TechnipFMC PLC (NYSE:FTI): A Peter Lynch GARP Candidate

The investment philosophy created by Peter Lynch has long been a guide for investors looking to build wealth through a disciplined, long-term method. His strategy focuses on finding companies that show strong, lasting growth while trading at sensible prices, a style often called Growth at a Reasonable Price (GARP). By mixing fundamental health checks with an eye for clear business models, the method aims to find companies set for long-term success without paying too much for their potential.

Alignment with Lynch's Core Ideas

TECHNIPFMC PLC (NYSE:FTI) appears as a candidate from a screen built on Lynch's criteria, showing several key traits he valued. The company works in the energy services field, providing solutions for the production and change of hydrocarbons. This places it in a cyclical but necessary industry, matching Lynch's liking for businesses in clear, if not always exciting, areas. The basic filters of the screen are made to find companies with a confirmed history of earnings growth, financial soundness, and good value, all of which are clear in TechnipFMC's profile.

Lasting Growth and Profitability

A key part of Lynch's strategy is finding companies with strong, but not overly fast, earnings growth. He was cautious of growth that could not last, which is why the screen looks for a 5-year earnings per share (EPS) growth between 15% and 30%.

• EPS Growth (5Y): 24.99%

TechnipFMC's growth rate fits well within this target area, pointing to a solid and possibly lasting increase in profitability. This earnings strength is further confirmed by high returns on capital, another measure Lynch highlighted to judge management's skill.

• Return on Equity (ROE): 28.42%

An ROE of over 28% is much higher than the screen's lowest need of 15% and is one of the best in its industry. This shows that the company is very good at creating profits from shareholders' equity, a good sign of operational skill and a lasting competitive edge.

Value and Financial Soundness

Lynch believed that even the best growth story must be bought at a fair price. The Price-to-Earnings-to-Growth (PEG) ratio is a main tool for this, trying to find stocks where the price matches their growth path.

• PEG Ratio (5Y): 0.71

A PEG ratio under 1.00 suggests the stock may be priced low compared to its past earnings growth. TechnipFMC's ratio of 0.71 shows that an investor is paying less for each unit of past growth, a good signal for value-focused GARP investors. Also, Lynch liked companies with strong balance sheets to handle economic lows.

• Debt-to-Equity: 0.14
• Current Ratio: 1.13

The company's low debt level, at just 0.14, is much better than the screen's requirement (D/E < 0.6) and matches Lynch's personal liking for very little borrowing. The current ratio above 1.0 confirms the company has enough short-term assets to pay for its short-term debts, giving a safety buffer.

Fundamental Analysis Summary

A detailed fundamental analysis report for TechnipFMC gives it a score of 6 out of 10. The report points out a company with excellent profitability measures, including better returns on assets, equity, and invested capital than its industry peers. Its value is seen as fair overall, with a good PEG ratio balancing a market-level P/E ratio. The main area to note is financial health, which scores a 6; while the company shows high ability to pay debts and a good debt situation, its cash and near-cash asset levels are lower than many industry rivals. Growth is rated medium, with very strong past EPS growth and forecasts for continued, though slower, growth in the future.

A Candidate for More Study

For investors who follow the GARP philosophy, TechnipFMC presents a good case based on number-based screening. It shows the kind of profitable growth, fair value, and financial strength that Peter Lynch supported. As always, a screen is a first step for more detailed study. Investors are urged to look into the company's competitive situation, management plans, and the up-and-down nature of the energy field.

This analysis came from a stock screen based on the ideas of Peter Lynch. You can find more companies that currently meet this strategy's rules by viewing the live screen here.

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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 views given are based on data thought to be correct, but no guarantee is made about its accuracy. All investments have risk, including the possible loss of the original amount. You should do your own research and talk with a qualified financial advisor before making any investment choices.