Pinterest Inc. Class A (NYSE:PINS) has been flagged by an "Affordable Growth" stock screen, a strategy designed to identify companies that balance strong expansion with reasonable valuation. The logic is straightforward: investors targeting long-term capital appreciation often chase high-growth names, but many of those come with inflated price tags that leave little margin for error. This method seeks to avoid that trap by requiring a solid growth rating (above 7 out of 10), a valuation score above 5, and at least decent profitability and health ratings. By filtering for these conditions, the aim is to uncover companies that may offer a more sustainable blend of momentum and value—often referred to as Growth at a Reasonable Price (GARP). Below, we examine how PINS stacks up against these criteria based on its latest fundamental report.
Growth Rating: 8/10
The first pillar of the affordable growth screen is strong expansion, and PINS earns an 8 out of 10 on the ChartMill Growth rating. Looking at the past performance, the company has delivered impressive momentum. Earnings per share (EPS) grew by 11.49% over the past year, while the longer-term average annual EPS growth stands at a strong 32.79%. Revenue growth is also solid, with a 16.30% increase in the most recent year and a five-year average of 20.06%.
Future expectations remain encouraging. Analysts project EPS to expand by an average of 15.11% annually over the next few years, and revenue is forecast to grow at 10.38% per year. While the forward growth rates are slightly below the blistering pace of the past—a common pattern as companies mature—they still signify a healthy trajectory. For the GARP approach, this blend of historical and projected growth provides the kind of earnings momentum that can drive share price appreciation without requiring the company to sustain unsustainable rates.
Valuation Rating: 7/10
Affordable growth demands that the price tag doesn't erase the potential upside. PINS scores a 7 out of 10 on valuation, which is a key differentiator from many high-growth peers. The trailing Price/Earnings (P/E) ratio sits at 13.38, which is cheaper than about 69% of companies in the Interactive Media & Services industry. More importantly, the forward P/E is just 9.57, indicating that expected earnings growth is already being factored into a relatively low multiple. Both figures are significantly below the S&P 500 averages of 26.91 and 21.49, respectively.
The valuation is further supported by the PEG ratio, which adjusts the P/E for expected growth. PINS's low PEG ratio suggests the market is not fully pricing in its future earnings expansion—a classic hallmark of a GARP candidate. Additionally, the Price/Free Cash Flow ratio is attractive relative to the industry, reinforcing that the stock is not overly stretched. For the affordable growth screen, this kind of valuation discipline is critical: it provides a margin of safety if growth slows, while still allowing room for upside if the company delivers on its targets.
Profitability and Health: Solid Foundations
While growth and valuation are the headline drivers, the screen also requires decent profitability and health to ensure the company is not a speculative bet. PINS holds a profitability rating of 6/10, which is acceptable but not exceptional. The company is profitable with a positive operating cash flow, and its Return on Equity (11.73%) and Return on Assets (7.20%) both outperform over 70% of industry peers. The gross margin of 79.86% is strong and has been trending higher, indicating pricing power and efficient cost management. However, the average Return on Invested Capital over the past three years was only 2.64%, which lags behind the industry average of 11.53%. This suggests that while profitability is improving, it still has room to catch up.
The health rating of 8/10 paints a much cleaner picture. PINS carries no outstanding debt, giving it a Debt/Equity and Debt/FCF ratio of zero. Its Altman-Z score of 5.76 indicates a very low risk of financial distress, and the current and quick ratios both sit at 4.23—well above the industry medians. The screen's focus on health is crucial for the affordable growth strategy: a company with strong growth and fair valuation is only a worthwhile investment if it has the financial stability to weather downturns and fund its own expansion. PINS, with its pristine balance sheet and ample liquidity, certainly meets that bar.
Putting It All Together
The full fundamental analysis report for PINS further breaks down these scores into detailed metrics. The summary rating of 7 out of 10 reflects a company that is growing strongly, is reasonably priced, and maintains excellent financial health, even if profitability is merely average. For investors following the affordable growth method, this combination is precisely what the screen is designed to capture: a company that offers the upside of expansion without the risk of an overstretched valuation or shaky fundamentals.
While no stock is without risk—PINS’s profitability could improve further, and the digital advertising market is competitive—the fundamentals suggest that the current market price has not fully reflected the company’s potential. This is the kind of scenario where a disciplined, rules-based approach can identify opportunities that might otherwise be overlooked in a market driven by hype.
Explore More Affordable Growth Stocks
The screen that identified PINS is just one example of how systematic filtering can uncover potential investment candidates. If you are interested in seeing more results from this same affordable growth screen—stocks with strong growth, reasonable valuation, and solid fundamentals—you can find the latest list here: Affordable Growth Screen Results.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider consulting a financial advisor before making investment decisions.
