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Hidden Value Gems
$AER should be a big beneficiary here too…leading owner of airplanes and jet engines…trading at c 1x P/B, but if asset value is 10-20% higher and with 75% of assets financed with debt, its market value of equity could be 60% higher.
Trading at c. 10x PE, close to 10% buyback yield.
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$AER should be a big beneficiary here too…leading owner of airplanes and jet engines…trading at c 1x P/B, but if asset value is 10-20% higher and with 75% of assets financed with debt, its market value of equity could be 60% higher.
Trading at c. 10x PE, close to 10% buyback yield.
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Offshore
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Librarian Capital
RT @LibrarianCap: "Alphabet: Strong Q2 Headlines, But Too Many Moving Parts?" $GOOG $GOOGL
8%+ decline in shares since results likely reflects fears of ad revenues slowing, headcount rising and SearchGPT
We disagree: https://t.co/X5pMWPkMYM https://t.co/8Xm0X4b2B1
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RT @LibrarianCap: "Alphabet: Strong Q2 Headlines, But Too Many Moving Parts?" $GOOG $GOOGL
8%+ decline in shares since results likely reflects fears of ad revenues slowing, headcount rising and SearchGPT
We disagree: https://t.co/X5pMWPkMYM https://t.co/8Xm0X4b2B1
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Offshore
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Librarian Capital
"Amazon $AMZN Paid Almost $1bn for Twitch in 2014. It’s Still Losing Money" (WSJ)
"Twitch’s biggest-paying users are opening their wallets less, and 3rd-party data reflect that growth in new users and engagement has slowed"
"Long-form live video doesn’t align well with ads" https://t.co/5qDsp8WvKA
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"Amazon $AMZN Paid Almost $1bn for Twitch in 2014. It’s Still Losing Money" (WSJ)
"Twitch’s biggest-paying users are opening their wallets less, and 3rd-party data reflect that growth in new users and engagement has slowed"
"Long-form live video doesn’t align well with ads" https://t.co/5qDsp8WvKA
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Offshore
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Finding Compounders
Warren Buffett considers Henry Singelton as having the best operating and Capital deployment record in American Business
Here is an article on Henry Singleton https://t.co/esdHoFnLRA
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Warren Buffett considers Henry Singelton as having the best operating and Capital deployment record in American Business
Here is an article on Henry Singleton https://t.co/esdHoFnLRA
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Offshore
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A sober valuation analysis on $EW 🧘🏽♂️
•NTM P/E Ratio: 22.55x
•10-Year Mean: 34.54x
•NTM FCF Yield: 4.59%
•10-Year Mean: 2.68%
As you can see, $EW appears to be trading below fair value
Going forward, investors can receive ~53% MORE in earnings per share & ~71% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $EW is a quality business
BALANCE SHEET✅
•Cash & Short-Term Inv: $1.99B
•Long-Term Debt: $597.30M
$EW has a strong balance sheet, a BBB S&P Credit Rating, & 50x FFO Interest Coverage Ratio
RETURN ON CAPITAL✅
•2019: 25.7%
•2020: 25.0%
•2021: 24.3%
•2022: 27.6%
•2023: 23.3%
•LTM: 22.9%
RETURN ON EQUITY✅
•2019: 28.7%
•2020: 18.9%
•2021: 28.9%
•2022: 26.1%
•2023: 22.3%
•LTM: 22.0%
$EW has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2013: $2.05B
•2023: $6.00B
•CAGR: 11.33%
FREE CASH FLOW🆗
•2013: $363.70M
•2023: $642.80M
•CAGR: 5.86%
NORMALIZED EPS✅
•2013: $0.52
•2023: $2.51
•CAGR: 17.04%
SHARE BUYBACKS✅
•2013 Shares Outstanding: 682.80M
•LTM Shares Outstanding: 606.20M
By reducing its shares outstanding 11.2%, $EW increased its EPS by 12.6% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 76.4%
•LTM Operating Margins: 30.2%
•LTM Net Income Margins: 24.8%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~53% MORE in EPS & ~71% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $EW has to grow earnings at an 11.28% 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 (11.28%) required growth rate:
