3 Reasons Growth Investors Will Love SPS Commerce (SPSC)

Core Viewpoint - Growth stocks are appealing due to their above-average financial growth, but identifying strong growth stocks is challenging due to inherent volatility and risks [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - SPS Commerce (SPSC) is currently highlighted as a recommended growth stock, possessing a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth seen as indicative of strong future prospects [3] - SPS Commerce has a historical EPS growth rate of 21.1%, with projected EPS growth of 13.4% this year, surpassing the industry average of 11.9% [4] Group 3: Cash Flow Growth - Higher-than-average cash flow growth is essential for growth-oriented companies, enabling expansion without reliance on external funding [5] - SPS Commerce's year-over-year cash flow growth stands at 22.6%, significantly higher than the industry average of 1.4% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 21.2%, compared to the industry average of 7.1% [6] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements [7] - Current-year earnings estimates for SPS Commerce have increased by 0.6% over the past month, indicating a positive outlook [7] Group 5: Overall Assessment - SPS Commerce has achieved a Growth Score of A and a Zacks Rank 2, suggesting it is a potential outperformer and a solid choice for growth investors [9]