficult task.
This is because these stocks generally carry above-average risk and volatility. In fact, betting on a stock for which the growth story has actually ended or is coming to an end could result in significant losses.
However, the task of finding leading growth stocks is made easier with the Zacks Growth Style Score (part of the Zacks Style Scores system), which goes beyond traditional growth attributes to analyze the real growth prospects of a company.
Perion Network (PERI – Free Report) is one such stock that our proprietary system currently recommends. The company not only has a favorable growth score but also a top Zacks ranking.
Research shows that stocks with the best growth characteristics consistently beat the market. And returns are even better for stocks that possess the combination of a growth score of A or B and a Zacks rank of No. 1 (strong buy) or 2 (buy).
Here are three of the most important factors that make this digital media company’s stock a great choice for growth right now.
Earnings growth is arguably the most important factor, as stocks with exceptionally high levels of profit tend to capture the attention of most investors. And for growth-oriented investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.
While the historic EPS growth rate for Perion Network is 5.3%, investors should actually focus on projected growth. The company’s EPS is expected to grow 73.2% this year, smashing the industry average, which forecasts EPS growth of 12.9%.
Impressive asset utilization ratio
The asset utilization ratio – also known as the sales to total assets (S/TA) ratio – is often overlooked by investors, but it is an important indicator in growth investing. This metric shows how effectively a business uses its assets to generate sales.
Currently, Perion Network has an S/TA ratio of 0.91, which means the company gets $0.91 in sales for every dollar in assets. Comparing this to the industry average of 0.61, it can be said that the company is more efficient.
In addition to efficiency in generating sales, sales growth plays an important role. And Perion Network is also well positioned from a sales growth standpoint. The company’s sales are expected to rise 31.7% this year, compared to an industry average of 0.7%.
Revisions to Promising Earnings Estimates
A stock’s superiority in terms of the metrics outlined above can be further validated by looking at the trend of earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Current year earnings estimates for Perion Network have been revised upwards. The Zacks consensus estimate for the current year jumped 35.3% in the past month.
Although revisions to the overall earnings estimate made Perion Network a Zacks No. 1 stock, it earned itself a growth score of A based on a number of factors, including those discussed below. above.
You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
This combination indicates that Perion Network is a potential outperformer and a solid choice for growth investors.