TechnipFMC PLC (NYSE:FTI) Aligns with Peter Lynch's GARP Investment Philosophy

The investment philosophy supported by Peter Lynch, the famous manager of Fidelity's Magellan Fund, focuses on finding companies with good growth potential that are available at fair prices—a method frequently called Growth at a Reasonable Price (GARP). Lynch highlighted lasting earnings growth, good financial condition, and clear business models, choosing firms that are not excessively promoted but show steady operational quality. His method mixes parts of both growth and value investing, concentrating on basic measures like the PEG ratio, debt amounts, and earnings to find long-term successes.

TECHNIPFMC PLC (NYSE:FTI) appears as a candidate that matches several of Lynch’s main standards. As a supplier of integrated projects, products, and services for the energy industry, especially in subsea and surface technologies, the company works in a specialized but vital field. Its worldwide presence and concentration on hydrocarbon solutions place it in a sector that, while occasionally changing, stays important to global infrastructure.

Key Metrics Alignment

Lynch’s method puts lasting growth, fair valuation, and financial strength first. Here is how TechnipFMC compares to his screening measures:

• PEG Ratio (Past 5 Years): 0.71
  Lynch liked companies with a PEG ratio under 1, as it shows the stock could be priced low compared to its earnings growth. TechnipFMC’s PEG of 0.71 implies the market has not completely accounted for its past growth, providing a safety buffer.

• EPS Growth (5-Year Average): 24.99%
  Lynch looked for earnings growth from 15% to 30% to prevent unrealistically high expansion. TechnipFMC’s almost-25% growth fits well in this area, showing good but controlled growth.

• Return on Equity (ROE): 28.01%
  An ROE over 15% was essential for Lynch, since it shows good use of shareholder money. TechnipFMC’s ROE of 28% not only meets but greatly surpasses this standard, placing in the top group of its industry.

• Debt-to-Equity Ratio: 0.15
  Lynch chose companies with little debt, often looking for a ratio under 0.25. TechnipFMC’s 0.15 shows a careful financial setup, lowering money risk and increasing strength.

• Current Ratio: 1.10
  This meets Lynch’s need for a ratio above 1, indicating the company can meet immediate debts, although it is important to see that cash measures are one area where TechnipFMC is behind some industry rivals.

Fundamental Health Overview

Based on Chartmill’s fundamental report, TechnipFMC has an overall score of 6 out of 10, showing a varied but mostly good picture. The company does well in earnings, with good returns on assets, equity, and invested money, all doing better than most industry peers. Its profit margins have gotten better, and it produces positive cash flow. However, the report mentions some issues with cash ratios and dividend continuity, though the last is less important for GARP investors mainly interested in price gains. Valuation is seen as acceptable, with a P/E ratio under the S&P 500 average but a bit high compared to industry numbers in some measures.

Alignment with Lynch’s Broader Principles

Beyond the figures, Lynch suggested investing in businesses you know—companies that offer necessary, even if ordinary, services. TechnipFMC’s part in energy infrastructure matches this thought: it is a key supporter for offshore oil and gas production, a field with lasting need. The company’s focus on integrated answers and technical advances might offer a lasting edge. Also, its share repurchase plan and lower share count over time fit with Lynch’s liking for companies that give value to shareholders through systematic ways.

For investors wanting to look into other companies that fit the Peter Lynch method, more screening outcomes are available here.

TechnipFMC offers a strong case for investors looking for growth at a fair price, with features that connect with Peter Lynch’s proven method. Its good past earnings growth, solid earnings, and careful debt amounts are positive for long-term possibility, though investors should keep aware of industry changes and cash measures. As always, complete personal research and a long-term view are necessary.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.