AFYA LTD-CLASS A (NASDAQ:AFYA) Stands Out as a High-Quality Investment in the Caviar Cruise Screening Strategy

The Caviar Cruise stock screening strategy is built to find high-quality companies ideal for long-term investment. Based on the ideas of quality investing, this method looks for businesses with solid revenue and profit growth, strong returns on invested capital, reasonable debt levels, and steady cash flow. The strategy highlights firms with pricing strength, competitive edges, and efficient operations, traits that help them perform well over time.

One company that fits this screening model is AFYA LTD-CLASS A (NASDAQ:AFYA), a Brazilian medical education group focused on training physicians. The company’s financial numbers match the Caviar Cruise standards, making it a strong choice for quality investors.

Key Metrics That Make AFYA a Quality Investment

1. High Return on Invested Capital (ROIC)
AFYA’s ROIC excluding cash, goodwill, and intangibles (ROICexgc) is 76.58%, well above the Caviar Cruise minimum of 15%. This number is important because it shows how well a company turns invested capital into profits. A high ROIC means AFYA uses its resources wisely, a sign of lasting competitive strengths.

2. Strong EBIT Growth Faster Than Revenue
While AFYA’s 5-year revenue growth data is missing, its EBIT growth of 37.58% CAGR over the same period points to rising profitability. Ideally, EBIT growth should be higher than revenue growth, showing better margins from scale or pricing strength. AFYA’s results here fit the screen’s focus on operational efficiency.

3. Good Debt Management
AFYA’s debt-to-free-cash-flow ratio of 2.85 is below the Caviar Cruise limit of 5, meaning the company can handle its debts easily. Free cash flow is key for dividends, buybacks, or reinvestment without taking on too much debt, a priority for long-term investors.

4. Strong Profit Quality
The company’s 5-year average profit quality, measured as free cash flow compared to net income, is 151.27%, far above the 75% target. This shows AFYA turns accounting profits into real cash well, reducing dependence on non-cash adjustments and supporting financial stability.

Fundamental Analysis Summary

AFYA’s fundamental report notes other strengths:

• Profitability: High operating (31.87%) and net (19.79%) margins, beating most competitors.
• Growth: Solid historical EPS growth (25% CAGR) and expected future revenue growth (~10% yearly).
• Valuation: Priced lower than industry and S&P 500 averages, with a P/E of 8.44.

Why These Criteria Are Important

The Caviar Cruise screen focuses on numbers that show a company’s ability to grow value over time. AFYA’s high ROIC and profit quality suggest efficient capital use and cash generation, while its reasonable debt and improving margins indicate durability. These features are vital for businesses that can succeed in different economic conditions.

Find More Quality Options

For investors looking for similar opportunities, the Caviar Cruise screener provides a selected list of high-quality stocks.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Conduct thorough research or consult a financial advisor before making investment decisions.