For investors looking for a mix of chance and caution, the "Growth at a Reasonable Price" (GARP) method presents a solid middle path. It tries to find companies that are increasing their business and profits at a good rate and are also priced at levels that do not require extreme hope about what comes next. This method sidesteps the risky excitement of extreme growth stocks and also avoids value traps, companies that are inexpensive for a cause. One way to use this method is through a structured filter for "Affordable Growth," which selects for stocks with good growth, firm profit and money strength, and a price that is still sensible. A recent name found by this filter is NATIONAL FUEL GAS CO (NYSE:NFG), a varied energy company centered on natural gas.
A Detailed View of Growth and Price
The center of the GARP case for National Fuel Gas depends on the meeting point of its growth path and its present market cost. Based on ChartMill's basic analysis report, the company gets a Growth Rating of 7 out of 10 and a Valuation Rating of 7 out of 10. This pairing is exactly what the Affordable Growth filter looks for.
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Growth Causes: The company's latest results show notable speed. In the last year, Earnings Per Share (EPS) rose by 40.31%, while Revenue increased by 20.86%. This is not a single event; the five-year history shows an average yearly EPS increase of 18.56% and revenue increase of 8.05%. For the future, experts predict revenue increase to rise to an average of 11.45% each year, though EPS increase is thought to slow to a more measured rate. This past performance together with future revenue estimates supports the company's "good growth" nature.
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Sensible Price: Even with this growth, the market does not value NFG highly. Its Price-to-Earnings (P/E) ratio of 12.1 is much lower than the wider S&P 500 average of 27.05 and is also good next to its industry group. The forward P/E ratio of 10.31 also indicates the stock is not valued for ideal outcomes. Important price measures show a steady picture:
- The P/E ratio is lower than 73% of its industry rivals.
- The Forward P/E ratio is lower than 87% of the industry.
- The Enterprise Value to EBITDA ratio is also lower than 87% of the industry.
This price setting is important for the GARP method. It means investors can approach the company's growth narrative without a very high cost, which helps reduce possible loss and betters the chance for acceptable gains.
Supporting Basics: Profit and Money Strength
For growth to continue and a sensible price to be a real chance, a company needs a firm base. This is where profit and money strength matter, and they are key parts of the Affordable Growth filter. National Fuel Gas shows clear strong points here, even with some parts to watch.
- High Profit: The company's Profit Rating is a high 9 out of 10. It regularly produces earnings and strong cash flow. Key performance ratios are top in its field:
- A Return on Assets of 7.12% is better than 100% of its industry.
- A Return on Equity of 18.26% and a Return on Invested Capital of 10.10% are near the top in the sector.
- It keeps high gross and operating margins.
This strong profit level is a main part of the filtering process because it signals a good business operation. A profitable growing company is much more interesting and less risky than a company growing through big losses or money tactics.
- Sufficient Money Strength with Notes: The Financial Health Rating of 5 out of 10 is the more careful side of the study. The company has an acceptable Debt-to-Equity ratio of 0.61, which is in fact better than all its industry group. It has also been lowering its share count, a move that benefits shareholders. However, cash measures like the Current and Quick Ratios are below 1.0, pointing to possible issues in meeting near-term needs without new cash flow. While this is not unusual for utilities that need much equipment and its Altman-Z score is top for the industry, it is a point for investors to note, showing why the filter asks for "acceptable" strength instead of a perfect score.
Is NFG a Name for Affordable Growth?
National Fuel Gas Co. offers a solid example for the Growth at a Reasonable Price method. It shows the sought mix of firm past growth, positive future revenue estimates, and a price that seems modest next to both the market and its own industry. This matches the filter's aim of finding growth that is not too costly. The company's high profit rating gives trust in the quality of its earnings, while its money strength, though not uniform, meets the level of being "acceptable" for this method.
The Affordable Growth filter is made to find such chances in a structured way. For investors wanting to see other stocks that fit these needs of good growth, sensible price, firm profit, and acceptable money strength, you can view the complete filter results here.
A full list of all basic points for NATIONAL FUEL GAS CO is in its full basic analysis report.
Disclaimer: This article is for information only and is not financial guidance, a suggestion to buy, sell, or keep any security, or a support of any investment method. The information given is from supplied data and should not be the only reason for an investment choice. Investors should do their own complete study and think about their personal money situation and risk comfort before any investment.
