TransMedics Group Inc (NASDAQ:TMDX): An Affordable Growth Stock for GARP Investors

Investors looking for companies with good expansion potential at reasonable prices often use Growth At Reasonable Price (GARP) methods. This method tries to find businesses showing very good growth paths without the high prices that often come with popular stocks. By concentrating on companies with strong growth numbers, good financial condition, and acceptable profit generation, all while being available at sensible prices, investors might gain from upward movement while limiting downward risk. One stock that recently appeared through an "Affordable Growth" filter, which looks for stocks with growth grades above 7, valuation numbers above 5, and good health and profit measures, is TransMedics Group Inc (NASDAQ:TMDX).

Growth Path

TransMedics displays very good growth traits that build the base of its attraction as an affordable growth possibility. The company's recent results show notable operational increases in important financial numbers.

• Earnings Per Share rose by 162.77% over the past year, showing good profit momentum
• Revenue increased 41.20% in the last year with a notable 79.64% average increase rate over recent years
• Future estimates point to continued good performance with EPS expected to grow 42.56% each year and revenue predicted to rise 21.19% per year

These growth numbers are much higher than industry standards and offer the basic reason for investor attention. For a GARP method, such active expansion is important as it supplies the driver for future stock price increases without depending only on higher valuations.

Valuation Check

Even with its notable growth, TransMedics is available at price levels that stay acceptable compared to its growth possibilities and industry setting. The company's valuation grade of 5/10 shows a mixed view between standard measures and growth-related calculations.

• The Price/Earnings ratio of 50.49 seems high next to the S&P 500 average of 26.51, but is less expensive than 68.25% of industry companies
• Enterprise Value to EBITDA and Price/Free Cash Flow ratios show TMDX is priced more appealingly than 69.84% and 77.25% of rivals respectively
• The PEG ratio, which changes the P/E for growth, indicates the current price might be acceptable given the company's large earnings growth expectations

This valuation picture fits well with the affordable growth idea—investors are not paying high prices for average growth, but instead acceptable prices for very good growth.

Financial Condition and Profit Generation

Beyond growth and valuation, TransMedics shows good basic strength in financial condition and developing profit generation. The company gets a health grade of 7/10, showing good cash availability and workable debt measures.

• Very good cash availability with Current and Quick ratios of 7.69 and 7.13 respectively, doing better than about 89% of industry companies
• An Altman-Z score of 5.36 shows low failure risk and financial steadiness
• While debt amounts are higher with a Debt/Equity ratio of 1.43, the company has lowered its debt/assets ratio compared to the year before

Profit generation numbers show a company changing, with a grade of 5/10 showing recent gain after past difficulties. The company now shows good profit levels that compare well with industry rivals.

• Return on Equity of 25.83% and Return on Assets of 9.70% are in the top part of the health care equipment industry
• Profit Margin of 16.20% and Operating Margin of 16.94% are much better than industry averages
• The company reached profit in the most recent year after several years of operational losses

These health and profit traits supply the steadiness needed for a GARP investment, making sure the company has the financial base to continue its growth plans without too much risk.

Investment Points

TransMedics stands as an interesting example in growth investing at acceptable valuations. The company's specific organ care technology and national program system have pushed notable revenue expansion and recent profit generation. While the total P/E ratio might make some value investors stop, the growth-related measures and industry-comparative valuations suggest the market may not be completely valuing the company's growth potential. The mix of very good growth rates, acceptable valuation within its field, good cash position, and developing profit generation makes an interesting picture for investors looking for affordable growth chances.

For investors wanting to find similar chances, other stocks meeting these affordable growth requirements can be located using this customized filter.

Disclaimer: This examination is based on fundamental data and grades supplied by ChartMill.com and shows an objective review of numerical measures. It does not form investment guidance, suggestion, or support of any security. Investors should do their own investigation and talk with financial consultants before making investment choices. Past results do not ensure future outcomes, and putting money into equities includes risk of loss.