By Rob Otman
NetApp (Nasdaq: NTAP) is a $12 billion company today. Investors that bought shares one year ago are sitting on a 50.65% total return. That’s above the S&P 500’s return of 14.02%.
NetApp stock is beating the market, and it reports earnings next week. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…[iu-adbox]
✓ Earnings-per-Share (EPS) Growth: NetApp reported a recent EPS growth rate of 133.86%. That’s above the technology hardware industry average of 74.85%. That’s a great sign. NetApp’s earnings growth is outpacing that of its competitors.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the technology hardware industry is 34.57. And NetApp’s ratio comes in at 21.43. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for NetApp stock is 71.69. That’s below the technology hardware industry average of 73.57. The company is less leveraged.
✓ Free Cash Flow per Share Growth: NetApp’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of NetApp comes in at 12.83% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. NetApp’s profit margin is above the technology hardware average of 10.17%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for NetApp is 17.98%, and that’s above its industry average ROE of 8.09%.
NetApp stock passes six of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Strong Buy.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You