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โ Invest In Assets ๐
RT @InvestInAssets: Howard Marks once said:
โI tell my fatherโs story of the gambler who one day hears about a race with only one horse in it, so he bet the rent money. Halfway around the track the horse jumped over the fence and ran awayโ
Here are 10 lessons that will make you an better investor: https://t.co/rOY4fY2Rn2
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RT @InvestInAssets: Howard Marks once said:
โI tell my fatherโs story of the gambler who one day hears about a race with only one horse in it, so he bet the rent money. Halfway around the track the horse jumped over the fence and ran awayโ
Here are 10 lessons that will make you an better investor: https://t.co/rOY4fY2Rn2
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โ Bamboo
Ever made an investment decision you still regret? Watch to learn how emotions can affect your investing journey and how to avoid regrettable choices. https://t.co/R1MO96fttu
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Ever made an investment decision you still regret? Watch to learn how emotions can affect your investing journey and how to avoid regrettable choices. https://t.co/R1MO96fttu
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โ Dimitry Nakhla | Babylon Capitalยฎ
S&P Global $SPGI reports a strong Q2 ๐๐ฝ
โขRevenue: $3.55B (+14% YoY) โ
โขAdjusted EPS: $4.04 (+30% YoY) โ
GUIDANCE ๐
โขFY Revenue Growth: 8%-10% (6%-8% prior)
โขAdjusted EPS: $14.35-$14.60 ($14.33 prior)
#stocks #investing https://t.co/YwFGbirsqC
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S&P Global $SPGI reports a strong Q2 ๐๐ฝ
โขRevenue: $3.55B (+14% YoY) โ
โขAdjusted EPS: $4.04 (+30% YoY) โ
GUIDANCE ๐
โขFY Revenue Growth: 8%-10% (6%-8% prior)
โขAdjusted EPS: $14.35-$14.60 ($14.33 prior)
#stocks #investing https://t.co/YwFGbirsqC
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โ Dimitry Nakhla | Babylon Capitalยฎ
A sober valuation analysis on $MCD ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 21.24x
โข10-Year Mean: 23.35x
โขNTM FCF Yield: 4.53%
โข10-Year Mean: 4.07%
As you can see, $MCD appears to be trading below fair value
Going forward, investors can receive ~10% MORE in earnings per share & ~11% MORE in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $MCD is a quality business
BALANCE SHEET๐
โขCash & Short-Term Inv: $838.00M
โขLong-Term Debt: $37.21B
$MCD has a decent balance sheet*, a BBB+ S&P Credit Rating, & ~7x FFO Interest Coverage Ratio
* $MCD owns plenty of land, with a total value of $7.08B as of Dec 2023
RETURN ON CAPITALโ
โข2019: 22.0%
โข2020: 16.4%
โข2021: 21.7%
โข2022: 23.1%
โข2023: 23.4%
โขLTM: 25.5%
$MCD has strong return metrics, highlighting the financial efficiency of the business
REVENUES๐
โข2018: $21.26B
โข2023: $25.49B
โขCAGR: 3.69%
FREE CASH FLOWโ
โข2018: $4.22B
โข2023: $7.25B
โขCAGR: 11.43%
NORMALIZED EPSโ
โข2013: $5.55
โข2023: $11.94
โขCAGR: 7.96%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 1.00B
โขLTM Shares Outstanding: 726.85M
By reducing its shares outstanding 27.3%, $MCD increased its EPS by 37.5% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 57.0%
โขLTM Operating Margins: 45.7%
โขLTM Net Income Margins: 32.2%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~10% MORE in EPS & ~11% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $MCD has to grow earnings at a 10.62% 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 (10.62%) required growth rate:
2024E: $12.01 (0.6% YoY) *FY Dec
2025E: $13.16 (9.6% YoY)
2026E: $14.33 (8.9% YoY)
$MCD has a good track record of meeting analyst estimates ~2 years out, so letโs assume $MCD ends 2026 with $14.33 in EPS & see its CAGR potential assuming different multiples
24x P/E: $343.92๐ต โฆ ~14.2% CAGR
23x P/E: $329.59๐ต โฆ ~12.3% CAGR
22x P/E: $315.26๐ต โฆ ~10.4% CAGR
21 P/E: $300.93๐ต โฆ ~8.4% CAGR
As you can see, $MCD appears to have attractive return potential IF we assume >22x earnings, a multiple below its 10-year mean & a multiple thatโs not too far off from 20x which is where $MCD has a history of bottoming at โ implying a decent margin of safety
Today at $261๐ต $MCD appears to be a worthwhile consideration for investment, especially for investors looking to establish a position in a strong dividend grower with relatively low volatility
#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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A sober valuation analysis on $MCD ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 21.24x
โข10-Year Mean: 23.35x
โขNTM FCF Yield: 4.53%
โข10-Year Mean: 4.07%
As you can see, $MCD appears to be trading below fair value
Going forward, investors can receive ~10% MORE in earnings per share & ~11% MORE in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $MCD is a quality business
BALANCE SHEET๐
โขCash & Short-Term Inv: $838.00M
โขLong-Term Debt: $37.21B
$MCD has a decent balance sheet*, a BBB+ S&P Credit Rating, & ~7x FFO Interest Coverage Ratio
* $MCD owns plenty of land, with a total value of $7.08B as of Dec 2023
RETURN ON CAPITALโ
โข2019: 22.0%
โข2020: 16.4%
โข2021: 21.7%
โข2022: 23.1%
โข2023: 23.4%
โขLTM: 25.5%
$MCD has strong return metrics, highlighting the financial efficiency of the business
REVENUES๐
โข2018: $21.26B
โข2023: $25.49B
โขCAGR: 3.69%
FREE CASH FLOWโ
โข2018: $4.22B
โข2023: $7.25B
โขCAGR: 11.43%
NORMALIZED EPSโ
โข2013: $5.55
โข2023: $11.94
โขCAGR: 7.96%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 1.00B
โขLTM Shares Outstanding: 726.85M
By reducing its shares outstanding 27.3%, $MCD increased its EPS by 37.5% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 57.0%
โขLTM Operating Margins: 45.7%
โขLTM Net Income Margins: 32.2%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~10% MORE in EPS & ~11% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $MCD has to grow earnings at a 10.62% 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 (10.62%) required growth rate:
2024E: $12.01 (0.6% YoY) *FY Dec
2025E: $13.16 (9.6% YoY)
2026E: $14.33 (8.9% YoY)
$MCD has a good track record of meeting analyst estimates ~2 years out, so letโs assume $MCD ends 2026 with $14.33 in EPS & see its CAGR potential assuming different multiples
24x P/E: $343.92๐ต โฆ ~14.2% CAGR
23x P/E: $329.59๐ต โฆ ~12.3% CAGR
22x P/E: $315.26๐ต โฆ ~10.4% CAGR
21 P/E: $300.93๐ต โฆ ~8.4% CAGR
As you can see, $MCD appears to have attractive return potential IF we assume >22x earnings, a multiple below its 10-year mean & a multiple thatโs not too far off from 20x which is where $MCD has a history of bottoming at โ implying a decent margin of safety
Today at $261๐ต $MCD appears to be a worthwhile consideration for investment, especially for investors looking to establish a position in a strong dividend grower with relatively low volatility
#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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