AstraZeneca PLC-SPONS ADR (NASDAQ:AZN) Passes Key Quality Investing Screen for Long-Term Growth

Pharmaceutical company AstraZeneca PLC-Spons ADR (NASDAQ:AZN) has been identified by a stock screen made to find good companies for long-term investment. This screen, called the Caviar Cruise, is based on the ideas of quality investing, a method centered on buying and keeping shares in excellent businesses for long times. The approach favors companies with steady and solid revenue and profit increases, high returns on invested capital, reasonable debt, and the skill to turn accounting profits into actual cash flow. By searching for these measurable characteristics, the screen intends to produce a list of companies that merit more study by investors looking for lasting, long-term assets.

Meeting the Main Quality Standards

AstraZeneca's financial data matches well with the basic filters of the Caviar Cruise screen. The method requires that a company increases in size and does so with good profits and effective operations, and AZN's past record satisfies this requirement.

• Revenue & EBIT Growth: The screen asks for at least a 5% yearly increase in both revenue and EBIT (Earnings Before Interest and Taxes) over five years. AstraZeneca easily surpasses this, with a revenue CAGR of 7.18% and a solid EBIT CAGR of 27.35%. A main point of the screen is that EBIT growth should be faster than revenue growth, indicating better operational effectiveness and pricing ability. AstraZeneca’s much higher EBIT growth rate is a good sign here.
• Return on Invested Capital: A high ROIC is a central part of quality investing, as it shows how well a company makes profits from its capital. The screen looks for a ROIC (excluding cash, goodwill, and intangibles) over 15%. AstraZeneca has a very high number of 81.56%, putting it near the best in its field and pointing to a very profitable and secure business.
• Debt and Cash Flow Condition: To confirm financial stability, the method uses a Debt-to-Free Cash Flow ratio, choosing companies that could pay off all debt in under five years using their present cash flow. AstraZeneca’s ratio of 3.41 fits within this good area, showing a debt level that is not a problem and is backed by good cash production.
• Profit Quality: This number checks how much net income becomes free cash flow. The screen wants a five-year average over 75%. AstraZeneca’s number of 772.45% is very high, though this can be affected by large non-cash items or timing changes in working capital. Still, it shows a strong ability to produce cash from its activities.

Fundamental Analysis Summary

A check of the detailed fundamental report for AstraZeneca gives a wider view for these screening outcomes. The company gets a total fundamental rating of 6 out of 10. Its best area is profitability, where it gets a 9, having field-best margins and returns on equity and assets. Growth is also good, with a score of 6, supported by solid past gains in both earnings and revenue.

The analysis does point out some items to note. The financial condition score is a 4, mainly because of lower liquidity ratios (Current and Quick Ratio), which indicate possible issues in covering immediate bills, though its solvency numbers like the Altman-Z score are fine. The dividend is seen as steady with a long history of payments, and looking at valuation, while some absolute price-to-earnings ratios seem high, AZN is priced lower than most of its industry competitors.

A Closer View of Quality Investing Ideas

Apart from the figures, quality investors also think about non-financial points. AstraZeneca, as a worldwide leader in prescription drugs, works in a field supported by the lasting, necessary trend of healthcare needs. Its large pipeline of 191 projects, including 19 late-stage new molecular entities, is a major competitive edge and a visible way for future growth. The company's international presence and the required nature of its goods add to its stability during economic declines. While judging the skill of leadership is less measurable, the company's successful performance and strong R&D pipeline indicate good management.

For investors interested in this method, the Caviar Cruise screen can be a useful first step for more investigation. You can view the present screen and its findings here.

In conclusion, AstraZeneca makes a good argument for quality investors, showing a strong match with the measurable filters of revenue growth, profitability, capital use, and financial soundness. Its place in a stable sector, together with a large innovation pipeline, supports the non-financial points wanted in a long-term asset. As with any investment, this study should be the starting point for your own research.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented should not be used as the sole basis for any investment decision.