Qualys Inc (NASDAQ:QLYS) Fits the Caviar Cruise Stock Screening Strategy for Long-Term Quality Investing

The Caviar Cruise stock screening strategy helps find high-quality companies for long-term investment. Based on quality investing principles, this method looks for firms with solid revenue and profit growth, strong returns on invested capital, low debt, and steady cash flow. The process uses measurable data to highlight operational strength, financial stability, and lasting competitive edges. By applying these standards, investors can find businesses likely to provide lasting value.

Qualys Inc (NASDAQ:QLYS) fits well within this strategy. The cloud security and compliance company meets several key criteria:

Revenue and Profit Growth

• Revenue Growth (5Y CAGR): 7.70% – Qualys surpasses the screen’s 5% minimum, showing steady revenue growth.
• EBIT Growth (5Y CAGR): 20.96% – The company’s operating profit growth is much higher than its revenue growth, suggesting better efficiency and possible pricing strength.

These numbers matter to quality investors because they show a company’s ability to grow profitably. Firms with EBIT growth outpacing revenue often benefit from scale or pricing advantages, traits of resilient businesses.

High Return on Invested Capital

• ROIC (Excluding Cash & Goodwill): 148.04% – This impressive figure highlights Qualys’ ability to generate strong returns from its operations. A high ROIC points to smart capital use, a sign of quality companies.

ROIC is a key metric in quality investing, showing how well a company reinvests capital to create profits. Qualys’ performance here puts it at the top of its industry.

Solid Financial Health

• Debt/Free Cash Flow: 0.0 – Qualys has no debt, removing worries about leverage and interest costs.
• Profit Quality (5Y Avg.): 174.19% – The company turns net income into free cash flow at an outstanding rate, far above the screen’s 75% benchmark.

A debt-free balance sheet offers financial flexibility, while high profit quality means earnings are supported by real cash flow, reducing accounting risks.

Fundamental Analysis Summary

Qualys scores 7 out of 10 in ChartMill’s fundamental analysis report, with top marks in profitability (9/10) and financial health (9/10). Key strengths include industry-leading margins (gross margin of 81.79%, operating margin of 31.24%) and strong returns on equity (36.44%). While its valuation is slightly high compared to earnings, the company’s growth and profitability support the premium.

Other Factors for Quality Investors

Beyond numbers, Qualys has qualities that match quality investing principles:

• Recurring Revenue Model: Its SaaS subscriptions ensure steady cash flow.
• Cybersecurity Demand: The company operates in a fast-growing sector with rising need for cloud security solutions.
• Global Presence: Qualys serves customers worldwide, lowering geographic risk.

For investors looking for more companies that fit the Caviar Cruise criteria, see the full screen results here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a financial advisor before making decisions.