Definition
QARP extends GARP by emphasizing quality factors like high ROE, stable margins, low debt, and consistent cash flows. It seeks companies with durable competitive advantages trading at reasonable multiples, prioritizing business quality over pure growth rates.
Formula
Screens typically combine: ROE > 15%, Debt/Equity < 50%, P/E < 25
Example
A QARP investor prefers a company with 18% ROE, 20% margins, and P/E of 18 over a company with 25% ROE but 40x P/E, balancing quality with valuation.
FAQ
What is QARP (Quality at a Reasonable Price)?
An investment approach focusing on high-quality companies at fair valuations.
How do you calculate QARP (Quality at a Reasonable Price)?
A common formula for QARP (Quality at a Reasonable Price) is: Screens typically combine: ROE > 15%, Debt/Equity < 50%, P/E < 25
Why is QARP (Quality at a Reasonable Price) important?
QARP (Quality at a Reasonable Price) helps investors evaluate valuation and make more informed decisions.