By Rob Otman
ASML (Nasdaq: ASML) is an $84 billion company today. Investors that bought shares one year ago are sitting on a 46.85% total return. That’s above the S&P 500’s return of 13.79%.
ASML stock is beating the market, and it reports earnings soon. 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: ASML reported a recent EPS growth rate of 21.95%. That’s below the semiconductor industry average of 136.87%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the semiconductor industry is 52.71. And ASML’s ratio comes in at 36.08. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for ASML stock is 28.34%. That’s below the semiconductor industry average of 48.71%. That’s a good sign. ASML’s debt levels are not out of control.
✗ Free Cash Flow per Share Growth: ASML has decreased its FCF per share over the last year relative to its competitors. That’s not 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.
✗ Profit Margins: The profit margin of ASML comes in at 25.11% today. And generally, the higher, the better. We also like to see this ratio above competitors. ASML’s profit margin is below the semiconductor average of 28.4%. So that’s a negative 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 ASML is 20.67% and that’s above its industry average ROE of 18.2%.
ASML stock passes three of our six key metrics today. That’s why our Investment U Stock Grader gives it a Hold.
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
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