For investors looking for a mix of solid growth and fair price, the "Affordable Growth" or Growth at a Reasonable Price (GARP) method presents a noteworthy option. This method tries to find firms that are increasing at a rate above the norm but do not carry the very high prices common to the most aggressive growth stocks. By looking for solid basics in growth, earnings, and financial strength, while also requiring a fair price score, the method works to lower risk and prevent paying too much for future prospects. Veeva Systems Inc - Class A (NYSE:VEEV) appears as a pick from such a filter, justifying a more detailed review of its basic profile.
Growth Path and Momentum
The central idea of any growth method is finding firms with solid and lasting increase. Veeva's basic report points to a noteworthy growth story, receiving a ChartMill Growth Rating of 7 out of 10. The firm has shown a notable ability to grow both its revenue and earnings at a good speed.
- Past Results: In the last year, Veeva increased its Earnings Per Share (EPS) by 23.84% and its Revenue by 15.96%. The averages over a longer period are more notable, with EPS increasing at 24.72% and Revenue at 19.99% per year in recent years.
- Future Outlook: Experts predict this forward motion will persist, though at a somewhat slower speed. Future EPS is forecast to grow by 15.33% yearly, with Revenue expected to rise by 14.37% on average. While this is a slowdown from the outstanding past rates, it still represents a solid growth view that supports the affordable growth argument.
Price Consideration
A fair price is what makes a growth stock "affordable" and not overly risky. Veeva gets a ChartMill Valuation Rating of 5, meaning it is not seen as too costly within its sector and growth context. This score shows a detailed situation where common measures seem high but are supported by the firm's quality and industry standards.
- Price/Earnings View: With a P/E ratio of 28.16, Veeva trades near the current S&P 500 average. More significantly, it is priced lower than over 76% of similar firms in the Health Care Technology industry, where average prices are much higher.
- Growth Adjustment: The PEG ratio, which modifies the P/E for forecast earnings growth, indicates the stock is priced fairly. The review states that Veeva's very good earnings and expected growth rates may support its current price multiple, keeping it from being labeled as costly within its high-achieving group.
Foundational Strength: Earnings and Financial Soundness
For a growth-at-a-fair-price method to be reliable, the growth must rest on a stable base. This is where Veeva's profile stands out, having high-level scores in both earnings (9/10) and financial soundness (9/10). These elements are vital as they lower basic risk and aid lasting increase.
- Notable Earnings: Veeva runs with industry-best margins. Its Profit Margin of 27.93% and Operating Margin of 28.88% are better than 97% of industry rivals. Returns on capital are also strong, with a Return on Invested Capital (ROIC) of 10.39% showing effective use of investor money.
- Very Strong Financial Soundness: The firm keeps a clean balance sheet with no debt, an unusual feature that offers great operational freedom and stability. Its cash position is excellent, with Current and Quick Ratios of 7.53, well above industry averages and confirming it can cover short-term needs with ease.
Conclusion
Veeva Systems illustrates the affordable growth filter idea. It pairs a solid, double-digit growth path in both past performance and future outlook with a price that, while not a bargain, is fair compared to its industry and quality. Importantly, this growth is supported by notable earnings measures and a very strong balance sheet with no debt, tackling key risk points for growth investors. The mix indicates a firm performing well in its specialty, providing cloud solutions to the life sciences industry, without the extreme price levels that often come with such performance.
For investors wanting to examine other firms that fit similar standards of good growth, sound basics, and fair price, you can see the full Affordable Growth filter results.
Disclaimer: This article is for information only and is not financial guidance, a support, or a suggestion to buy, sell, or hold any security. The basic data and ratings use past and forecast figures, which can change. Investors should do their own complete research and think about their personal money situation and risk comfort before making any investment choices.
