Natera currently trades at $141.03 and has been a dream stock for shareholders. It’s returned 351% since April 2020, blowing past the S&P 500’s 87.1% gain. The company has also beaten the index over the past six months as its stock price is up 6.9% thanks to its solid quarterly results.
Following the strength, is NTRA a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Is Natera a Good Business?
Founded in 2003 as Gene Security Network before rebranding in 2012, Natera (NASDAQ: NTRA) develops and commercializes genetic tests for prenatal screening, cancer detection, and organ transplant monitoring using its proprietary cell-free DNA technology.
1. Elevated Demand Drives Higher Sales Volumes
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful Immuno-Oncology company because there’s a ceiling to what customers will pay.
Natera’s tests processed punched in at 758,200 in the latest quarter, and over the last two years, averaged 24.2% year-on-year growth. This performance was fantastic and shows its offerings have a unique value proposition (and perhaps some degree of customer loyalty). 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Natera’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Natera’s margin expanded by 55.8 percentage points over the last five years. Natera’s free cash flow margin for the trailing 12 months was 4.1%.
Final Judgment
These are just a few reasons why we're bullish on Natera, and with its shares beating the market recently, the stock trades at $141.03 per share (or 9.5× forward price-to-sales). Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More Than Natera
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