WIPRO LTD-ADR (NYSE:WIT) Stands Out as a Quality Investment for the Long Term

Wipro Ltd. (NYSE:WIT) has become an interesting option for quality investors using the Caviar Cruise screening method. This process finds companies with solid past results, very good profitability measures, and financial soundness that points to long-term durability. The system stresses measurable standards that show business quality, making it especially helpful for investors looking for lasting companies for long-term portfolios.

Quality Investing Framework Match

The Caviar Cruise screen assesses companies on a number of important areas that are significant for quality investing. For sales and profit expansion, the method calls for at least 5% yearly growth in both sales and EBIT over five years, with EBIT growth preferably higher than sales growth. While Wipro's 3.2% sales growth over the last five years is a bit under the 5% mark, its 8.27% EBIT growth shows better operational effectiveness. This EBIT growth being greater than sales growth indicates the company has pricing strength or gains from scale, both signs of quality businesses.

Profitability measures show notable force in Wipro's situation. The screen looks for a Return on Invested Capital excluding cash, goodwill, and intangibles (ROICexgc) over 15%, and Wipro performs very well with a 72.41% figure. This points to superior effectiveness in using capital to create profits from main operations. The company also shows solid profit quality with a five-year average of 112.5%, much higher than the 75% requirement, indicating that accounting profits regularly turn into real cash flow.

Financial Soundness and Steadiness

Financial strength forms another vital part of the quality investing method. The Caviar Cruise process looks at debt amounts compared to free cash flow, favoring companies that could in theory pay back all debt in five years using present cash flow. Wipro greatly surpasses this benchmark with a debt-to-free-cash-flow figure of 1.11, showing the company could remove its complete debt load in just over one year. This careful financial setup gives significant endurance during economic declines and room for strategic moves.

Key financial soundness measures include:

• Debt-to-Free-Cash-Flow: 1.11 years (much lower than 5-year maximum)
• Current Ratio: 2.26 (good short-term cash position)
• Altman-Z Score: 5.56 (small chance of failure)

Fundamental Analysis Summary

Wipro's fundamental score of 6 out of 10 shows a varied but mostly good evaluation against industry rivals. The company performs best in profitability (7/10) and financial soundness (7/10), with specific strong points in:

• Profit margin of 15.06%, doing better than 90.59% of IT services peers
• Operating margin of 16.76%, higher than 89.41% of industry rivals
• Return on equity of 15.68%, superior to 77.65% of similar companies

Growth shows a more average picture, with a score of 4/10. While past EPS growth has been good at 8.52% per year, future projections show some slowing. The valuation score of 5/10 indicates the stock is fairly valued compared to both industry peers and wider market measures. Detailed fundamental analysis shows more details in the company's financial situation.

Investment Points

For quality investors, Wipro offers several appealing features next to areas needing close review. The very high ROICexgc and good profit change to cash flow point to a fundamentally healthy business model. The small debt load and good cash position give operational steadiness and lower financial danger. However, the average sales growth path and falling growth rates in both sales and profits need watching to make sure the company keeps its competitive place.

The global IT services market keeps offering long-term growth trends, especially in digital change, cloud services, and artificial intelligence where Wipro has built skills. The company's global reach and varied service lineup fit well with quality investing ideas that prefer businesses with wide geographic and product variety.

Finding Other Options

Investors curious about using similar quality filters for other companies can use the Caviar Cruise screen to find other possible choices meeting these strict standards.

Disclaimer: This analysis uses public information and screening methods described. It is not investment advice, nor is it a suggestion to buy, sell, or keep any security. Investors should perform their own research and talk to financial advisors before making investment choices.