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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on SPS Commerce, Inc. (NASDAQ:SPSC) due to its excellent fundamentals in more than one area. SPSC is a company with great financial health as well as a a great history of performance. In the following section, I expand a bit more on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on SPS Commerce here.
Flawless balance sheet with solid track record
In the past couple of years, SPSC has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. Not only did SPSC outperformed its past performance, its growth also exceeded the Software industry expansion, which generated a 22% earnings growth. This is an optimistic signal for the future. SPSC's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that SPSC has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. SPSC currently has no debt on its balance sheet. This means it is running its business only on equity capital funding, which is typically normal for a small-cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future.
For SPS Commerce, there are three key aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for SPSC’s future growth? Take a look at our free research report of analyst consensus for SPSC’s outlook.
- Valuation: What is SPSC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SPSC is currently mispriced by the market.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SPSC? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.