By Rob Otman
Select Comfort (Nasdaq: SCSS) is a $2 billion company today. Investors that bought shares one year ago are sitting on a 63.78% total return. That’s above the S&P 500’s return of 13.69%.
Select Comfort stock is beating the market, 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…
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Earnings-per-Share (EPS) Growth: Select Comfort reported a recent EPS growth rate of 111.11%. That’s above the specialty retail industry average of 14.28%. That’s a great sign. Select Comfort’s earnings growth is outpacing competitors.
Price-to-Earnings (P/E): The average price-to-earnings ratio of the specialty retail industry is 24.11. And Select Comfort’s ratio comes in at 23.69. It’s trading at a better value than many of its competitors.
Debt-to-Equity: The debt-to-equity ratio for Select Comfort Stock is 0. That’s below the specialty retail industry average of 58.28. The company is less leveraged.
Free Cash Flow per Share Growth: Select Comfort’s FCF has been higher than 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 Select Comfort comes in at 6.21% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Select Comfort’s profit margin is above the specialty retail average of 5.34%. 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 Select Comfort is 39.15%, and that’s above its industry average ROE of 16.25%.
Select Comfort 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. For more details, click here.
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Source:: Investment You
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