InMode Ltd (NASDAQ:[INMD](https://www.chartmill.com/stock/quote/INMD)): A GARP Investment Candidate

Growth at a reasonable price (GARP) investing balances the principles of growth and value investing. While growth investors seek companies with high earnings expansion, value investors focus on undervalued stocks. GARP strategies, popularized by investors like Peter Lynch, look for firms with consistent growth, strong fundamentals, and reasonable valuations. InMode Ltd (NASDAQ:INMD) appears to fit this approach based on key financial metrics.

Why InMode Ltd Fits the GARP Criteria

Strong Historical Growth

InMode Ltd has demonstrated solid earnings growth, with a five-year EPS growth rate of 22.97%, comfortably within the 15-30% range preferred by GARP investors. This indicates sustainable expansion rather than hypergrowth, which can be difficult to maintain.

Attractive Valuation

The stock trades at a P/E ratio of 7.88, significantly below both the industry average (27.04) and the S&P 500 (28.98). Its PEG ratio (5Y) of 0.76—well below the ideal threshold of 1—suggests the stock is undervalued relative to its growth prospects.

Financial Health & Profitability

InMode boasts a debt-free balance sheet (Debt/Equity = 0), reducing financial risk. Its current ratio of 10.23 reflects strong liquidity, ensuring it can meet short-term obligations. Additionally, the company’s ROE of 25.76% highlights efficient use of shareholder capital.

Fundamental Analysis Summary

Our fundamental report assigns InMode a score of 8 out of 10, with high marks for profitability and financial health. Key strengths include:

• High margins (Gross Margin: 80.31%, Operating Margin: 28.50%)
• Strong returns (ROIC: 14.32%, outperforming 95.77% of peers)
• Positive cash flow over the past five years

While recent revenue and EPS declines raise short-term concerns, the company’s long-term growth trajectory and low valuation make it a compelling candidate for GARP investors.

View more GARP-compliant stocks here

Final Thoughts

InMode Ltd aligns with GARP principles, offering a mix of growth potential and value. Investors should conduct further due diligence, considering industry trends and competitive positioning.