Offshore
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โ Dimitry Nakhla | Babylon Capitalยฎ
On April 10, 2024, I posted my analysis on $MSCI, arguing it was overvalued at $542๐ต and an attractive buy at $450๐ต
Since then, the stock has fallen over -17%, dipping just below my target price of $450๐ต
Shortly after hitting my $450๐ต price target, $MSCI shares rebounded, surging over 23% ๐
As I stated in my analysis:
โAs you can see, $MSCI appears to have attractive return potential if we assume >34x earnings, leaving us with no margin of safety
Given the multiple expansion over the last 10 years, deteriorating balance sheet, & a reduction in the growth rate, Iโd demand greater value from $MSCI
Iโd likely get more interested in $MSCI closer to $450๐ต or at ~31x earnings (~16.5% below todays price)โ
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ."
A sober valuation analysis on $MSCI ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 37.26x
โข10-Year Mean: 34.88x
โขNTM FCF Yield: 2.94%
โข10-Year Mean: 3.39%
As you can see, $MSCI appears to be trading above fair value
Going forward, investors can receive ~7% LESS in earnings per share & ~13% LESS in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $MSCI is a good business
BALANCE SHEET๐
โขCash & Short-Term Inv: $457.82M
โขLong-Term Debt: $4.49B
$MSCI has an ok balance sheet, a BBB- S&P Credit Rating, & 6.62x FFO Interest Coverate
RETURN ON CAPITALโ
โข2019: 23.4%
โข2020: 28.6%
โข2021: 26.5%
โข2022: 33.0%
โข2023: 35.2%
RETURN ON EQUITY๐
โข2019: (463.5%)
โข2020: (231.5%)
โข2021: (239.3%)
โข2022: (148.6%)
โข2023: (131.4%)
*ROE negative due to heavy use of debt
$MSCI has strong return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $0.91B
โข2023: $2.53B
โขCAGR: 10.76%
FREE CASH FLOWโ
โข2013: $280.93M
โข2023: $1.21B
โขCAGR: 15.75%
NORMALIZED EPSโ
โข2013: $2.16
โข2023: $13.52
โขCAGR: 20.13%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 121.07M
โขLTM Shares Outstanding: 79.84M
By reducing its shares outstanding 34%, $MSCI increased its EPS by 51% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 82.3%
โขLTM Operating Margins: 54.8%
โขLTM Net Income Margins: 45.4%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~7% LESS in EPS & ~13% LESS in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $MSCI has to grow earnings at an 18.63% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be less than the (18.63%) required growth rate:
2024E: $14.89 (10.1% YoY) *FY Dec
2025E: $17.05 (14.5% YoY)
2026E: $19.45 (14.1% YoY)
$MSCI has a great track record of meeting analyst estimates ~2 years out, but letโs assume $MSCI ends 2026 with $19.45 in EPS & see its CAGR potential assuming different multiples
34x P/E: $661.3[...]
On April 10, 2024, I posted my analysis on $MSCI, arguing it was overvalued at $542๐ต and an attractive buy at $450๐ต
Since then, the stock has fallen over -17%, dipping just below my target price of $450๐ต
Shortly after hitting my $450๐ต price target, $MSCI shares rebounded, surging over 23% ๐
As I stated in my analysis:
โAs you can see, $MSCI appears to have attractive return potential if we assume >34x earnings, leaving us with no margin of safety
Given the multiple expansion over the last 10 years, deteriorating balance sheet, & a reduction in the growth rate, Iโd demand greater value from $MSCI
Iโd likely get more interested in $MSCI closer to $450๐ต or at ~31x earnings (~16.5% below todays price)โ
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ."
