Globus Medical Inc - A (NYSE:GMED): A Strong GARP Candidate with Solid Growth and Fair Valuation

Investors looking for growth opportunities without paying too much often use the "Growth at a Reasonable Price" (GARP) strategy, which combines strong growth potential with fair valuations. One method to find such stocks is by using fundamental screening tools that assess companies based on growth, profitability, financial health, and valuation metrics. GLOBUS MEDICAL INC - A (NYSE:GMED) stands out as a candidate that meets this approach, performing well in these key areas while offering an appealing valuation.

Growth: A Key Advantage

Globus Medical shows strong growth, earning a ChartMill Growth Rating of 7. Key points from its fundamental analysis report include:

• Revenue Growth: Over the past year, revenue increased by 32.26%, with a five-year average of 26.25% annually.
• Earnings Growth: EPS rose 23.02% in the last year, with a five-year average growth rate of 13.19%, showing steady profitability improvements.
• Future Outlook: Analysts expect 12.10% annual EPS growth ahead, suggesting continued progress despite a slight slowdown in revenue growth.

For GARP investors, solid historical and expected growth is important—it ensures the company can deliver returns without relying only on uncertain future performance.

Valuation: Fairly Priced for Growth

Despite its growth, GMED remains fairly valued, scoring 6 in Valuation:

• P/E Ratio: At 17.43, GMED trades below the industry average (29.04) and the S&P 500’s 27.69, making it relatively affordable.
• Forward P/E: The forward P/E of 14.47 further highlights its value, trading lower than 85.56% of industry peers.
• Enterprise Value/EBITDA: GMED ranks well here, valued lower than 91.44% of competitors, adding to its appeal for value-focused growth investors.

A fair valuation helps investors avoid overpaying for growth, reducing risk if market conditions change.

Profitability and Financial Health: A Stable Foundation

GMED’s Profitability Rating of 7 and Health Rating of 7 provide a strong base:

• High Margins: Operating margins (17.79%) and gross margins (66.86%) exceed most peers, showing pricing power and efficiency.
• Solid Balance Sheet: With no debt and a current ratio of 4.45, the company can support growth without financial pressure.
• ROIC Growth: Its return on invested capital (8.24%) is above the industry average and has improved, indicating good use of capital.

These metrics matter for GARP strategies—profitability ensures growth is lasting, while financial health lowers the risk of dilution or trouble.

Conclusion: A Well-Rounded Growth Option

Globus Medical fits the affordable growth approach well, offering above-average growth, solid profitability, and a reasonable valuation. While its revenue growth may slow slightly, its strong margins, debt-free position, and fair multiples make it an attractive choice for investors seeking growth without high risk.

For more stocks that match this screening method, check the Affordable Growth Screen on ChartMill.

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