Read full article here »
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PINS Affordable Growth Screen Flags Pinterest Inc. Class A (NYSE:PINS) as a GARP Opportunity
Pinterest Inc. Class A (NYSE:PINS) has been flagged by an "Affordable Growth" stock screen, a strategy designed to identify companies that balance strong expansion with reasonable valuation. The logic is straightforward: investors targeting long-term capital appreciation often chase high-growth names, but many of those come with inflated price tags that leave little margin for error. This method seeks to avoid that trap by requiring a solid growth rating (above 7 out of 10), a valuation score above 5, and at least decent profitability and health ratings. By filtering for these conditions, the aim is to uncover companies that may offer a more sustainable blend of momentum and value—often referred to as Growth at a Reasonable Price (GARP). Below, we examine how PINS stacks up against these criteria based on its latest fundamental report.
Growth Rating: 8/10
The first pillar of the affordable growth screen is strong expansion, and PINS earns an 8 out of 10 on the ChartMill Growth rating. Looking at the past performance, the company has delivered impressive momentum. Earnings per share (EPS) grew by 11.49% over the past year, while the longer-term average annual EPS growth stands at a strong 32.79%. Revenue growth is also solid, with a 16.30% increase in the most recent year and a five-year average of 20.06%.
Future expectations remain encouraging. Analysts project EPS to expand by an average of 15.11% annually over the next few years, and revenue is forecast to grow at 10.38% per year. While the forward growth rates are slightly below the blistering pace of the past—a common pattern as companies mature—they still signify a healthy trajectory. For the GARP approach, this blend of historical and projected growth provides the kind of earnings momentum that can drive share price appreciation without requiring the company to sustain unsustainable rates.
Valuation Rating: 7/10
Affordable growth demands that the price tag doesn't erase the potential upside. PINS scores a 7 out of 10 on valuation, which is a key differentiator from many high-growth peers. The trailing Price/Earnings (P/E) ratio sits at 13.38, which is cheaper than about 69% of companies in the Interactive Media & Services industry. More importantly, the forward P/E is just 9.57, indicating that expected earnings growth is already being factored into a relatively low multiple. Both figures are significantly below the S&P 500 averages of 26.91 and 21.49, respectively.
The valuation is further supported by the PEG ratio, which adjusts the P/E for expected growth. PINS's low PEG ratio suggests the market is not fully pricing in its future earnings expansion—a classic hallmark of a GARP candidate. Additionally, the Price/Free Cash Flow ratio is attractive relative to the industry, reinforcing that the stock is not overly stretched. For the affordable growth screen, this kind of valuation discipline is critical: it provides a margin of safety if growth slows, while still allowing room for upside if the company delivers on its targets.
Profitability and Health: Solid Foundations
While growth and valuation are the headline drivers, the screen also requires decent profitability and health to ensure the company is not a speculative bet. PINS holds a profitability rating of 6/10, which is acceptable but not exceptional. The company is profitable with a positive operating cash flow, and its Return on Equity (11.73%) and Return on Assets (7.20%) both outperform over 70% of industry peers. The gross margin of 79.86% is strong and has been trending higher, indicating pricing power and efficient cost management. However, the average Return on Invested Capital over the past three years was only 2.64%, which lags behind the industry average of 11.53%. This suggests that while profitability is improving, it still has room to catch up.
The health rating of 8/10 paints a much cleaner picture. PINS carries no outstanding debt, giving it a Debt/Equity and Debt/FCF ratio of zero. Its Altman-Z score of 5.76 indicates a very low risk of financial distress, and the current and quick ratios both sit at 4.23—well above the industry medians. The screen's focus on health is crucial for the affordable growth strategy: a company with strong growth and fair valuation is only a worthwhile investment if it has the financial stability to weather downturns and fund its own expansion. PINS, with its pristine balance sheet and ample liquidity, certainly meets that bar.
Putting It All Together
The full fundamental analysis report for PINS further breaks down these scores into detailed metrics. The summary rating of 7 out of 10 reflects a company that is growing strongly, is reasonably priced, and maintains excellent financial health, even if profitability is merely average. For investors following the affordable growth method, this combination is precisely what the screen is designed to capture: a company that offers the upside of expansion without the risk of an overstretched valuation or shaky fundamentals.
While no stock is without risk—PINS’s profitability could improve further, and the digital advertising market is competitive—the fundamentals suggest that the current market price has not fully reflected the company’s potential. This is the kind of scenario where a disciplined, rules-based approach can identify opportunities that might otherwise be overlooked in a market driven by hype.
Explore More Affordable Growth Stocks
The screen that identified PINS is just one example of how systematic filtering can uncover potential investment candidates. If you are interested in seeing more results from this same affordable growth screen—stocks with strong growth, reasonable valuation, and solid fundamentals—you can find the latest list here: Affordable Growth Screen Results.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider consulting a financial advisor before making investment decisions.
Read full article here »