A sober valuation analysis on $MSCI ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 37.26x
โข10-Year Mean: 34.88x
โขNTM FCF Yield: 2.94%
โข10-Year Mean: 3.39%
As you can see, $MSCI appears to be trading above fair value
Going forward, investors can receive ~7% LESS in earnings per share & ~13% LESS in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $MSCI is a good business
BALANCE SHEET๐
โขCash & Short-Term Inv: $457.82M
โขLong-Term Debt: $4.49B
$MSCI has an ok balance sheet, a BBB- S&P Credit Rating, & 6.62x FFO Interest Coverate
RETURN ON CAPITALโ
โข2019: 23.4%
โข2020: 28.6%
โข2021: 26.5%
โข2022: 33.0%
โข2023: 35.2%
RETURN ON EQUITY๐
โข2019: (463.5%)
โข2020: (231.5%)
โข2021: (239.3%)
โข2022: (148.6%)
โข2023: (131.4%)
*ROE negative due to heavy use of debt
$MSCI has strong return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $0.91B
โข2023: $2.53B
โขCAGR: 10.76%
FREE CASH FLOWโ
โข2013: $280.93M
โข2023: $1.21B
โขCAGR: 15.75%
NORMALIZED EPSโ
โข2013: $2.16
โข2023: $13.52
โขCAGR: 20.13%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 121.07M
โขLTM Shares Outstanding: 79.84M
By reducing its shares outstanding 34%, $MSCI increased its EPS by 51% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 82.3%
โขLTM Operating Margins: 54.8%
โขLTM Net Income Margins: 45.4%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~7% LESS in EPS & ~13% LESS in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $MSCI has to grow earnings at an 18.63% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be less than the (18.63%) required growth rate:
2024E: $14.89 (10.1% YoY) *FY Dec
2025E: $17.05 (14.5% YoY)
2026E: $19.45 (14.1% YoY)
$MSCI has a great track record of meeting analyst estimates ~2 years out, but letโs assume $MSCI ends 2026 with $19.45 in EPS & see its CAGR potential assuming different multiples
34x P/E: $661.3[...]
Offshore
โ Dimitry Nakhla | Babylon Capitalยฎ On April 10, 2024, I posted my analysis on $MSCI, arguing it was overvalued at $542๐ต and an attractive buy at $450๐ต Since then, the stock has fallen over -17%, dipping just below my target price of $450๐ต Shortly after hittingโฆ
0๐ต โฆ ~8.9% CAGR
32x P/E: $622.40๐ต โฆ ~6.5% CAGR
30x P/E: $583.50๐ต โฆ ~4.0% CAGR
28x P/E: $544.60๐ต โฆ ~1.5% CAGR
As you can see, $MSCI appears to have attractive return potential if we assume >34x earnings, leaving us with no margin of safety
Given the multiple expansion over the last 10 years, deteriorating balance sheet, & a reduction in the growth rate, Iโd demand greater value from $MSCI
Iโd likely get more interested in $MSCI closer to $450๐ต or at ~31x earnings (~16.5% below todays price)
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ. "- Dimitry Nakhla | Babylon Capitalยฎ
tweet
32x P/E: $622.40๐ต โฆ ~6.5% CAGR
30x P/E: $583.50๐ต โฆ ~4.0% CAGR
28x P/E: $544.60๐ต โฆ ~1.5% CAGR
As you can see, $MSCI appears to have attractive return potential if we assume >34x earnings, leaving us with no margin of safety
Given the multiple expansion over the last 10 years, deteriorating balance sheet, & a reduction in the growth rate, Iโd demand greater value from $MSCI
Iโd likely get more interested in $MSCI closer to $450๐ต or at ~31x earnings (~16.5% below todays price)
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ. "- Dimitry Nakhla | Babylon Capitalยฎ
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Offshore
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โ Brandon Beylo
And people wonder why technical analysis gets a bad rap.
That said, I hope this dude is right ๐
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And people wonder why technical analysis gets a bad rap.
That said, I hope this dude is right ๐
GOLD
This will take some time BUT gold for the next 2 decades imo will prove to be biblical.
