COMFORT SYSTEMS USA INC (NYSE:FIX) Fits Louis Navellier’s High-Growth Stock Criteria

Investment strategies often use established methods, and one such system is presented in Louis Navellier’s “The Little Book That Makes You Rich.” This growth investing plan focuses on finding companies with solid and improving financial results based on eight specific guidelines. These rules concentrate on earnings estimate changes, earnings surprises, sales and profit increases, profit margin improvement, cash flow, profit speed, and high returns on equity. The aim is to find stocks with the possibility for major price gains by using fundamental advantages. A recent filter using these ideas has identified COMFORT SYSTEMS USA INC (NYSE:FIX) as a business that fits well with this plan.

Positive Earnings Revisions and Surprises

A central idea of Navellier’s system is that positive analyst estimate changes and regular earnings surprises can be strong drivers. When analysts increase their forecasts, it often points to fundamental business strength that may not be completely represented in the stock price. In the same way, companies that regularly outperform forecasts can push the market to reassess their future prospects.

• The average EPS estimate for the next quarter has been increased by 22.26% over the last three months.
• The company has reported a positive earnings surprise in all of the last four quarterly results.
• The average beat percentage over these four quarters is a significant 18.41%.

These numbers show strong future confidence from analysts and a proven ability for COMFORT SYSTEMS USA to outperform forecasts regularly, meeting the first two rules of the plan.

Strong Sales and Earnings Growth

For a growth stock, increasing revenue and earnings are essential. Navellier’s plan looks for companies that are not only increasing, but doing so at a notable rate, which is a clear sign of market need and business expansion potential.

• Year-over-year revenue increase stands at 34.97%.
• Quarterly sales increase is also strong at 35.24%.
• Earnings increase is even more marked, with a year-over-year EPS rise of 80.72% and a large quarterly EPS increase of 101.71%.

This effective mix of solid revenue growth and fast profit increase directly relates to the third and sixth rules of the “Little Book” system, pointing out a company in a fast-growth period.

Improving Profitability and Solid Cash Flow

Increasing sales are most beneficial when they become better profitability and cash production. Improving operating margins indicate the company is growing efficiently, while solid cash flow offers the financial ability to fund future growth without needing outside money.

• The operating margin has improved by 29.27% over the past year.
• Free cash flow, an important measure of financial condition, has increased by 49.08% in the same period.

This performance satisfies the fourth and fifth rules of the plan, showing that COMFORT SYSTEMS USA is not just growing its revenue but is also becoming more profitable and creating notable cash from its business activities.

Earnings Speed and High Return on Equity

The plan values earnings speed—the quickening of increase rates—and a high return on equity (ROE). Speed can indicate a turning point, while a high ROE shows that management is very good at creating profits from money invested by shareholders.

• The current quarterly EPS increase of 101.71% is much greater than the increase rate from the similar quarter a year ago (49.27%), confirming positive earnings speed.
• The company has an ROE of 35.12%, well above the plan’s lowest need and putting it in the group of leading performers in its field.

These numbers meet the last two rules, indicating that the company’s growth is speeding up and that it is very good at building value for its shareholders.

Fundamental Analysis Summary

A look at the detailed fundamental analysis report for COMFORT SYSTEMS USA supports the results from the “Little Book” filter. The company gets a very good overall fundamental score of 8 out of 10, with especially high marks for profitability and growth. Its financial condition score is also solid, indicating a good balance sheet with little liquidity or debt problems. While its valuation measures seem high on a normal price-to-earnings basis, this is partly explained by its exceptional growth and profitability, a typical feature of high-quality growth stocks.

Finding More Candidates

The “Little Book” plan is made to find companies with solid fundamental speed, and COMFORT SYSTEMS USA acts as a leading example of its possibility. For investors looking to research other stocks that meet this strict filter, you can see the full and current list of results here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice of any kind. The author has no position in FIX. All data and analysis are based on publicly available information and should not be the sole basis for any investment decision. Always conduct your own due diligence and consult with a qualified financial advisor before making any investment.