Installed Building Products (NYSE:IBP) Identified as a High-Quality Long-Term Investment by Caviar Cruise Screen

Installed Building Products (NYSE:IBP) has been identified by the Caviar Cruise stock screening method, a system built to find good companies appropriate for long-term, buy-and-hold investment plans. Shaped by the ideas of quality investing, this screen focuses on lasting profitability, sound finances, and operational strength instead of short-term price differences. The system measures numbers that show a company's capacity to increase, produce returns, and keep financial control over time.

Revenue and Profitability Growth

A central belief of the Caviar Cruise method is the proof of steady increase in both revenue and earnings before interest and taxes (EBIT). While the 5-year revenue growth number for Installed Building Products is not in the given data, the company’s EBIT has increased at a notable compounded yearly rate of 25.87% over the last five years. This significant growth in operating profit implies the company has not only made its operations larger but has done so with better efficiency and maybe greater ability to set prices, a sign of good businesses that can build value over time.

Return on Invested Capital

Another important filter in the quality investing screen is a strong return on invested capital (ROIC), which gauges how well a company uses its capital to produce profits. Installed Building Products states an ROIC without cash, goodwill, and intangibles of 41.47%, much higher than the screen’s lowest limit of 15%. This shows excellent capital use and a lasting competitive edge, letting the company put earnings back into the business at high returns, a main element of long-term shareholder value.

Financial Health and Cash Flow

The screen also focuses on a good financial setup, especially a workable debt level compared to free cash flow. Installed Building Products displays a debt-to-free-cash-flow number of 3.19, notably under the highest permitted value of 5. This implies the company can easily handle its debt with cash made from its operations, lowering money risk and allowing room for strategic moves or shareholder benefits.

Also, the company’s average earnings quality over the past five years is at 110.6%, much above the 75% minimum the screen needs. This measure, which matches free cash flow to net income, shows that profits are being turned into actual cash, an indicator of financial soundness and high-grade earnings.

Fundamental Analysis Overview

A review of the company’s fundamental report supports these positives. Installed Building Products receives a total score of 6 out of 10, with very good numbers in profitability (9/10) and financial health (8/10). Important points contain:

• Outstanding return on equity of 37.61%, doing better than 98.41% of similar companies.
• Firm and growing operating and profit margins in recent years.
• A good current ratio of 2.85 and quick ratio of 2.31, showing strong liquidity.
• A workable debt level compared to cash flow, even though the debt-to-equity ratio is above the industry average.

Regarding valuation, the stock seems somewhat pricey based on common measures like P/E and EV/EBITDA, which is typical for high-grade companies. Growth numbers show a firm past performance, although short-term forecasts are moderate.

Alignment with Quality Investing Principles

Beyond the figures, Installed Building Products works in a steady industry, insulation installation and building products, which gains from long-run movements in energy savings, home building, and renovation. The company’s operations across multiple areas including installation, distribution, and manufacturing offer variety and size. These non-number factors, joined with its number-based strengths, make it a strong option for investors looking for lasting, high-grade businesses.

For readers wanting to see other companies that fit the Caviar Cruise standards, more screening outcomes can be found via this link.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.