13 year sleeper has been broken . https://t.co/L83kCnikwW tweet
Offshore
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โ Dimitry Nakhla | Babylon Capitalยฎ
A sober valuation analysis on $GOOG ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 22.62x
โข10-Year Mean: 23.58x
โขNTM FCF Yield: 3.76%
โข10-Year Mean: 4.18%
As you can see, $GOOG appears to be trading near fair value
Going forward, investors can receive ~4% MORE in earnings per share & ~10% LESS in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $GOOG is a great business
BALANCE SHEETโ
โขCash & Short-Term Inv: $100.72B
โขLong-Term Debt: $13.23B
$GOOG has a strong balance sheet, an AA+ S&P Credit Rating & >275x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 16.4%
โข2020: 16.2%
โข2021: 27.6%
โข2022: 26.1%
โข2023: 28.1%
โขLTM: 30.2%
RETURN ON EQUITYโ
โข2019: 18.1%
โข2020: 19.0%
โข2021: 32.1%
โข2022: 23.6%
โข2023: 27.4%
โขLTM: 29.8%
$GOOG has strong return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $55.52B
โข2023: $307.39
โขCAGR: 18.66%
FREE CASH FLOWโ
โข2013: $11.30B
โข2023: $69.50B
โขCAGR: 19.91%
NORMALIZED EPSโ
โข2013: $2.19
โข2023: $5.80
โขCAGR: 10.22%
SHARE BUYBACKSโ
โข2018 Shares Outstanding: 14.07B
โขLTM Shares Outstanding: 12.65B
By reducing its shares outstanding ~10.0%, $GOOG increased its EPS by ~11.1% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 57.3%
โขLTM Operating Margins: 30.5%
โขLTM Net Income Margins: 25.9%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~4% MORE in EPS & ~10% LESS in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $GOOG has to grow earnings at an 11.31% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be more than the (11.31%) required growth rate:
2024E: $7.56 (30.4% YoY) *FY Dec
2025E: $8.64 (14.3% YoY)
2026E: $9.96 (15.2% YoY)
$GOOG has an excellent track record of meeting analyst estimates ~2 years out, so letโs assume $GOOG ends 2026 with $9.96 in EPS & see its CAGR potential assuming different multiples
24x P/E: $239.04๐ต โฆ ~13.4% CAGR
23x P/E: $229.08๐ต โฆ ~11.5% CAGR
22x P/E: $219.12๐ต โฆ ~9.6% CAGR
As you can see, $GOOG appears to have attractive return potential if we assume 23x - 24x earnings (a multiple near its 5-year & 10-year mean)
At 24x earnings, $GOOG CAGR potential is excellent & itโs not unreasonable for the business to trade for 24x (given current growth rate estimates, its moat, balance sheet, & exemplary capital allocation)
Today at $176.00๐ต (current pre-market price) $GOOG appears to be an attractive consideration for investment
$GOOG presents excellent value & a wide margin of safety closer to $150๐ต or ~15% below todayโs price
At $150๐ต, investors can reasonably expect ~14.6% CAGR even assuming 21x earnings
#stocks #investing $GOOGL
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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A sober valuation analysis on $GOOG ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 22.62x
โข10-Year Mean: 23.58x
โขNTM FCF Yield: 3.76%
โข10-Year Mean: 4.18%
As you can see, $GOOG appears to be trading near fair value
Going forward, investors can receive ~4% MORE in earnings per share & ~10% LESS in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $GOOG is a great business
BALANCE SHEETโ
โขCash & Short-Term Inv: $100.72B
โขLong-Term Debt: $13.23B
$GOOG has a strong balance sheet, an AA+ S&P Credit Rating & >275x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 16.4%
โข2020: 16.2%
โข2021: 27.6%
โข2022: 26.1%
โข2023: 28.1%
โขLTM: 30.2%
RETURN ON EQUITYโ
โข2019: 18.1%
โข2020: 19.0%
โข2021: 32.1%
โข2022: 23.6%
โข2023: 27.4%
โขLTM: 29.8%
$GOOG has strong return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $55.52B
โข2023: $307.39
