MSA Safety Inc. (NYSE:MSA): A Quality Investment Built for the Long Term

For investors aiming to create a lasting, durable portfolio, the ideas of quality investing present a useful structure. This method centers on finding companies with lasting competitive strengths, sound financial condition, and the capacity to produce steady, reliable profits over many years. Instead of searching for large discounts, quality investors are prepared to pay a reasonable price for outstanding businesses they can hold for a very long time. One organized way to find these companies is through a specific stock screener, like the "Caviar Cruise" screen, which selects for firms with good past revenue and profit increase, high returns on capital, solid cash generation, and acceptable debt.

A recent search using this approach has identified MSA Safety Inc (NYSE:MSA), a worldwide leader in the creation and production of safety products and solutions. The company’s presence on the screen implies its financial characteristics match the signs of a quality business, deserving additional examination from investors concentrated on lasting holdings.

Matching the Main Quality Standards

The Caviar Cruise screen uses several measurable filters to find possible quality investments. MSA Safety's financial numbers show it meets these important checks clearly.

• Profitability and Efficiency: A central part of quality investing is a high return on invested capital (ROIC), which calculates how well a company produces profits from its capital base. The screen demands an ROIC (leaving out cash, goodwill, and intangibles) over 15%. MSA Safety greatly surpasses this with a number of 29.4%, showing notable efficiency and a strong competitive position in its area of safety equipment.
• Financial Condition and Flexibility: Quality companies are not weighed down by debt. The screen uses a Debt-to-Free Cash Flow (FCF) ratio below 5 to make sure debts can be handled easily. MSA’s ratio of 2.2 is good, meaning it could pay off all its debt in a little over two years using its present cash flow, giving notable financial stability.
• Reliable Earnings: The screen looks for companies that turn accounting profits into actual cash, a signal of earnings reliability. It filters for a 5-year average Profit Quality (FCF/Net Income) over 75%. MSA’s number of 213% is excellent, meaning its reported net income is more than fully received as cash, giving good funds for reinvestment, dividends, or lowering debt.
• Profitable Increase: Lasting increase is important. The screen checks for 5-year compound annual growth rates (CAGR) over 5% for both revenue and EBIT (earnings before interest and taxes), with EBIT increase exceeding revenue increase—a signal of getting more profitable. MSA’s revenue CAGR is 4.7%, just under the limit, but its EBIT CAGR of 12.4% is more than twice the requirement and much higher than its sales increase. This shows the company has increased its profit margins through operational effectiveness or pricing strength.

A View of Financial Condition

A look at MSA Safety’s wider fundamental analysis report supports the image shown by the screen. The company gets an overall fundamental rating of 6 out of 10, with specific strong points in profitability and financial health.

• Profitability is a clear strong point (rating: 9/10), with margins that are near the best in its industry. Its operating margin of 21.1% and profit margin of 15.0% do better than over 95% of similar companies in the Commercial Services & Supplies sector. Both margins have shown good growth in recent years.
• Financial health is solid (rating: 7/10), backed by a good Altman-Z score showing low bankruptcy risk and very good liquidity with a current ratio of 3.1. The debt situation, as seen in the screen, is very acceptable.
• Growth is consistent (rating: 4/10), with a reliable historical EPS growth rate near 10% each year. Analysts think this pace will keep going, expecting future EPS growth around 8.4% per year.
• Valuation is not uniform (rating: 4/10). While its P/E ratio seems high compared to its own past, it is valued lower than many industry peers and the wider S&P 500. For a quality investor, this may be a reasonable price for a company with such good financial traits.

You can see the complete, detailed analysis in MSA Safety’s fundamental analysis report.

The Non-Quantitative Argument for a Quality Holding

Beyond the figures, MSA Safety’s business model shows several non-quantitative features that quality investors value. The company works in the necessary area of worker safety, providing products like breathing apparatus, gas detection systems, and protective helmets. This essential nature creates a stable, consistent demand source. Its global presence spreads out revenue sources and connects to worldwide industrial safety patterns. The business is fairly simple to grasp, and its recognized brand (e.g., the V-Gard helmet line) and established connections with fire services and industrial clients point to a lasting competitive edge.

Conclusion

MSA Safety Inc. offers a useful example of a company found through an organized quality investing screen. Its notable return on capital, excellent cash conversion, good balance sheet, and pattern of profitable growth match the central principles of looking for lasting, well-run businesses. While its valuation is not low and revenue increase is moderate, its financial strength and defensive market may support a higher price for investors with a long-term view. As always, this examination should be a beginning for more study.

Want to find other companies that meet strict quality filters? You can use the Caviar Cruise screen yourself and see the complete list of results by using this link: Caviar Cruise Quality Stock Screener.

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