Pinterest Inc (NYSE:PINS) Emerges as a Top Growth at a Reasonable Price (GARP) Stock

For investors looking for a mix of solid expansion and careful valuation, the "Growth at a Reasonable Price" (GARP) method presents an interesting middle path. This method looks for companies with good, lasting growth paths that are not completely seen in their current stock prices, steering clear of both speculative high-growth stocks and slow value choices. By concentrating on businesses with sound basics, including good financials and steady earnings, combined with appealing prices, the method seeks to find chances where the market might be missing future promise. One stock that recently appeared through an "Affordable Growth" screen representing these ideas is Pinterest Inc - Class A (NYSE:PINS).

A Good Base in Growth and Earnings

The main attraction of Pinterest is its notable growth profile, which is a key requirement for any affordable growth method. The company's fundamental report shows a Growth Rating of 7 out of 10, supported by notable historical and expected expansion.

• Revenue Growth: Pinterest has shown very good top-line growth, with revenue rising by 26.12% on average each year over recent periods. While future growth is predicted to slow, analysts still estimate a solid yearly rise of 12.94%.
• Earnings Path: The company displays a good history in earnings per share (EPS) growth, averaging 8.67% yearly. More significantly, this pace is predicted to increase, with EPS estimated to grow by 15.64% each year in the near future.

This steady growth is backed by very good profitability, an important standard that confirms the growth is of high quality and can continue. Pinterest receives a Profitability Rating of 7, marked by a notable profit margin of nearly 49%, which is better than 94% of similar companies in the Interactive Media & Services industry. Its return on equity (ROE) of 41.19% is outstanding, placing at the top of its field. Good profitability supplies the financial means for ongoing reinvestment and protects the company in economic slowdowns, making it an essential part for a dependable GARP investment.

Valuation: Fair Considering the Outlook

The "reasonable price" part is where the GARP method distinguishes itself from pure growth investing. Pinterest's Valuation Rating of 5 implies the market is valuing its growth without too much excitement. A detailed view of the numbers shows a varied but generally acceptable situation.

• P/E Ratios: The company's standard Price/Earnings (P/E) ratio of 17.33 is viewed as high on its own. However, it is less expensive than 69% of its industry competitors and is lower than the S&P 500 average of 26.56. The more forward-looking Price/Forward Earnings ratio of 13.02 is priced cheaper than 71% of the industry.
• Growth Consideration: Importantly, when growth is included, the valuation seems more appealing. The low PEG ratio shows the stock's P/E is fairly matched to its estimated earnings growth rate of over 15%. This match is central to the GARP idea—paying a fair price for clear future growth.

Outstanding Financial Condition Offers a Safety Buffer

Maybe one of Pinterest's most notable fundamental traits is its very strong financial standing, which receives a top Health Rating of 9. This offers a meaningful safety buffer, another important part for investors looking for affordable growth.

• Balance Sheet Soundness: The company has no debt, putting its Debt/Equity and Debt/FCF ratios with the best in its field. This lack of debt gives great operational freedom and lowers risk.
• Good Liquidity: Pinterest has a current ratio and quick ratio of 8.36, showing it has more than enough means to cover short-term needs and doing better than 94% of industry peers.
• Low Failure Risk: An Altman-Z score of 16.81 points to very little financial trouble risk and better financial condition than most rivals.

This outstanding financial condition means the company can pay for its growth plans from within, handle market changes without strain, and possibly give capital back to shareholders later, all of which help the long-term investment argument.

Summary and Next Steps

Pinterest offers an interesting example for the Growth at a Reasonable Price framework. It joins increasing earnings growth and good profitability with a valuation that, while not very cheap, is fair compared to both its industry and its own growth outlook. This is all supported by an extremely sound, debt-free balance sheet that lowers investor risk. The match of these elements—good growth, high-quality profitability, fair valuation, and top-level financial condition—makes it a stock worth examining for portfolios wanting balanced, fundamental-focused growth chances.

For investors wanting to find other companies that match this description, you can view more results from the Affordable Growth screen here.

Disclaimer: This article is for information only and is not financial advice, a suggestion to buy or sell any security, or a support of any investment plan. Investors should do their own complete research, including a review of Pinterest's full fundamental analysis report, and think about their personal financial position and risk comfort before making any investment choices.