โขCAGR: 18.66%
FREE CASH FLOWโ
โข2013: $11.30B
โข2023: $69.50B
โขCAGR: 19.91%
NORMALIZED EPSโ
โข2013: $2.19
โข2023: $5.80
โขCAGR: 10.22%
SHARE BUYBACKSโ
โข2018 Shares Outstanding: 14.07B
โขLTM Shares Outstanding: 12.65B
By reducing its shares outstanding ~10.0%, $GOOG increased its EPS by ~11.1% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 57.3%
โขLTM Operating Margins: 30.5%
โขLTM Net Income Margins: 25.9%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~4% MORE in EPS & ~10% LESS in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $GOOG has to grow earnings at an 11.31% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be more than the (11.31%) required growth rate:
2024E: $7.56 (30.4% YoY) *FY Dec
2025E: $8.64 (14.3% YoY)
2026E: $9.96 (15.2% YoY)
$GOOG has an excellent track record of meeting analyst estimates ~2 years out, so letโs assume $GOOG ends 2026 with $9.96 in EPS & see its CAGR potential assuming different multiples
24x P/E: $239.04๐ต โฆ ~13.4% CAGR
23x P/E: $229.08๐ต โฆ ~11.5% CAGR
22x P/E: $219.12๐ต โฆ ~9.6% CAGR
As you can see, $GOOG appears to have attractive return potential if we assume 23x - 24x earnings (a multiple near its 5-year & 10-year mean)
At 24x earnings, $GOOG CAGR potential is excellent & itโs not unreasonable for the business to trade for 24x (given current growth rate estimates, its moat, balance sheet, & exemplary capital allocation)
Today at $176.00๐ต (current pre-market price) $GOOG appears to be an attractive consideration for investment
$GOOG presents excellent value & a wide margin of safety closer to $150๐ต or ~15% below todayโs price
At $150๐ต, investors can reasonably expect ~14.6% CAGR even assuming 21x earnings
#stocks #investing $GOOGL
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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Offshore
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โ Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: A sober valuation analysis on $LVMH ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 21.91x
โข10-Year Mean: 24.92x
โขNTM FCF Yield: 4.56%
โข10-Year Mean: 4.13%
As you can see, $LVMH appears to be trading below fair value
Going forward, investors can receive ~14% MORE in earnings per share & ~10% MORE in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $LVMH is a high-quality business
*Financials In Euros โฌ*
BALANCE SHEETโ
โขCash & Short-Term Inv: โฌ11.29B
โขLong-Term Debt: โฌ11.33B
$LVMH has a strong balance sheet, reflected by its AA- S&P Credit Rating & 18.91x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 16.6%
โข2020: 10.2%
โข2021: 18.9%
โข2022: 21.2%
โข2023: 21.0%
RETURN ON EQUITYโ
โข2019: 21.5%
โข2020: 12.8%
โข2021: 28.9%
โข2022: 28.0%
โข2023: 26.7%
$LVMH has excellent return metrics, highlighting the companyโs financial efficiency
REVENUESโ
โข2013: โฌ29.02B
โข2023: โฌ86.15B
โขCAGR: 11.49%
FREE CASH FLOWโ
โข2013: โฌ2.99B
โข2023: โฌ11.59B
โขCAGR: 14.50%
NORMALIZED EPSโ
โข2013: โฌ6.83
โข2023: โฌ30.33
โขCAGR: 16.07%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 503.22M
โขLTM Shares Outstanding: 500.30M
MARGINSโ
โขLTM Gross Margins: 68.8%
โขLTM Operating Margins: 26.5%
โขLTM Net Income Margins: 17.6%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~14% MORE in EPS & ~10% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $LVMH has to grow earnings at a 10.95% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2025 EPS growth over the next few years to be less than (10.95%) the required growth rate:
2024E: โฌ31.56 (4.3% YoY)* Dec
2025E: โฌ35.25 (11.4% YoY)
2026E: โฌ38.15 (8.2% YoY)
So, letโs assume $LVMH ends 2026 with โฌ38.15 in EPS & see its CAGR potential (dividends included) assuming different multiples:
