DRDGOLD LTD-SPONSORED ADR (NYSE:DRD) Fits the Growth at a Reasonable Price (GARP) Profile

For investors looking to balance the search for growth with some caution, the Growth at a Reasonable Price (GARP) method provides a solid middle path. This method, often used in an "Affordable Growth" filter, finds companies with good growth potential but without the extreme prices seen with other high-growth stocks. The aim is to find businesses where good basics, like profit and financial strength, support the growth story, pointing to durability instead of just speculation. One stock that recently appeared from this type of filtering is DRDGOLD LTD-SPONSORED ADR (NYSE:DRD), a South African firm focused on recovering gold from old mining waste material.

A Good Growth Profile

The main element of any GARP investment is, expectedly, growth. DRDGOLD’s recent results here are strong, giving it a high Growth score of 8 out of 10 in its basic review. The company is not only growing, it is speeding up.

• Very Strong Recent Results: In the last year, DRDGOLD reported very high year-over-year growth in Earnings Per Share (EPS) of 141.66% and Revenue growth of 87.20%.
• Good Historical Pattern: This is not a single event. The company has kept a notable average yearly EPS growth of 26.15% and Revenue growth of 13.49% over recent years.
• Positive Future View: Analyst predictions indicate this pace will carry on, with expected average yearly growth of 27.21% for EPS and 16.38% for Revenue in the next few years.

This mix of good past results and a likely future path is just what growth investors seek. It shows effective operations and a business plan that can use market chances, which for DRDGOLD involves the continued recovery of gold from past mining waste.

Valuation at a Sensible Level

While growth is needed, the "reasonable price" part is what sets the GARP method apart and lowers risk. A stock priced too high can see its value stay flat even with good growth. DRDGOLD’s Valuation score of 6 implies it is not priced for ideal outcomes, offering a possible chance to buy.

• Good Value Measures: The company trades at a Price-to-Earnings (P/E) ratio of 14.34, which is seen as low compared to its industry group, 93.55% of which have higher valuations. Its forward P/E of 14.11 also looks good next to the wider S&P 500 average.
• Growth Consideration: Maybe more important is the Price/Earnings-to-Growth (PEG) ratio, which includes growth forecasts. DRDGOLD’s low PEG ratio shows the market may not be fully accounting for its high expected earnings growth, a typical sign of a GARP chance.

This valuation setting is key. It implies the market has not yet pushed the stock price to unreasonable levels based on its growth potential, allowing space for possible gain as the company follows its plans.

Supporting Basics: Profit and Strength

A filter for "affordable growth" correctly focuses on more than just growth and price. It needs the core business to be stable, which is where profit and financial strength matter. These points lower the chance that the growth story is based on weak grounds.

DRDGOLD does very well in Profit, having a top score of 9. Its margins are a key advantage, with a Profit Margin of 27.51% and an Operating Margin of 35.35%, each putting it in the best part of its industry. Also, its Return on Invested Capital (ROIC) of 26.85% is much higher than its cost of capital, showing it is producing real value for shareholders with its work. High profit supplies the means for reinvestment and growth without needing too much outside funding.

The company’s Financial Strength score is a good 6. Its balance sheet is very careful, with almost no debt (a Debt/Equity ratio of 0.00), a trait that is better than over 80% of its industry peers. Its cash ratios, like a Current Ratio of 2.28, show more than enough ability to cover near-term needs. While the report mentions a small point about a rise in shares outstanding over a five-year span, the overall financial picture is very good. A strong balance sheet gives protection from economic drops and small operational issues, a needed quality for a growth stock.

Summary and More Study

DRDGOLD offers a solid example for the Growth at a Reasonable Price method. It shows the very high revenue and earnings growth that draws momentum investors, yet it trades at valuation measures that are sensible both compared to history and within its industry. This growth is supported by excellent profit measures and a very strong balance sheet with little debt, tackling main risk points that often trouble high-growth companies.

The company’s basic picture, shown in its full ChartMill review report, matches well with the needs for affordable growth: strong growth (score 8), high profit (9), acceptable financial strength (6), and a sensible valuation (6). For investors wanting to look at other companies that fit this careful method, the set "Affordable Growth Screen" can be used to create a new list of possible choices using current market data.

---

Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer or request to buy or sell any securities. The information given is based on supplied data and should not be the only source for any investment choice. Investing has risk, including the possible loss of the original amount. Always do your own research and think about talking with a qualified financial advisor before making any investment choices.