UNITED THERAPEUTICS CORP (NASDAQ:UTHR) Excels as a High-Quality Pick in the Caviar Cruise Stock Screen

The Caviar Cruise stock screening strategy is designed to find high-quality companies suitable for long-term investment. Based on quality investing principles, this method looks for firms with steady revenue and profit growth, high returns on invested capital, strong cash flow, and manageable debt. The approach prioritizes businesses that perform well over time and have lasting competitive advantages and efficient operations. By focusing on these traits, the screen helps identify companies likely to provide lasting value to shareholders.

UNITED THERAPEUTICS CORP (NASDAQ:UTHR) appears as a strong candidate under this strategy, meeting many key criteria that match quality investing principles.

Revenue and Profit Growth

A key part of the Caviar Cruise strategy is finding companies with steady growth in revenue and profits. United Therapeutics shows solid revenue growth, with a 5-year compound annual growth rate (CAGR) of 7.16%, above the screen’s 5% minimum. Its EBIT growth over the same period is 17.97%, much higher than revenue growth, a sign of better operational efficiency and pricing strength. This matches the screen’s rule that EBIT growth should be higher than revenue growth, showing the company can grow profits effectively.

High Return on Invested Capital (ROIC)

ROIC is important for quality investors, as it shows how well a company uses capital to generate profits. United Therapeutics performs well here, with an ROIC (excluding cash, goodwill, and intangibles) of 28.28%, above the 15% minimum set by the screen. This suggests the company uses its resources efficiently, a sign of a well-run, high-quality business.

Strong Cash Flow and Profit Quality

The screen favors companies that turn accounting profits into real cash flow, a sign of financial health. United Therapeutics has an impressive 5-year average profit quality (free cash flow to net income) of 98.64%, well above the 75% benchmark. This means nearly all reported earnings are supported by actual cash, reducing the risk of accounting issues. The company also has no debt, shown by its Debt/Free Cash Flow ratio of 0.0, highlighting a clean balance sheet and financial flexibility.

Valuation and Fundamental Strength

While the Caviar Cruise screen does not set strict valuation rules, United Therapeutics seems reasonably priced, with a P/E ratio of 11.77, below industry and S&P 500 averages. The company’s fundamental analysis report shows strong profitability, with top-tier margins (operating margin of 50.06%) and good liquidity (current ratio of 7.26). Its Altman-Z score of 13.96 confirms financial stability, with very low bankruptcy risk.

Industry Position and Competitive Strengths

As a biotechnology company focused on treatments for pulmonary arterial hypertension and oncology, United Therapeutics works in a specialized area with high entry barriers. Its FDA-approved therapies and ongoing research give it a lasting competitive edge, a key factor for quality investors looking for long-term growth. The company’s global presence and pricing strength further support its fit with this strategy.

Conclusion

United Therapeutics Corp is a strong investment candidate, meeting the Caviar Cruise screen’s strict standards for growth, profitability, and financial health. Its reliable cash flow, debt-free balance sheet, and efficient capital use make it a good choice for investors focused on sustainable, long-term returns.

For those interested in more companies that pass the Caviar Cruise screen, click here to view additional results.

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