2024E: $2.69 (7.3% YoY) *FY Dec
2025E: $2.87 (6.5% YoY)
2026E: $3.20 (11.4% YoY)
$EW has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $EW ends 2026 with $3.20 in EPS & see its CAGR potential assuming different multiples
26x P/E: 83.20💵 … ~12.4% CAGR
25x P/E: $80.00💵 … ~10.7% CAGR
24x P/E: $76.80💵 … ~9.0% CAGR
23x P/E: $73.60💵 … ~7.2% CAGR
As you can see, $EW appears to have attractive return potential IF we assume >25x earnings, a multiple well-below its 10-year mean & a multiple that $EW has a history of bottoming at
Although my research leads me to believe that $EW is undervalued & that investors buying $EW at $62.00💵 will likely do well, I am less inclined to buy at $62.00💵 today given that its EPS growth estimates may not justify a multiple >25x & the company’s inconsistencies in FCF growth
I’d get more interested in $EW closer to $56.50💵 where I can reasonably expect ~11% CAGR while anticipating a 23x multiple (leaving myself some margin of safety)
#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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RT @DimitryNakhla: A sober valuation analysis on $EW 🧘🏽♂️
•NTM P/E Ratio: 22.55x
•10-Year Mean: 34.54x
•NTM FCF Yield: 4.59%
•10-Year Mean: 2.68%
As you can see, $EW appears to be trading below fair value
Going forward, investors can receive ~53% MORE in earnings per share & ~71% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $EW is a quality business
BALANCE SHEET✅
•Cash & Short-Term Inv: $1.99B
•Long-Term Debt: $597.30M
$EW has a strong balance sheet, a BBB S&P Credit Rating, & 50x FFO Interest Coverage Ratio
RETURN ON CAPITAL✅
•2019: 25.7%
•2020: 25.0%
•2021: 24.3%
•2022: 27.6%
•2023: 23.3%
•LTM: 22.9%
RETURN ON EQUITY✅
•2019: 28.7%
•2020: 18.9%
•2021: 28.9%
•2022: 26.1%
•2023: 22.3%
•LTM: 22.0%
$EW has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2013: $2.05B
•2023: $6.00B
•CAGR: 11.33%
FREE CASH FLOW🆗
•2013: $363.70M
•2023: $642.80M
•CAGR: 5.86%
NORMALIZED EPS✅
•2013: $0.52
•2023: $2.51
•CAGR: 17.04%
SHARE BUYBACKS✅
•2013 Shares Outstanding: 682.80M
•LTM Shares Outstanding: 606.20M
By reducing its shares outstanding 11.2%, $EW increased its EPS by 12.6% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 76.4%
•LTM Operating Margins: 30.2%
•LTM Net Income Margins: 24.8%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~53% MORE in EPS & ~71% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $EW has to grow earnings at an 11.28% 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 (11.28%) required growth rate:
2024E: $2.69 (7.3% YoY) *FY Dec
2025E: $2.87 (6.5% YoY)
2026E: $3.20 (11.4% YoY)
$EW has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $EW ends 2026 with $3.20 in EPS & see its CAGR potential assuming different multiples
26x P/E: 83.20💵 … ~12.4% CAGR
25x P/E: $80.00💵 … ~10.7% CAGR
24x P/E: $76.80💵 … ~9.0% CAGR
23x P/E: $73.60💵 … ~7.2% CAGR
As you can see, $EW appears to have attractive return potential IF we assume >25x earnings, a multiple well-below its 10-year mean & a multiple that $EW has a history of bottoming at
Although my research leads me to believe that $EW is undervalued & that investors buying $EW at $62.00💵 will likely do well, I am less inclined to buy at $62.00💵 today given that its EPS growth estimates may not justify a multiple >25x & the company’s inconsistencies in FCF growth
I’d get more interested in $EW closer to $56.50💵 where I can reasonably expect ~11% CAGR while anticipating a 23x multiple (leaving myself some margin of safety)
#stocks #investing
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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Offshore
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Brandon Beylo
RT @marketplunger1: One of my favorite Stanley Druckenmiller quotes.
“People always forget that 50% of a stock’s move is the overall market, 30% is the industry, and maybe 20% from stock picking.” https://t.co/A9NdU1Wsd2
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RT @marketplunger1: One of my favorite Stanley Druckenmiller quotes.
“People always forget that 50% of a stock’s move is the overall market, 30% is the industry, and maybe 20% from stock picking.” https://t.co/A9NdU1Wsd2
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