DONNELLEY FINANCIAL SOLUTIONS (NYSE:DFIN) – A GARP Candidate Worth Considering

DONNELLEY FINANCIAL SOLUTIONS (NYSE:DFIN) emerged from our Peter Lynch-inspired screen as a stock that aligns with the growth-at-a-reasonable-price (GARP) approach. The company combines steady earnings growth, strong profitability, and a conservative financial structure—all while trading at a sensible valuation.

Key Strengths

• Earnings Growth: DFIN has delivered a 5-year average EPS growth of 24.6%, comfortably within Lynch’s preferred range of 15-30%. This suggests sustainable expansion rather than overheated growth.
• Attractive Valuation: With a PEG ratio (5Y) of 0.68, the stock appears undervalued relative to its growth trajectory. A PEG below 1 often signals a bargain for GARP investors.
• Strong Profitability: The company’s return on equity (ROE) of 21.5% exceeds Lynch’s 15% threshold, reflecting efficient use of shareholder capital.
• Healthy Balance Sheet: A debt-to-equity ratio of 0.44 and a current ratio of 1.24 indicate prudent financial management with ample liquidity.

Fundamental Snapshot

Our full analysis rates DFIN a 6/10, highlighting its robust profitability and financial health. Key takeaways:

• Profitability: Above-industry ROE and ROIC, with consistent operating cash flow.
• Valuation: P/E of 16.77 is below the S&P 500 average, and EV/EBITDA suggests the stock is cheaper than 89% of peers.
• Growth Outlook: Expected EPS growth of 14% annually, though revenue growth remains modest.

For investors seeking a balanced mix of growth and value, DFIN’s fundamentals make it a compelling candidate.

Our Peter Lynch Strategy screener lists more stocks meeting these criteria and is updated regularly.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own research before making investment decisions.