Yamaha Motor Co., Ltd. (YAMHF) is an Incredible Growth Stock: 3 Reasons Why

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all.

In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.

However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.

Yamaha Motor Co., Ltd. (YAMHF) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank.

Research shows that stocks carrying the best growth features consistently beat the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Here are three of the most important factors that make the stock of this company a great growth pick right now.

Earnings Growth

Arguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for Yamaha Motor Co., Ltd. is 15.5%, investors should actually focus on the projected growth. The company's EPS is expected to grow 88.6% this year, crushing the industry average, which calls for EPS growth of 85%.

Impressive Asset Utilization Ratio

Growth investors often overlook asset utilization ratio, also known as sales-to-total-assets (S/TA) ratio, but it is an important feature of a real growth stock. This metric exhibits how efficiently a firm is utilizing its assets to generate sales.

Right now, Yamaha Motor Co., Ltd. has an S/TA ratio of 0.87, which means that the company gets $0.87 in sales for each dollar in assets. Comparing this to the industry average of 0.62, it can be said that the company is more efficient.

In addition to efficiency in generating sales, sales growth plays an important role. And Yamaha Motor Co., Ltd. looks attractive from a sales growth perspective as well. The company's sales are expected to grow 21% this year versus the industry average of 17%.

Promising Earnings Estimate Revisions

Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

There have been upward revisions in current-year earnings estimates for Yamaha Motor Co., Ltd. The Zacks Consensus Estimate for the current year has surged 13.5% over the past month.

Bottom Line

While the overall earnings estimate revisions have made Yamaha Motor Co., Ltd. a Zacks Rank #1 stock, it has earned itself a Growth Score of A based on a number of factors, including the ones discussed above.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination positions Yamaha Motor Co., Ltd. well for outperformance, so growth investors may want to bet on it.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.