For investors looking to balance the search for high-growth companies with fiscal care, the "Growth at a Reasonable Price" (GARP) method offers a middle ground. This method tries to find companies showing strong and lasting growth, but whose shares are not priced at the high levels common in speculative trends. By looking for stocks with good growth measures, sound finances, solid profits, and a fair price, investors can search for chances where the market may not have completely accounted for a company's future. ADMA Biologics Inc (NASDAQ:ADMA) recently appeared on such an "Affordable Growth" screen, leading to a more detailed review of its fundamental profile.
A Look at Fundamental Strength
A review of ADMA Biologics' detailed fundamental analysis report shows an overall score of 7 out of 10, with notable scores in growth and financial health. This matches the main GARP idea of combining expansion with stability. The company's business model, centered on making and selling FDA-approved plasma-derived biologics for immune deficiencies, seems to be reaching a good operational stage.
Notable Growth Measures
The growth part is where ADMA is most distinct, receiving a high score of 8. This is the driver for any GARP candidate, and ADMA's recent results give good support.
- High Earnings Growth: The company's Earnings Per Share (EPS) rose by 92.86% over the past year, a clear sign of moving revenue growth to profits.
- Strong Revenue Path: Revenue growth has been good, increasing 27.62% in the last year and averaging 70.84% each year over recent years.
- Positive Future View: Analyst projections indicate this pace is likely to continue, with estimated average yearly growth of 33.90% in EPS and 21.48% in revenue for the next years.
This mix of high past growth and a good forward view is exactly what growth-focused investors look for, as it indicates a business model that can scale and is gaining market acceptance.
Price Consideration
A fair price is the "reasonable price" foundation of the GARP method, stopping investors from paying too much for growth. ADMA's price score of 6 shows a varied but finally positive view when seen with an industry-specific focus.
- On a basic level, ADMA's Price-to-Earnings (P/E) ratio of 37.24 seems high next to the wider S&P 500 average.
- However, the important context is within its competitive field. The biotechnology industry often has high prices due to long development times and growth hopes. Compared to similar companies, ADMA is priced lower, with a P/E ratio less than 91.39% of the biotechnology industry.
- This relative price point is further shown by other measures. The company's Enterprise Value to EBITDA and Price/Free Cash Flow ratios are also more appealing than over 90% of its industry competitors.
- Also, its forward P/E ratio of 21.26 is seen as fair next to both industry averages and the wider market, especially when viewed next to its high expected earnings growth rate.
This review shows why screening is important: a stock that looks costly alone can be a relative value inside its high-growth sector.
Supporting Fundamentals: Health and Profits
Lasting growth needs a solid base. ADMA's financial health score of 8 points to a strong balance sheet, which lowers risk for investors.
- The company has a very strong Altman-Z score of 22.92, showing very low near-term bankruptcy risk and doing better than 90% of its industry.
- Liquidity is very good, with a Current Ratio of 7.13, showing strong ability to meet short-term needs.
- While it has some debt, its Debt-to-Free Cash Flow ratio of 1.78 is seen as very good, meaning it could pay off all debt with less than two years of cash flow.
Profitability, with a score of 6, shows parts of high strength along with the company's growth path.
- Margins are a strong point. ADMA's Profit Margin of 42.87% and Operating Margin of 34.19% do better than over 97% of the biotechnology industry, indicating efficient operations and pricing ability.
- Return measures are also strong, with Return on Equity (ROE) of 48.57% and Return on Invested Capital (ROIC) of 25.76% rating among the top in its sector.
These health and profit factors are key for the GARP method, as they indicate the company's growth is not driven by high financial risk or happening without creating real economic returns.
Summary
ADMA Biologics presents an example of the profile sought by affordable growth screens. It shows strong, speeding growth in both revenue and earnings, the main draw for growth investors. Importantly, this growth is not matched with a speculative price when compared to industry peers, meeting the "reasonable price" need. The investment view is further supported by a very strong financial state and high profitability measures, which provide a safety buffer and indicate the growth can last.
For investors wanting to review other companies that match this mix of growth, price, and fundamental strength, the set Affordable Growth screen can be used to create a changing list of possible candidates.
Disclaimer: This article is for information only and is not financial advice, a recommendation, or an offer to buy or sell any securities. Investors should do their own complete research and think about their personal financial situation and risk tolerance before making any investment choices.
