Determine the Classification:
This methodology would consider ASX a "fast-grower".
P/E/Growth Ratio: [PASS]
The investor should examine the P/E (18.59) relative to the growth rate (78.28%), Based on the average of the 3, 4 and 5 year historical EPS growth rates using the current fiscal year EPS estimate, for a company. This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for ASX (0.24) is very favorable.
SALES AND P/E RATIO: [PASS]
For companies with sales greater than $1 billion, this methodology likes to see that the P/E ratio remain below 40. Large companies can have a difficult time maintaining a growth high enough to support a P/E above this threshold. ASX, whose sales are $7,566.9 million, needs to have a P/E below 40 to pass this criterion. ASX's P/E of (18.59) is considered acceptable.
Inventory To Sales: [FAIL]
When inventories increase faster than sales, it is a red flag. However an increase of up to 5% is considered bearable if all other ratios appear attractive. Inventory to sales for ASX was 16.53% last year, while for this year it is Infinity%. Since inventory has been rising and the inventory change, Infinity% is greater than 5%, it fails this test.
EPS Growth Rate: [FAIL]
This methodology favors companies that have several years of fast earnings growth, as these companies have a proven formula for growth that in many cases can continue many more years. This methodology likes to see earnings growth in the range of 20% to 50%, as earnings growth over 50% may be unsustainable. The EPS growth rate for ASX is 78.3%, Based on the average of the 3, 4 and 5 year historical EPS growth rates using the current fiscal year EPS estimate, which is considered too fast.
Total Debt/Equity Ratio: [PASS]
This methodology would consider the Debt/Equity ratio for ASX (69.65%) to be mediocre. If the Debt/Equity ratio is this high, the other ratios and financial statistics for ASX should be good enough to compensate.
FREE CASH FLOW: [NEUTRAL]
The Free Cash Flow/Price ratio, though not a requirement, is considered a bonus if it is above 35%. A positive Cash Flow (the higher the better) separates a wonderfully reliable investment from a shaky one. This methodology prefers not to invest in companies that rely heavily on capital spending. This ratio for ASX (.6%) is too low to add to the attractiveness of the stock. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.
NET CASH POSITION: [NEUTRAL]
Another bonus for a company is having a Net Cash/Price ratio above 30%. Lynch defines net cash as cash and marketable securities minus long term debt. According to this methodology, a high value for this ratio dramatically cuts down on the risk of the security. The Net Cash/Price ratio for ASX (0.5%) is too low to add to the attractiveness of this company. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.