Manhattan Associates Inc (NASDAQ:MANH) Identified as a High-Quality Business by Caviar Cruise Screen

Supply chain management specialist Manhattan Associates Inc (NASDAQ:MANH) has been identified by an investment screening method focused on finding high-quality businesses. The "Caviar Cruise" screen, built on quality investing ideas, looks for companies with a history of strong and profitable expansion, high returns on capital, and sound financial condition. This approach favors businesses that are not only expanding but are doing so productively, making them possible selections for long-term, buy-and-hold portfolios.

Meeting the Core Quality Investing Standards

Manhattan Associates shows clear agreement with the basic filters of the Caviar Cruise screen. The company’s past results and financial numbers mirror the traits quality investors usually look for.

• Revenue & EBIT Growth: The screen demands a minimum 5% yearly expansion in both revenue and EBIT (Earnings Before Interest and Taxes) over five years. Manhattan Associates easily surpasses this, with a 5-year revenue CAGR of 8.08% and a more notable EBIT CAGR of 17.68%. Importantly, the EBIT expansion is faster than revenue expansion, a main screen filter that points to better operational profitability and possible pricing strength.
• High Return on Capital: A central part of quality investing is a high Return on Invested Capital (ROIC), which calculates how productively a company creates profits from its capital base. The screen sets a high minimum at 15%. Manhattan Associates greatly exceeds this with an ROIC (excluding cash, goodwill, and intangibles) of 495.06%, pointing to a very capital-light and productive business model.
• Sound Financial Condition: The screen assesses debt levels by comparing total debt to free cash flow, looking for a ratio under 5. Manhattan Associates does very well here with a Debt/FCF ratio of 0.0, meaning it functions with no debt on its balance sheet. This offers notable financial adaptability and lowers risk.
• High-Quality Earnings: The Profit Quality measure, which compares free cash flow to net income, is required to be above 75% on a 5-year average. This makes sure that accounting profits are being turned into real cash. Manhattan Associates displays an average Profit Quality of 144.89%, showing that it produces more cash flow than its reported net income, a signal of very high earnings quality.

Fundamental Analysis Summary

A detailed fundamental analysis for Manhattan Associates gives the stock a rating of 7 out of 10. The company gets very good scores for both profitability and financial condition. Its margins and returns on capital are some of the best in the software industry. The analysis also confirms the company's steady growth path and its clean balance sheet, which has no debt. The main point of warning is in its valuation, which is viewed as high based on traditional measures like its Price-to-Earnings ratio. However, for quality investors, a higher valuation can occasionally be acceptable for a company's better financial traits and lasting competitive strengths.

Agreement with Wider Quality Ideas

Beyond the measurable numbers, quality investing also thinks about more subjective factors that add to a company's long-term strength. Manhattan Associates, as a top provider of supply chain and omnichannel software solutions, works in an area with high entry obstacles. Its global presence and the essential nature of its software for retailers and logistics providers indicate a level of recession resistance and a competitive edge constructed on deep industry knowledge. The company gains from the long-term, ongoing trend of supply chain digitization and improvement, which backs continued need for its services.

Finding More Quality Choices

The Caviar Cruise screen is made to methodically find companies that display these signs of quality. Manhattan Associates is one of the names that passes this strict filter. Investors curious about seeing the complete list of companies that currently fit these standards can run the Caviar Cruise screen themselves.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy or sell any security, or an endorsement of any investment strategy. All investments involve risk, including the possible loss of principal. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.