QUALYS INC (NASDAQ:QLYS) Matches Key Standards of the Caviar Cruise Quality Investing Screen

The Caviar Cruise stock screening method is a structured way to find good investment chances. This plan, drawn from Belgian author Luc Kroeze's writing on quality investing, centers on firms showing steady revenue and profit increases, high returns on invested capital, low debt, and good cash flow conversion. Investors using this method look for companies with lasting competitive edges and operational strength that can produce long-term value.

Matching Caviar Cruise Standards

QUALYS INC (NASDAQ:QLYS) shows good fit with the Caviar Cruise quality investing plan in several important areas. The firm's performance data explains why it is seen as a possible quality investment.

The screening method focuses on a number of key financial measures that QUALYS meets clearly:

• Revenue Growth: QUALYS has a 5-year revenue CAGR of 7.79%, which is above the 5% minimum set by the Caviar Cruise screen. This shows the firm's capacity to keep growing its business.

• EBIT Growth Performance: With a 5-year EBIT CAGR of 20.96%, QUALYS is well above both the 5% minimum and its revenue growth. This points to better operational efficiency and possible scale benefits.

• Outstanding Return Measures: The firm has an ROIC excluding cash, goodwill, and intangibles of 82.91%, much higher than the 15% mark. This excellent return shows very good capital use efficiency.

• Debt Management: QUALYS has a Debt to Free Cash Flow ratio of 0.0, meaning it has no debt and placing it inside the acceptable 0-5 year range for quality firms.

• Cash Flow Quality: The firm shows a strong 5-year average profit quality of 174.19%, well over the 75% limit, pointing to good conversion of accounting profits into real cash flow.

Fundamental Analysis Summary

Based on the detailed fundamental analysis report, QUALYS gets a total rating of 7 out of 10, with high marks in profitability (9/10) and financial health (9/10). The company works in the competitive software field and is notable for its very good margins and returns relative to industry peers.

The analysis points out QUALYS's high profitability measures, including an 18.51% return on assets, 36.41% return on equity, and profit margins of 29.04%. These numbers put the firm in the top group in its industry. From a financial health view, QUALYS shows no debt issues, positive cash flow creation, and a lower share count from buybacks.

Operational Strength and Market Position

QUALYS's business as a cloud security and compliance solutions provider fits well with quality investing ideas. The company's software-as-a-service model builds repeating revenue, and its focus on cybersecurity meets a rising global demand. The combined platform lets customers handle IT assets, security checks, and compliance through one system, creating possible switching costs and customer loyalty benefits.

The company's strong margin structure, with gross margins of 81.84% and operating margins of 31.01%, suggests good pricing control and operational effectiveness. These traits match the Caviar Cruise focus on businesses with competitive benefits and the capacity to keep profitability during different economic periods.

Valuation Points

While QUALYS trades at a P/E ratio of 20.18, which seems fair next to both the S&P 500 average and industry peers, quality investors usually care more about business quality than exact valuation. The firm's valuation multiples related to free cash flow and enterprise value to EBITDA seem more appealing, with QUALYS trading at a lower price than about 80% of its industry rivals on these measures.

Investment Fit

QUALYS makes a good case for quality investors looking for companies with strong financials, lasting business models, and competitive edges. The firm's performance against the Caviar Cruise screening standards, especially its high returns on capital, no-debt balance sheet, and good cash flow creation, fits well with the method's focus on businesses able to provide long-term value.

For investors wanting to look at more companies that fit the Caviar Cruise quality investing standards, the complete screening results offer a wider set of possible investment choices meeting these strict requirements.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance does not guarantee future results.