We assign a fundamental rating of 7 out of 10 to QLYS. QLYS was compared to 278 industry peers in the Software industry. QLYS scores excellent points on both the profitability and health parts. This is a solid base for a good stock. QLYS is not valued too expensively and it also shows a decent growth rate. These ratings could make QLYS a good candidate for quality investing.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

QLYS had positive earnings in the past year.
QLYS had a positive operating cash flow in the past year.
In the past 5 years QLYS has always been profitable.
In the past 5 years QLYS always reported a positive cash flow from operatings.

1.2 Ratios

The Return On Assets of QLYS (18.33%) is better than 94.96% of its industry peers.
QLYS has a Return On Equity of 35.73%. This is amongst the best in the industry. QLYS outperforms 93.53% of its industry peers.
With an excellent Return On Invested Capital value of 29.68%, QLYS belongs to the best of the industry, outperforming 96.76% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for QLYS is significantly above the industry average of 10.73%.

		Industry Rank	Sector Rank
ROA	18.33%
ROE	35.73%
ROIC	29.68%

ROA(3y)17.3%

ROA(5y)14.61%

ROE(3y)38.31%

ROE(5y)30.77%

ROIC(3y)30.81%

ROIC(5y)24.74%

1.3 Margins

QLYS's Profit Margin of 28.96% is amongst the best of the industry. QLYS outperforms 89.21% of its industry peers.
In the last couple of years the Profit Margin of QLYS has grown nicely.
The Operating Margin of QLYS (32.55%) is better than 94.24% of its industry peers.
In the last couple of years the Operating Margin of QLYS has grown nicely.
QLYS has a better Gross Margin (82.45%) than 87.77% of its industry peers.
QLYS's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	32.55%
PM (TTM)	28.96%
GM	82.45%

OM growth 3Y13.04%

OM growth 5Y6.51%

PM growth 3Y18.3%

PM growth 5Y5.81%

GM growth 3Y1.44%

GM growth 5Y0.82%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), QLYS is creating value.
QLYS has less shares outstanding than it did 1 year ago.
QLYS has less shares outstanding than it did 5 years ago.
QLYS has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

2.2 Solvency

QLYS has an Altman-Z score of 6.91. This indicates that QLYS is financially healthy and has little risk of bankruptcy at the moment.
QLYS's Altman-Z score of 6.91 is amongst the best of the industry. QLYS outperforms 83.09% of its industry peers.
There is no outstanding debt for QLYS. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0
Altman-Z	6.91

ROIC/WACC2.67

WACC11.13%

2.3 Liquidity

QLYS has a Current Ratio of 1.38. This is a normal value and indicates that QLYS is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of QLYS (1.38) is comparable to the rest of the industry.
QLYS has a Quick Ratio of 1.38. This is a normal value and indicates that QLYS is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of QLYS (1.38) is comparable to the rest of the industry.
The current and quick ratio evaluation for QLYS is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

		Industry Rank	Sector Rank
Current Ratio	1.38
Quick Ratio	1.38

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

QLYS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 14.84%, which is quite good.
QLYS shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 21.24% yearly.
QLYS shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 10.13%.
Measured over the past years, QLYS shows a quite strong growth in Revenue. The Revenue has been growing by 13.57% on average per year.

EPS 1Y (TTM)14.84%

EPS 3Y23.81%

EPS 5Y21.24%

EPS Q2Q%19.23%

Revenue 1Y (TTM)10.13%

Revenue growth 3Y13.9%

Revenue growth 5Y13.57%

Sales Q2Q%10.41%

3.2 Future

Based on estimates for the next years, QLYS will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.68% on average per year.
QLYS is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.64% yearly.

EPS Next Y16.14%

EPS Next 2Y10.89%

EPS Next 3Y9.32%

EPS Next 5Y8.68%

Revenue Next Year10.33%

Revenue Next 2Y9%

Revenue Next 3Y8.23%

Revenue Next 5Y8.64%

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

QLYS is valuated rather expensively with a Price/Earnings ratio of 19.37.
74.10% of the companies in the same industry are more expensive than QLYS, based on the Price/Earnings ratio.
QLYS is valuated rather cheaply when we compare the Price/Earnings ratio to 28.32, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 17.50, the valuation of QLYS can be described as rather expensive.
Based on the Price/Forward Earnings ratio, QLYS is valued a bit cheaper than the industry average as 75.18% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.57, QLYS is valued a bit cheaper.

		Industry Rank	Sector Rank
PE	19.37
Fwd PE	17.5

4.2 Price Multiples

QLYS's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. QLYS is cheaper than 76.98% of the companies in the same industry.
QLYS's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. QLYS is cheaper than 79.14% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	17.43
EV/EBITDA	18.06

4.3 Compensation for Growth

The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of QLYS may justify a higher PE ratio.