TECHNIPFMC PLC (NYSE:FTI) Fits Peter Lynch’s Growth-at-a-Reasonable-Price Strategy

Peter Lynch’s investment strategy, described in One Up on Wall Street, centers on finding companies with stable growth at fair prices. His method combines value and growth investing, highlighting financial strength, earnings, and controlled debt. The strategy steers clear of overly popular or rapidly expanding businesses, preferring those with reliable, lasting prospects. One firm that recently appeared in a Peter Lynch-inspired screen is TECHNIPFMC PLC (NYSE:FTI), a provider of energy services focused on hydrocarbon production.

Why TECHNIPFMC Matches the Peter Lynch Approach

The screen selects companies using financial measures that fit Lynch’s ideas. Here’s how FTI aligns with these standards:

• Earnings Growth (15-30% Range):
  FTI’s 5-year EPS growth is 24.99%, fitting Lynch’s ideal range of 15-30%. This shows steady, manageable growth—neither too slow nor overly aggressive.

• Fair Valuation (PEG ≤ 1):
  The stock’s PEG ratio (past 5 years) is 0.65, well under Lynch’s limit of 1. This implies the market might be pricing FTI below its earnings growth potential.

• High Profitability (ROE > 15%):
  With a 28.01% Return on Equity, FTI beats 91.8% of its competitors in the Energy Equipment & Services sector, showing effective use of capital.

• Low Debt (Debt/Equity < 0.6):
  FTI’s Debt/Equity ratio of 0.15 is far below Lynch’s maximum, indicating minimal borrowing—a plus for long-term stability.

• Good Liquidity (Current Ratio ≥ 1):
  The Current Ratio of 1.10 means the company can cover short-term obligations, though it falls below 90% of industry peers—a slight concern.

Key Strengths and Points to Watch

A closer look at FTI’s fundamental report shows more positives:

• Better Margins: Operating and profit margins have grown lately, with a 12.39% Operating Margin ahead of most rivals.
• Solid Cash Flow: The company produces strong free cash flow, with a Debt/FCF ratio of 0.60, meaning it can repay debt quickly.
• Shareholder Benefits: FTI has decreased shares outstanding over time, a practice Lynch typically liked.

However, the report notes a lower Gross Margin (20.45%) compared to peers and a weaker Quick Ratio (0.84), indicating tighter liquidity without inventory.

Sector Background and Future Prospects

FTI works in the cyclical energy industry, but its focus on offshore and subsea technologies prepares it for lasting demand as oil exploration changes. Analysts predict 10.14% yearly EPS growth ahead, slightly slower than its past rate but still healthy. Revenue growth forecasts (4.46% yearly) are moderate, matching Lynch’s preference for steady, not extreme, growth.

Final Thoughts

For those looking for growth at a fair price, TECHNIPFMC PLC makes a strong case. Its earnings path, undervaluation (based on PEG), and solid finances fit Peter Lynch’s criteria. While liquidity and gross margins need attention, the overall financial health and industry role support a long-term investment view.

To find more stocks that fit this strategy, check the full Peter Lynch Screen results here.

Disclaimer: This article is not investment advice. Do your own research or consult a financial advisor before making investment decisions.