Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does OmniVision Technologies (NASDAQ:OVTI) fit the bill? Let's take a look at what its recent results tell us about its potential for future gains.

What we're looking for
The graphs you're about to see tell OmniVision's story, and we'll be grading the quality of that story in several ways:

  • Growth: are profits, margins, and free cash flow all increasing?
  • Valuation: is share price growing in line with earnings per share?
  • Opportunities: is return on equity increasing while debt to equity declines?
  • Dividends: are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let's take a look at OmniVision's key statistics:

OVTI Total Return Price Chart

OVTI Total Return Price data by YCharts

Passing Criteria

3-Year* Change 

Grade

Revenue growth > 30%

52%

Pass

Improving profit margin

(49.8%)

Fail

Free cash flow growth > Net income growth

118.4% vs. (23.7%)

Pass

Improving EPS

(19.5%)

Fail

Stock growth (+ 15%) < EPS growth

(31.7%) vs. (19.5%)

Pass

Source: YCharts. * Period begins at end of Q1 2011.

OVTI Return on Equity (TTM) Chart

OVTI Return on Equity (TTM) data by YCharts

Passing Criteria

3-Year* Change

Grade

Improving return on equity

(47.2%)

Fail

Declining debt to equity

(41%)

Pass

Source: YCharts. * Period begins at end of Q1 2011.

How we got here and where we're going
Despite its weakening bottom line, OmniVision has pulled through in our assessment with a solid four out of seven passing grades. Its free cash flow momentum should certainly cheer investors, as this is the first time in several years that OmniVision's free cash flow is higher than its net income. It hasn't helped the company to start from a historically high level of net income on our assessment, and it's clearly making progress back toward new highs after sinking to woeful levels in 2012. Can OmniVision grind out a rare perfect score by this time next year with a stronger bottom line? Let's dig deeper to find out.

It's clear that OmniVision has staged a major turnaround, in sentiment and stock price, since last year -- shares mostly went nowhere in 2013 and finished with roughly half the gain of the S&P 500, but OmniVision has trounced the index in 2014 with a 33% gain. This is in no small part due to the company's lousy 2013 earnings reports, which closed out the year with a stumble and left some investors and analysts determined to kick it out of tech-savvy portfolios for good.

But OmniVision's battled back this against perceptions of obsolescence wrought by its ouster from Apple's (NASDAQ:AAPL) iPhones with stronger-than-expected earnings despite losing a key customer. Bears like Fool tech specialist Harsh Chauhan contend that this bounce is merely setting investors up for disappointment, and history highlights a number of missed expectations in OmniVision's earlier earnings reports. Bulls like Fool writer Sharda Sharma point out OmniVision's slate of improved camera-sensor technology as a competitive edge, which could help regain ground lost to major Asian tech companies Sony and Samsung. Chauhan has even come around lately as OmniVision's guidance has become more impressive, driven by the growth of Chinese manufacturers rather than Apple's newest iPhones.

Fool writer Bryan Wagman points out that OmniVision's opportunities aren't limited to camera sensors in smartphones -- the company could also find a sizable opportunity in supplying these sensors to automakers and security-camera manufacturers, which recently got a lot of attention when Google acquired hot start-up Dropcam. OmniVision doesn't have a major foothold in either sector at the moment, but investors may also want to consider the company's rock-bottom valuations as a good buy signal -- the company's P/E ratio is near historic lows at just 13.5, and its single-digit price-to-free-cash-flow ratio  is one of the lowest in the entire tech sector.

Putting the pieces together
Today, OmniVision has some of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy -- or to stay away from a stock that's going nowhere.

Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.