Quality Investing Analysis: Patrick Industries Inc (NASDAQ:PATK) and the Caviar Cruise Screen

Quality investing represents a specific method for portfolio building that focuses on finding companies with lasting competitive strengths, sound financial condition, and lasting growth potential. The Caviar Cruise screening method, based on quality investing ideas, methodically finds companies that show better operational results using measurable data. This plan favors businesses with steady revenue and profit increases, good returns on money put into the company, acceptable debt amounts, and the skill to turn accounting profits into real cash flow. Investors using this method look for companies that can provide long-term value growth instead of short-term market changes.

Financial Performance Measurements

Patrick Industries Inc (NASDAQ:PATK) shows several traits that match quality investing ideas through its financial data. The company's EBIT growth of 10.81% over the last five years is well above the screen's 5% minimum, showing steady operational betterment. This measurement is especially notable in quality investing as it shows main business results without the alteration of financial structuring or tax factors.

The company's return on invested capital without cash, goodwill, and intangibles is 21.51%, notably higher than the 15% need in the Caviar Cruise screen. This good ROIC indicates management uses capital effectively to create good returns, a key part of quality investing thinking. Companies keeping high ROIC levels often have competitive strengths that let them earn good returns on their investments.

Balance Sheet and Cash Flow Condition

Patrick Industries shows careful financial management through its debt-to-free-cash-flow measurement of 4.86, staying inside the acceptable limit of 0-5 years given in the quality screen. This ratio shows the company could in theory pay back all its debt in less than five years using present cash flow levels, giving financial options and lowering failure risk.

The company's profit quality measurement of 148.51% over the last five years is much higher than the 75% minimum, showing great skill to change accounting profits into real cash flow. This good cash changing ability gives the company resources for planned projects, including possible purchases, debt lowering, shareholder payments, or putting money back into the business.

Fundamental Evaluation

According to the detailed fundamental analysis, Patrick Industries gets a total rating of 5 out of 10, placing it as a medium-level performer in the automobile components industry. The evaluation shows different results across various rating groups:

• Profitability: Medium score of 5/10 with good return on equity (11.03%) and invested capital results but smaller profit margins compared to industry friends
• Financial Health: Mixed score of 5/10 including a good Altman-Z score of 3.15 and acceptable debt-to-free-cash-flow ratio, but with higher debt-to-equity levels
• Growth: Medium rating of 5/10 with good past revenue growth (9.72% CAGR) and expected EPS growth (17.94% each year), though recent revenue growth has slowed
• Valuation: Score of 3/10 indicating higher pricing with P/E ratio of 22.92, though forward P/E of 16.92 seems more acceptable
• Dividend: Medium rating of 5/10 with steady payment history and good growth, though lasting power questions exist because earnings growth is behind dividend rises

Industry Place and Business Method

As a main supplier of component answers for recreational vehicles, marine, manufactured housing, and industrial markets, Patrick Industries gains from varied presence in several growing areas. The company's manufacturing and distribution parts provide full answers across its target markets, while its RecPro e-commerce site shows a planned project to get aftermarket chances. This business method fit with long-term consumer directions in recreational markets backs the quality investing idea of putting money into companies placed for lasting growth.

Investment Points

While Patrick Industries meets several number-based standards of the Caviar Cruise quality screen, investors should think about the company's higher valuation and medium profit margins inside its industry setting. The company's good cash flow creation, acceptable returns on capital, and sensible debt outline provide a base for continued operational performance. However, the mixed fundamental rating indicates complete careful checking stays needed before investment thought.

For investors wanting to look at more companies that meet the Caviar Cruise quality standards, the full screening outcomes give a wider group of possible quality investments across different areas and market sizes.

Disclaimer: This evaluation is for information reasons only and does not make up investment guidance, suggestion, or support of any security. Investors should do their own checking and talk with money advisors before making investment choices. Past results do not ensure future outcomes.