INMODE LTD (NASDAQ:INMD) Appears to Fit Peter Lynch's Investment Criteria

In the area of long-term investing, few methods have shown as much real success as Peter Lynch's system described in his important book "One Up on Wall Street." This method focuses on finding companies with lasting growth paths trading at sensible prices, mixing parts of both growth and value investing. The system stresses fundamental study over predicting market movements, looking for businesses with sound financial condition, steady earnings, and low debt amounts while staying away from companies expanding at unsupportable speeds. This structure intends to create a varied collection of 10-30 stocks meant to do well over 10-20 year periods, using Lynch's confirmed history of reaching 29.2% average yearly returns during his time leading the Magellan Fund.

Meeting Peter Lynch Criteria

INMODE LTD (NASDAQ:INMD) shows good fit with several Peter Lynch investment rules, presenting a solid case for growth at a sensible price (GARP) investors. The company's fundamental numbers reflect the balanced growth and price traits Lynch favored in his investment thinking.

The main numbers that fit with Lynch's system are:

• Lasting EPS Growth: 22.97% five-year EPS growth rate sits within Lynch's chosen 15-30% span, showing good but maintainable expansion
• Good Price: PEG ratio of 0.35 well under Lynch's highest limit of 1.0, indicating the stock is priced low compared to its growth
• No Debt: Debt/equity ratio of 0.0 meets Lynch's careful need for under 0.6, showing outstanding financial soundness
• Strong Cash Position: Current ratio of 9.60 is much higher than the lowest need of 1.0, showing very good short-term financial condition
• High Earnings Ability: ROE of 28.44% is much better than the 15% lowest limit, showing good use of shareholder money

Fundamental Condition Evaluation

The full fundamental study shows INMODE as a financially sound company working in the medical aesthetics field. The company gets an overall fundamental score of 7 out of 10, placing it well inside the Health Care Equipment & Supplies industry. INMODE's outstanding earnings numbers are notable, with return on assets at 25.23% and return on invested capital at 16.27%, both placing in the highest groups of industry competitors. The company keeps impressive earnings percentages, including a 44.50% profit margin and 79.98% gross margin, though recent small drops in operating and gross margins need watching.

From a price viewpoint, INMODE seems priced well with a P/E ratio of 8.06, much lower than both the S&P 500 average of 26.91 and industry competitors. The company's financial condition is especially good, having no existing debt and very strong cash ratios that are much better than industry averages. While recent expansion has slowed from past levels, the company's sound fundamental position and sensible price make an interesting case for long-term investors. For full fundamental study, see the complete fundamental report.

Investment Points

For investors using Peter Lynch's system, INMODE stands for the kind of company that joins clear business activities with good financial traits. The company's focus on minimally-invasive aesthetic medical products serves a developing market area with repeating income possibility. Lynch stressed putting money into businesses you grasp, and INMODE's clear business plan in the healthcare technology field meets this rule well.

The company's mix of past growth, good earnings, simple balance sheet, and sensible price makes a picture that fits with Lynch's liking for companies that can give continued results without high risk. The absence of debt gives important financial room, while the high returns on equity and invested capital show effective money use. These features are especially important in Lynch's structure, as they show a business able to build value over long times without using borrowed money.

Finding More Possibilities

Investors wanting to find more companies that meet Peter Lynch's investment rules can use the Peter Lynch Strategy Screener to locate other possible choices that share these careful investment features.

This article gives factual study based on public data and should not be seen as investment guidance. Investors should do their own study and talk with money experts before making investment choices. Past results do not promise future outcomes, and all investments have built-in risks.