For investors looking to balance the search for growth with a degree of caution, the "Growth at a Reasonable Price" (GARP) or "Affordable Growth" strategy offers a practical middle path. This method tries to find companies that are increasing their sales and profits at a good rate while also being priced at levels that do not assume flawless future performance. By looking for stocks with good fundamental growth marks combined with acceptable valuation, profitability, and financial strength measures, investors can try to assemble a collection of companies set for increase without paying an extreme future price.
VEEVA SYSTEMS INC-CLASS A (NYSE:VEEV) is a supplier of specialized cloud software and data answers for the worldwide life sciences industry, helping customers from research and development to sales. The company's recent pick by an Affordable Growth filter indicates its profile matches this measured investment idea.
A Base of Good Growth
The central idea of any growth plan is, expectedly, growth. Veeva Systems shows a solid history and encouraging forward progress, receiving a ChartMill Growth Rating of 7 out of 10. This mark indicates good results across important measures:
- Past Results: Over the previous year, Veeva increased its Earnings Per Share (EPS) by a notable 23.84%, with a three-year average yearly EPS increase of 24.72%. Sales increase has been equally good, at 15.96% for the last year and almost 20% on average each year.
- Future Outlook: Analyst estimates indicate this growth path, while slowing, stays sound. Predicted average yearly EPS increase is near 15.33%, with sales projected to increase by about 14.37% in the next few years.
For an Affordable Growth plan, this continued and forecasted increase is vital, as it supplies the basic driver for possible future stock price gains.
Valuation with Perspective
A stock's valuation is the "reasonable price" part of the calculation. Veeva gets a middle ChartMill Valuation Rating of 5. This mark shows the stock is not inexpensive, but its cost may be acceptable considering its other traits. The review presents a detailed view:
- Higher-Priced Measures: With a Price/Earnings (P/E) ratio of 28.36 and a Forward P/E of 25.10, Veeva sells for a higher price compared to the wider S&P 500.
- Industry View: The setting is key. Inside the often highly priced Health Care Technology field, Veeva's valuation seems more average. Its P/E ratio costs less than over 77% of its industry group, and its Forward P/E is below about 66% of them.
- Growth Consideration: The Price/Earnings to Growth (PEG) ratio, which modifies the P/E for expected growth, indicates the current valuation matches the company's growth outlook. Also, the fundamental report states that Veeva's high profitability may support a higher earnings multiple.
This valuation description is exactly what an Affordable Growth filter looks for: a stock that is not overly expensive relative to its own growth possibility and its industry setting, stopping investors from paying too much for future performance.
Supporting Basics: Profitability and Financial Strength
Lasting growth at a fair price cannot stand alone; it must be supported by a steady base. This is where Veeva's other fundamental ratings give important assurance, directly meeting the strategy's need for "decent profitability and health."
- High Profitability (Rating: 8/10): Veeva works with notable effectiveness. Its Profit Margin of 27.93% and Operating Margin of 28.88% are better than 97% of industry rivals. Returns on Assets, Equity, and Invested Capital are all steadily good and above industry averages, showing management's successful use of money to create profits.
- Excellent Financial Strength (Rating: 9/10): Possibly one of Veeva's most clear advantages is its clean balance sheet. The company has no debt, leading to a Debt/Equity ratio of zero. Combined with a very high Current Ratio and Quick Ratio above 7.5, the company has superior liquidity and financial room. An Altman-Z score of 22.86 is well above safe levels, showing a very small short-term chance of financial trouble.
These high marks in profitability and strength lower investment risk. A profitable company can pay for its own growth, and a financially strong one is durable during economic slowdowns. This steadiness is necessary for the Affordable Growth method, as it helps make sure the company's growth path is not interrupted by operational weakness or balance sheet pressure.
Summary
Veeva Systems presents an example of the Affordable Growth investment concept. The company displays the required driver of good, steady growth in an important field. While its valuation is not very low, it seems fair when considered next to its high-quality fundamentals, superior industry standing, and future growth forecasts. Most significantly, this growth is supported by top-level profitability and a very strong balance sheet, giving a buffer that pure growth stocks frequently do not have.
For investors wanting to examine other companies that match this measured profile of growth, value, profitability, and strength, more outcomes can be seen by checking the Affordable Growth stock screen.
A complete explanation of the fundamental review behind these ratings for Veeva can be seen in its full fundamental report.
Disclaimer: This article is for information only and does not make up financial guidance, a suggestion to buy or sell any security, or a support of any investment plan. Investors should do their own study and think about their personal financial situation and risk comfort before making any investment choices.
