Is HSTM a high-quality business?

AlphaMadera's AlphaQuality grade scores HealthStream, Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how HSTM compares to a Buffett-style quality bar.

What is HealthStream, Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to HSTM based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes HSTM a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

HSTM - HealthStream, Inc.

Price: -- -- | CONSENSUS: Hold DETAILS | PRICE TARGET: $24.00 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Stable Earnings Power

AlphaQuality — archetype-weighted quantitative grade

B- 67.7 / 100 composite

Composite Grade

Composite of six pillars weighted for stable earnings power businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 20%

C- 44.4

5yr Avg ROIC 3.5% 27/100
Operating Margin Trend +0.97 pp/yr 84/100

Capital Efficiency

Weight: 15%

C- 48.1

5yr Avg ROE 4.0% 30/100
5yr Share-Count CAGR -1.2% 81/100

Growth Quality

Weight: 15%

B+ 79.7

5yr Revenue CAGR 4.3% 55/100
5yr EPS CAGR 35.7% 100/100
Revenue-Growth Years (5) 5/5 100/100

Cash Generation

Weight: 15%

B+ 76.2

5yr FCF Margin 17.1% 85/100
5yr FCF/NI Conversion 3.91x 65/100

Balance Sheet

Weight: 20%

A+ 95.8

Net Debt / EBITDA -0.63x 98/100
Interest Coverage (EBIT/Int) 30.00x 100/100
Altman Z-Score 3.44 87/100

Stability

Weight: 15%

C+ 60.0

EPS Volatility (σ/μ) 0.55 26/100
Piotroski F-Score 7 78/100
Negative-Revenue Years (5) 0/5 100/100

1 of 3 gurus held; 1 added; 2 full exits.

Holders: 1 -2
Avg Δ position: +37.7%
New buys: 0
Full exits: 2

Greenblatt sold -100%
Laffont sold -100%
Cooperman increased +38%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (20%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (15%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (15%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (20%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (15%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.