Reply To: What constitutes a quality small cap company?
Typical quality factors are:
- High gross margins
- Low volatility in margins
- Revenue and earnings growth
- High and stable ROE and ROIC/ROCE
- Solid balance sheet (low leverage, net cash position etc)
- High cash conversion
In a screener I would also include some valuation metrics to allow for multiple expansion.
More information in this discussion note from NBIM: https://www.nbim.no/en/publications/discussion-notes/2015/the-quality-factor/