META PLATFORMS INC-CLASS A (NASDAQ:META) stands out as a potential candidate for quality investors, based on our Caviar Cruise screening methodology. The company demonstrates strong financial health, consistent growth, and high profitability, making it a compelling choice for long-term investors.
Key Strengths of META
High Return on Invested Capital (ROIC): META’s ROIC (excluding cash and goodwill) is an impressive 40.75%, well above the 15% threshold for quality stocks. This indicates efficient use of capital to generate profits.
Strong Revenue and EBIT Growth: Over the past five years, META has delivered 12.05% annual revenue growth and 19.21% EBIT growth, showing both expansion and improving profitability.
Low Debt Relative to Cash Flow: The company’s debt-to-free-cash-flow ratio is just 0.55, meaning it could repay all its debt in less than a year using current cash flows.
High Profit Quality: META converts 92.28% of its net income into free cash flow, reflecting strong earnings reliability.
Fundamental Analysis Summary
META earns a 7/10 in our fundamental analysis, with standout scores in profitability (9/10) and financial health (8/10). Key highlights include:
Profitability: Exceptional margins, with a 43.00% operating margin and 39.11% net profit margin, ranking among the best in its industry.
Growth: Consistent past growth in revenue and earnings, with analysts expecting 12.05% annual revenue growth in the coming years.
Valuation: While not cheap, META trades in line with industry averages, justified by its strong fundamentals.