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3 Reasons Why Yamaha Motor Co., Ltd. (YAMHF) Is a Great Growth Stock
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Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a growth stock that can live up to its true potential can be a tough task.
By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.
However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.
Our proprietary system currently recommends Yamaha Motor Co., Ltd. (YAMHF - Free Report) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.
Studies have shown that stocks with the best growth features consistently outperform 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 #1 (Strong Buy) or 2 (Buy).
Here are three of the most important factors that make the stock of this company a great growth pick right now.
Earnings Growth
Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.
While the historical EPS growth rate for Yamaha Motor Co., Ltd. is 19.7%, investors should actually focus on the projected growth. The company's EPS is expected to grow 170.4% this year, crushing the industry average, which calls for EPS growth of 45.4%.
Impressive Asset Utilization Ratio
Asset utilization ratio -- also known as 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 efficiently a firm is utilizing its assets to generate sales.
Right now, Yamaha Motor Co., Ltd. has an S/TA ratio of 0.88, which means that the company gets $0.88 in sales for each dollar in assets. Comparing this to the industry average of 0.64, it can be said that the company is more efficient.
In addition to efficiency in generating sales, sales growth plays an important role. And Yamaha Motor Co., Ltd. is well positioned from a sales growth perspective too. The company's sales are expected to grow 12.7% this year versus the industry average of 7.8%.
Promising Earnings Estimate Revisions
Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in 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 near-term stock price movements.
There have been upward revisions in current-year earnings estimates for Yamaha Motor Co., Ltd. The Zacks Consensus Estimate for the current year has surged 0.9% over the past month.
Bottom Line
Yamaha Motor Co., Ltd. has not only earned a Growth Score of A based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.
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3 Reasons Why Yamaha Motor Co., Ltd. (YAMHF) Is a Great Growth Stock
Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a growth stock that can live up to its true potential can be a tough task.
By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.
However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.
Our proprietary system currently recommends Yamaha Motor Co., Ltd. (YAMHF - Free Report) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.
Studies have shown that stocks with the best growth features consistently outperform 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 #1 (Strong Buy) or 2 (Buy).
Here are three of the most important factors that make the stock of this company a great growth pick right now.
Earnings Growth
Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.
While the historical EPS growth rate for Yamaha Motor Co., Ltd. is 19.7%, investors should actually focus on the projected growth. The company's EPS is expected to grow 170.4% this year, crushing the industry average, which calls for EPS growth of 45.4%.
Impressive Asset Utilization Ratio
Asset utilization ratio -- also known as 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 efficiently a firm is utilizing its assets to generate sales.
Right now, Yamaha Motor Co., Ltd. has an S/TA ratio of 0.88, which means that the company gets $0.88 in sales for each dollar in assets. Comparing this to the industry average of 0.64, it can be said that the company is more efficient.
In addition to efficiency in generating sales, sales growth plays an important role. And Yamaha Motor Co., Ltd. is well positioned from a sales growth perspective too. The company's sales are expected to grow 12.7% this year versus the industry average of 7.8%.
Promising Earnings Estimate Revisions
Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in 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 near-term stock price movements.
There have been upward revisions in current-year earnings estimates for Yamaha Motor Co., Ltd. The Zacks Consensus Estimate for the current year has surged 0.9% over the past month.
Bottom Line
Yamaha Motor Co., Ltd. has not only earned a Growth Score of A based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
This combination indicates that Yamaha Motor Co., Ltd. is a potential outperformer and a solid choice for growth investors.