Why I just invested $1,500 into this top ASX growth share

I’m a big fan of investing in ASX dividend shares, but I also own some ASX growth shares that I’m bullish about.

One of the very best businesses on the ASX is Pro Medicus Ltd (ASX: PME) and I recently invested $1,500 in it. It’s not the first time I’ve invested in the company, but I thought the valuation was attractive enough to invest in the business again.

Pro Medicus is a leading healthcare informatics company, providing a full range of medical imaging software and services to hospitals, imaging centres and healthcare groups globally.

Three factors drove my decision to invest in the ASX growth share.

Much better valuation

I believe investing in great businesses leads to better long-term returns. However, wonderful companies usually come with a higher price tag.

The Pro Medicus share price certainly isn’t cheap, but it’s a lot cheaper than it used to be, and that’s what triggered my decision to buy. I like to invest during dips and take advantage of the lower price.

Not only has the Pro Medicus share price fallen 24% since July 2026 (at the time of writing), but it’s down more than 50% since July 2025. How often will you see one of the ASX’s best companies fall by that much? Not very often.

According to the projection on CMC Invest, the Pro Medicus share price is now valued at 88x FY27’s earnings and 70x FY28’s estimated earnings.

Of course, those are still high price/earnings (P/E) ratios. Why be willing to pay that price for the ASX growth share? There are two factors that really stick out.

Ongoing impressive contract performance

The company’s financials continue to compound at a strong pace and this is helping justify the valuation.

Revenue growth is a core driver of the company’s progress – in FY26 the business reported revenue grew 22.9% to $261.7 million. That revenue generation is mostly from contracts signed before FY26.

During FY26, the company announced it had signed 10 new contracts worth a minimum of A$407 million.

It also renewed six out of six contracts worth A$141 million on five-year terms. Those renewals included increased minimums and an increased fee per transaction, which is a great sign of organic revenue growth and client appreciation of Pro Medicus’ software.

Some investors may be worried about AI, but the company has proven it continues to attract new contracts. In August 2026, it announced a seven-year A$25 million contract with Valley Health which included the full stack of technology, as well as cardiology imaging, which is another growth avenue for the company.

Profit margins continue to rise

Not only is the ASX growth share’s revenue growing at a fast pace, but the company’s incredibly high profit margins continue to improve. This means that each new revenue dollar is even more profitable than it was before.

During FY26, the company’s operating profit (EBIT) margin improved by 90 basis points to 74.9%. That’s an insanely high figure. It also rose despite management indicating they weren’t expecting the margin to stay as high as it was during COVID-19 – it’s a lot higher now.

Given the size of the EBIT margin improvement in FY26 and the potential for further tech-driven margin gains, I think its profit margins can continue to climb.

While the P/E ratio is still relatively high, I believe its strong revenue growth and high margins will allow the earnings multiple to quickly become more reasonable over the next few years.

But it’s not the only ASX growth share I’ve got my eyes on.

The post Why I just invested $1,500 into this top ASX growth share appeared first on The Motley Fool Australia.

More reading

• CSL vs Pro Medicus: Which ASX healthcare share is better?
• 5 leading ASX shares I’d buy and hold until 2040
• 6 ASX shares set to soar 39% to 135%
• 5 best ASX shares to buy in October
• $10,000 invested in Pro Medicus and CSL shares 3 years ago is now worth…

Motley Fool contributor Tristan Harrison has positions in Pro Medicus. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.