Taylor Devices Inc (NASDAQ:TAYD) Identified as a High-Quality Investment by Caviar Cruise Screening

Taylor Devices Inc (NASDAQ:TAYD) has been identified by the Caviar Cruise screening method, an approach focused on finding quality investment candidates using quantifiable financial metrics. This strategy focuses on companies with steady revenue and profit increases, high returns on invested capital, strong cash flow conversion, and acceptable debt levels, characteristics that often point to lasting competitive strengths and high operational performance.

Growth and Profitability Metrics

The company reports a 5-year revenue compound annual growth rate (CAGR) of 8.05%, clearly above the screen's 5% minimum. More notably, its EBIT growth over the same period was 25.87%, greatly exceeding revenue growth. This difference points to not only larger operations but also better operational efficiency and possible pricing strength, a sign of quality businesses that can increase margins as they grow.

Return on Capital and Financial Health

Taylor Devices shows outstanding capital use with a return on invested capital excluding cash, goodwill, and intangibles (ROICexgc) of 31.52%, over two times the screen's 15% minimum. This points to a very good use of capital in profit-making operations. The company has excellent financial health with no debt, leading to a debt-to-free-cash-flow ratio of 0.0, much lower than the screen's highest limit of 5. This lack of debt offers major financial options and lowers risk in economic declines.

Cash Flow Quality

The company shows remarkable profit quality with a 5-year average free cash flow to net income ratio of 215.97%, greatly surpassing the 75% minimum need. This shows that Taylor Devices turns accounting profits into real cash at a very high rate, offering good liquidity for reinvestment, possible dividends, or strategic chances without needing outside funding.

Fundamental Analysis Summary

According to the detailed fundamental analysis, Taylor Devices rates 7 out of 10 overall, with especially high scores in profitability (9/10) and financial health (10/10). The company does better than most industry competitors in profit margins, return metrics, and liquidity ratios while keeping a valuation that seems fair compared to both its industry and the wider market. The analysis mentions exceptional health and profitability scores that create "a good base for any company," although growth metrics present mixed signs with strong historical EPS growth but moderate future expectations.

Additional Quality Considerations

Beyond the numerical filters, Taylor Devices works in specialized shock absorption and energy storage devices for aerospace, defense, and construction markets, sectors with long-term growth patterns. The company's focused knowledge probably offers competitive strengths through unique technology and long-standing customer connections. Its worldwide market presence and fairly simple business model fit well with other quality investing principles that focus on understandable businesses with lasting competitive positions.

For investors wanting to see more companies that fit the Caviar Cruise quality investing rules, the full screen results can be found through this link.

This analysis is provided 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 a qualified financial advisor before making investment decisions.