Bio-Techne Corp (NASDAQ:TECH) Passes the Caviar Cruise Screen for Quality Investors

For investors aiming to assemble a portfolio of lasting, high-quality businesses, the ideas of quality investing offer a strong framework. This method centers on finding companies with lasting competitive strengths, sound financial condition, and the capacity to produce high returns on capital over many years. The "Caviar Cruise" stock screen is made to methodically sort for these features, highlighting measurable numbers like steady revenue and profit increase, high returns on invested capital, strong free cash flow production, and a reasonable amount of debt. The aim is not to locate temporary discounts, but to find companies fit to become lasting holdings.

One company that appears from using this strict screen is Bio-Techne Corp (NASDAQ:TECH), a worldwide supplier of tools and reagents for life science research and clinical diagnostics. A detailed look shows how its financial picture matches several central parts of quality investing.

Financial Condition and Profitability

Central to the quality investing idea is the search for companies that use capital productively to create profits. The Caviar Cruise screen requires a high Return on Invested Capital (ROIC), specifically looking for a number over 15% when figured on core operating assets (leaving out cash and intangibles). This number is important because it shows how well a company uses its money to create returns; a high ROIC frequently points to a lasting competitive edge.

• Bio-Techne's ROIC (Ex Cash+GW) is 24.48%, well above the screen's 15% requirement. This shows the company's main activities are very good at turning invested capital into profits.
• The company also shows strong profit margins, with an operating margin of 22.13% that beats more than 91% of similar companies. This ability to set prices and operational effectiveness are signs of a good business.

Steady Increase and Performance

Quality investing is not only about present profitability; it needs a clear history of increase and the belief it will continue. The screen searches for a minimum 5% compound annual growth rate (CAGR) in both revenue and EBIT (earnings before interest and taxes) over five years. Also, it needs EBIT increase to be faster than revenue increase, a signal of getting better profitability and possible scale benefits.

• Bio-Techne's 5-year EBIT CAGR is 11.98%, easily passing the 5% mark and showing solid, steady profit growth.
• While its 5-year revenue CAGR is 7.10%, it is key to see that this number still meets the screen's increase rule. The company's higher EBIT increase compared to its revenue increase points to successful margin gains and operational benefits over this time.

Strong Cash Flow and Balance Sheet Soundness

For a quality investor, reported earnings matter less if they are not supported by actual cash entering the business. The screen checks this through "Profit Quality," which compares free cash flow to net income. A high percentage shows that profits are of good quality and easily on hand for new investment, dividends, or lowering debt. A sound balance sheet, measured by a low Debt-to-Free Cash Flow number, is just as important for long-term stability.

• Bio-Techne's 5-year average Profit Quality is a very high 177.7%. This shows the company creates much more free cash flow than its accounting net income, a signal of great financial condition and high-quality earnings.
• The company's Debt-to-Free Cash Flow number is a very low 1.34. This means it could pay off all its debt with a little more than one year of present free cash flow, showing a very strong balance sheet with little financial danger.

High-Level Fundamental Summary

A look at Bio-Techne's detailed fundamental analysis report supports this quality argument. The report gives the company a good total score, with special strength in its Profitability and Financial Condition. Its margins lead the industry, and its liquidity and solvency numbers are very good. The main points for investors are its price, which seems high compared to the wider market, and a recent reduction in revenue increase, which the company links to wider market weakness in life science tools. Still, analysts forecast future earnings increase in the high single digits.

Is TECH a Quality Stock?

Based on the measurable filters of the Caviar Cruise screen, Bio-Techne Corp makes a strong case for quality investors. It shows the main features the method looks for: high returns on capital, a long history of profitable increase, excellent change of earnings into cash, and a very sound balance sheet. These features suggest a business with lasting competitive strengths in its specific markets of protein sciences and diagnostic tools.

For investors wanting to look at other companies that pass similar strict quality filters, the Caviar Cruise screening settings can be found here: View the Caviar Cruise Screen.

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Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer to buy or sell any security. Investing has risk, including the possible loss of your original investment. You should do your own study and talk with a qualified financial advisor before making any investment choices.