Haemonetics Meets Quality Screen on Returns and Cash Generation
Haemonetics passed a quality-focused screen that requires durable growth, high returns on capital, modest leverage, and cash-backed profits. Its five-year revenue CAGR was 5.93%, EBIT CAGR was 27.48%, and ROIC excluding cash, goodwill, and intangibles was 23.84%. The company's debt-to-free-cash-flow ratio was 4.79, and its five-year average profit quality was 140.14%.
Haemonetics is a New York-listed medical technology firm assessed through a quality-investing framework inspired by Luc Kroeze's The Caviar Formula. The base checklist demands five-year revenue and EBIT growth above 5%, EBIT outpacing revenue, ROIC excluding cash, goodwill and intangibles above 15%, debt-to-free-cash-flow below 5, and average profit quality above 75%.
Against those tests, revenue compounded at 5.93%, EBIT at 27.48%, that ROIC reached 23.84%, debt/FCF was 4.79, and profit quality averaged 140.14%. A separate fundamental report gave 6/10, citing excellent profitability, medium growth, correct valuation, and minor financial-health concerns; it noted high debt/equity, declining profit margin, and a PEG implying growth may not justify the P/E.
Investors using quality screens may gain a framework to evaluate durable medtech firms, potentially affecting capital allocation toward companies with strong cash generation. Employees, patients, and suppliers of such firms could be indirectly affected if access to capital or strategic priorities shift. However, screen results are not guarantees; market, regulatory, and clinical risks may alter outcomes.