23x P/E: โฌ877.45๐ต โฆ ~10.0% CAGR
22x P/E: โฌ839.30๐ต โฆ ~8.1% CAGR
21x P/E: โฌ801.15๐ต โฆ ~6.2% CAGR
As you can see, weโd have to assume 23x for $LVMH to have attractive return potential & while 23x is certainly reasonable given its quality, we should be aware that $LVMH 10-Year average multiple (24.92x) is elevated a bit due to the valuation spike in 2020-2021
While $LVMH deserves to trade at a premium multiple due to its quality, Iโm hesitant to rely on 23x because I want to ensure some margin of safety
Itโs safer to rely on ~21x earnings & be pleasantly surprised with some multiple expansion (rather than have the risk of multiple compression)
Iโd prefer to be more patient & wait for a better entry price around โฌ640๐ต (11% below todays price), this way I can reasonably expect ~11% CAGR assuming a 21x multiple
$MC $LVMHF $LVMUY
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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RT @DimitryNakhla: A sober valuation analysis on $LVMH ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 21.91x
โข10-Year Mean: 24.92x
โขNTM FCF Yield: 4.56%
โข10-Year Mean: 4.13%
As you can see, $LVMH appears to be trading below fair value
Going forward, investors can receive ~14% MORE in earnings per share & ~10% MORE in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $LVMH is a high-quality business
*Financials In Euros โฌ*
BALANCE SHEETโ
โขCash & Short-Term Inv: โฌ11.29B
โขLong-Term Debt: โฌ11.33B
$LVMH has a strong balance sheet, reflected by its AA- S&P Credit Rating & 18.91x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 16.6%
โข2020: 10.2%
โข2021: 18.9%
โข2022: 21.2%
โข2023: 21.0%
RETURN ON EQUITYโ
โข2019: 21.5%
โข2020: 12.8%
โข2021: 28.9%
โข2022: 28.0%
โข2023: 26.7%
$LVMH has excellent return metrics, highlighting the companyโs financial efficiency
REVENUESโ
โข2013: โฌ29.02B
โข2023: โฌ86.15B
โขCAGR: 11.49%
FREE CASH FLOWโ
โข2013: โฌ2.99B
โข2023: โฌ11.59B
โขCAGR: 14.50%
NORMALIZED EPSโ
โข2013: โฌ6.83
โข2023: โฌ30.33
โขCAGR: 16.07%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 503.22M
โขLTM Shares Outstanding: 500.30M
MARGINSโ
โขLTM Gross Margins: 68.8%
โขLTM Operating Margins: 26.5%
โขLTM Net Income Margins: 17.6%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~14% MORE in EPS & ~10% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $LVMH has to grow earnings at a 10.95% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2025 EPS growth over the next few years to be less than (10.95%) the required growth rate:
2024E: โฌ31.56 (4.3% YoY)* Dec
2025E: โฌ35.25 (11.4% YoY)
2026E: โฌ38.15 (8.2% YoY)
So, letโs assume $LVMH ends 2026 with โฌ38.15 in EPS & see its CAGR potential (dividends included) assuming different multiples:
23x P/E: โฌ877.45๐ต โฆ ~10.0% CAGR
22x P/E: โฌ839.30๐ต โฆ ~8.1% CAGR
21x P/E: โฌ801.15๐ต โฆ ~6.2% CAGR
As you can see, weโd have to assume 23x for $LVMH to have attractive return potential & while 23x is certainly reasonable given its quality, we should be aware that $LVMH 10-Year average multiple (24.92x) is elevated a bit due to the valuation spike in 2020-2021
While $LVMH deserves to trade at a premium multiple due to its quality, Iโm hesitant to rely on 23x because I want to ensure some margin of safety
Itโs safer to rely on ~21x earnings & be pleasantly surprised with some multiple expansion (rather than have the risk of multiple compression)
Iโd prefer to be more patient & wait for a better entry price around โฌ640๐ต (11% below todays price), this way I can reasonably expect ~11% CAGR assuming a 21x multiple
$MC $LVMHF $LVMUY
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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