AMETEK INC (NYSE:AME) Identified as a High-Quality Stock by Caviar Cruise Screen

AMETEK INC (NYSE:AME) has been identified by the Caviar Cruise stock screening method, a process built to find good companies for long-term investment. This approach focuses on durable business models, strong financial condition, and steady growth, characteristics that match the ideas of quality investing. The screen assesses measures like revenue and EBIT growth, return on invested capital, debt level, and profit quality to select companies showing operational strength and financial durability.

Financial Performance and Growth

AMETEK satisfies a number of main requirements of the Caviar Cruise screen, showing good past results and effective capital use:

• Revenue Growth (5Y CAGR): 7.45%, above the 5% minimum, showing continued need for its electronic instruments and electromechanical devices.
• EBIT Growth (5Y CAGR): 8.61%, also above the 5% minimum and showing that profit is increasing more quickly than revenue, a signal of operational effectiveness and possible pricing strength.
• Return on Invested Capital (ex-cash and intangibles): 69.31%, much higher than the 15% standard, indicating very good returns on capital used and capable management.

These measures are important to quality investing, as they show a company’s capacity to grow profitably while creating high returns for shareholders.

Balance Sheet Strength and Cash Flow Quality

AMETEK’s financial steadiness is another main advantage, matching the screen’s focus on low debt and good-quality earnings:

• Debt-to-Free Cash Flow: 1.15, much lower than the screen’s maximum of 5, meaning the company could eliminate its debt in just over one year using present cash flow, a sign of financial adaptability.
• Profit Quality (5-year average): 115.39%, considerably above the 75% minimum, showing that net income is being turned into free cash flow effectively. This lessens dependence on accounting profits and supports the durability of earnings.

These numbers are important to quality investors because they lower risk and confirm the company can finance future growth, dividends, or purchases without taking on too much debt.

Fundamental Analysis Overview

Based on Chartmill’s fundamental report, AMETEK has a score of 7 out of 10, with notable ability in profitability and financial condition. The report mentions very good margins, with an operating margin of 26.24% doing better than all others in the industry, and a solid ROIC of 11.25%. Solvency measures are strong, including a low debt-to-equity ratio of 0.15 and an Altman-Z score pointing to very low bankruptcy risk. While growth is average and valuation is reasonable compared to the industry, the company’s high-quality features make it an interesting candidate for more study.

Suitability for Quality Investing

Apart from the figures, AMETEK displays traits valued by quality investors:

• It works in specialized markets (e.g., analytical instruments, electromechanical devices) with probable competitive benefits and pricing strength.
• The company has an international presence, spreading out revenue streams and lowering geographic risk.
• Its reliable performance and high cash conversion fit with the buy-and-hold strategy, lessening the requirement for regular portfolio changes.

For investors wanting to review other companies that meet comparable requirements, the Caviar Cruise screen provides a selected list of possible options.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider their financial situation and risk tolerance before making investment decisions.