3 Reasons Growth Investors Will Love Bright Horizons (BFAM)

Core Viewpoint - Growth investors are increasingly focused on identifying stocks with above-average financial growth, which can lead to solid returns, but finding such stocks is challenging due to their inherent risks and volatility [1] Group 1: Company Overview - Bright Horizons Family Solutions (BFAM) is currently highlighted as a recommended growth stock based on the Zacks Growth Style Score, which evaluates a company's real growth potential beyond traditional metrics [2] - The company has achieved a favorable Growth Score and holds a top Zacks Rank, indicating strong investment potential [2][9] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly attractive as it signals strong future prospects [4] - Bright Horizons has a historical EPS growth rate of 0.9%, but projected EPS growth for this year is expected to be 18.6%, significantly outperforming the industry average of 13.8% [5] Group 3: Asset Utilization - The asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is an important metric for assessing a company's efficiency in generating sales [6] - Bright Horizons has an S/TA ratio of 0.67, indicating it generates $0.67 in sales for every dollar in assets, which is higher than the industry average of 0.65 [7] - The company is also expected to achieve sales growth of 10.9% this year, compared to the industry average of 2.6% [7] Group 4: Earnings Estimate Revisions - Trends in earnings estimate revisions are crucial, with positive revisions correlating strongly with stock price movements [8] - Bright Horizons has seen its current-year earnings estimates revised upward by 7.9% over the past month, indicating positive momentum [8] Group 5: Investment Positioning - Bright Horizons has earned a Growth Score of A and a Zacks Rank of 2 due to favorable earnings estimate revisions, positioning it well for potential outperformance in the market [9]