Taylor Devices Inc (NASDAQ:TAYD) Passes Stringent Caviar Cruise Quality Screen

The Caviar Cruise screening method is a structured way to find good investment possibilities. It is based on Belgian author Luc Kroeze's writing on quality investing ideas. This approach looks for companies with steady revenue and profit increases, high returns on invested capital, sound financial condition, and lasting business structures. The screen uses simple and more detailed filters to find businesses with lasting competitive edges and high operational performance.

Taylor Devices Inc (NASDAQ:TAYD) appears as a noteworthy candidate after this strict screening process. The North Tonawanda-based company focuses on designing and making shock absorption, rate control, and energy storage devices for aerospace, defense, construction, and industrial markets around the world.

Financial Performance Metrics

Taylor Devices shows the basic traits that quality investors look for in long-term holdings. The company's past performance displays a trend of maintainable growth and operational effectiveness:

• Revenue growth (5Y CAGR): 9.13%
• EBIT growth (5Y CAGR): 23.88%
• Return on Invested Capital (excluding cash/goodwill): 27.17%
• Debt to Free Cash Flow: 0.0
• Profit Quality (5-year average): 169.56%

Growth and Profitability Alignment

The company's EBIT growth is much higher than its revenue growth, showing better operational effectiveness and possible pricing strength. This 23.88% EBIT growth next to 9.13% revenue growth indicates the company gains from economies of scale or competitive edges that let it turn more revenue into profit at a faster rate. For quality investors, this operational leverage is important as it shows management's skill in growing the business profitably.

Capital Efficiency and Financial Health

Taylor Devices shows outstanding capital use with a 27.17% return on invested capital when leaving out cash, goodwill, and intangibles. This measure is central to the Caviar Cruise method, as it shows how well management uses capital to create profits. The company's debt-free balance sheet, with a zero debt-to-free cash flow ratio, gives financial steadiness and adaptability. This careful financial setup matches quality investing ideas that favor lasting business structures over leveraged growth.

Cash Flow Quality and Reinvestment

The company's profit quality measure of 169.56% over five years shows strong cash conversion, where accounting profits greatly become real cash flow. This is much higher than the screen's 75% minimum, showing Taylor Devices' ability to create real cash returns from its operations. The high profit quality, paired with a solid ROIC, suggests the company effectively puts capital back into the business while still returning significant cash.

Fundamental Analysis Overview

According to the detailed fundamental analysis, Taylor Devices gets an overall rating of 7 out of 10, with especially high scores in profitability (8/10) and financial health (9/10). The analysis points out several main strengths:

• Outstanding profit margins of 20.04%, doing better than 97% of machinery industry peers
• Solid and getting better operating and gross margins
• Perfect liquidity ratios with current ratio of 9.21 and quick ratio of 7.02
• Fair valuation with P/E ratio of 15.72, trading below industry averages

The company's financial health is further supported by an Altman-Z score of 16.28, showing very low bankruptcy risk, and the total lack of debt on its balance sheet.

Business Model Considerations

Beyond the numbers, Taylor Devices works in niche markets with high engineering barriers to entry, indicating lasting competitive edges. Its focus on seismic protection, aerospace, and specialized industrial applications gives variety across sectors that usually show different economic sensitivities. The company's global presence and specialized product line match quality investing standards that prefer businesses with lasting competitive advantages and international market presence.

For investors wanting to look at more companies that meet the Caviar Cruise quality investing standards, the complete screen results give a wider group of possible quality investments.

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.