METTLER-TOLEDO INTERNATIONAL (NYSE:MTD) – A Quality Stock with Strong Fundamentals

METTLER-TOLEDO INTERNATIONAL (NYSE:MTD) was identified as a potential quality investment through our Caviar Cruise stock screener. The company, a leading provider of precision instruments and services, demonstrates strong profitability, efficient capital allocation, and consistent growth—key traits sought by quality investors.

Why MTD Fits the Quality Investing Criteria

• High Return on Invested Capital (ROIC): MTD’s ROIC (excluding cash and goodwill) stands at 82.8%, significantly above the 15% threshold for quality stocks. This indicates exceptional efficiency in generating profits from invested capital.
• Strong EBIT Growth: The company has delivered an annual EBIT growth rate of 8.92% over the past five years, outpacing its revenue growth of 3.81%, which suggests improving profitability and operational efficiency.
• Healthy Debt Management: With a Debt-to-Free Cash Flow ratio of 2.39, MTD can repay its debt in under three years using current cash flows, reflecting financial stability.
• Profit Quality: MTD converts nearly all of its net income into free cash flow, with a five-year average Profit Quality of 100.58%, indicating reliable earnings.

Fundamental Analysis Summary

MTD earns a 5/10 overall fundamental rating, with standout strengths in profitability and financial health. Key highlights:

• Profitability (8/10): High margins (Operating Margin: 28.85%, Profit Margin: 22.17%) and industry-leading ROIC (43.51%).
• Financial Health (5/10): Solid solvency (Altman-Z score: 10.46) but weaker liquidity metrics (Quick Ratio: 0.70).
• Valuation (4/10): P/E (30.12) is above the S&P 500 average, but justified by strong profitability.
• Growth (4/10): Moderate past revenue growth (5.18% annually) and expected future EPS growth (9.32%).

For investors seeking durable businesses with high returns, MTD’s operational strength and disciplined capital use make it a compelling candidate.

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Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.