Offshore
Photo
Hidden Value Gems
“An investment strategy built around ROIC is going to leave you with a portfolio of older and declining firms, and some of them will be value traps, because what you're capturing with the return investment capital is your past, that this company used to have great investments. Kraft Heinz, has a great return investment capital. It's not because of the new projects it's taking. It's because that 57 varieties of Ketchup are paying off in terms of what they did for you 10 years ago, 20 years ago, 30 years ago. ROIC is a backward looking accounting number.”
- Aswath Damodaran
tweet
“An investment strategy built around ROIC is going to leave you with a portfolio of older and declining firms, and some of them will be value traps, because what you're capturing with the return investment capital is your past, that this company used to have great investments. Kraft Heinz, has a great return investment capital. It's not because of the new projects it's taking. It's because that 57 varieties of Ketchup are paying off in terms of what they did for you 10 years ago, 20 years ago, 30 years ago. ROIC is a backward looking accounting number.”
- Aswath Damodaran
Aswath Damodaran on the shortfalls of ROIC
Source: @MT_Capital1 https://t.co/fycdjbJdvS tweet
Offshore
Photo
Quiver Quantitative
Wild that this is allowed.
Last week, we reported on a purchase of Lockheed Martin stock by Representative Jared Moskowitz.
It has now risen 18% since then.
Moskowitz sits on the House Committee on Foreign Affairs. https://t.co/xIRfHAImRk
tweet
Wild that this is allowed.
Last week, we reported on a purchase of Lockheed Martin stock by Representative Jared Moskowitz.
It has now risen 18% since then.
Moskowitz sits on the House Committee on Foreign Affairs. https://t.co/xIRfHAImRk
tweet
Offshore
Photo
Stock Analysis Compilation
Longleaf on PotlatchDeltic $PCH US
Thesis: PotlatchDeltic's high-quality timberlands and alternative use development, combined with a strong management team and attractive dividend, offer substantial long-term value
(Extract from their Q2 letter) https://t.co/dCyXo7vPJo
tweet
Longleaf on PotlatchDeltic $PCH US
Thesis: PotlatchDeltic's high-quality timberlands and alternative use development, combined with a strong management team and attractive dividend, offer substantial long-term value
(Extract from their Q2 letter) https://t.co/dCyXo7vPJo
tweet
Offshore
Photo
Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A sober valuation analysis on $LVMH 🧘🏽♂️
•NTM P/E Ratio: 19.97x
•10-Year Mean: 23.92x
•NTM FCF Yield: 4.87%
•10-Year Mean: 4.13%
As you can see, $LVMH appears to be trading below fair value
Going forward, investors can receive ~19% MORE in earnings per share & ~13% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $LVMH is a high-quality business
*Financials In Euros €*
BALANCE SHEET✅
•Cash & Short-Term Inv: €11.09B
•Long-Term Debt: €11.64B
$LVMH has a strong balance sheet, reflected by its AA- S&P Credit Rating & 16x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 16.6%
•2020: 10.2%
•2021: 18.9%
•2022: 21.2%
•2023: 21.0%
•LTM: 19.1%
RETURN ON EQUITY✅
•2019: 21.5%
•2020: 12.8%
•2021: 28.9%
•2022: 28.0%
•2023: 26.7%
•LTM: 22.8%
$LVMH has excellent return metrics, highlighting the company’s financial efficiency
REVENUES✅
•2013: €29.02B
•2023: €86.15B
•CAGR: 11.49%
FREE CASH FLOW✅
•2013: €2.99B
•2023: €11.59B
•CAGR: 14.52%
NORMALIZED EPS✅
•2013: €6.83
•2023: €30.33
•CAGR: 16.07%
SHARE BUYBACKS❌
•2013 Shares Outstanding: 503.22M
•LTM Shares Outstanding: 499.83M
MARGINS✅
•LTM Gross Margins: 68.5%
•LTM Operating Margins: 25.6%
•LTM Net Income Margins: 16.3%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~19% MORE in EPS & ~13% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $LVMH has to grow earnings at a 9.99% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be less than (10.95%) the required growth rate:
2024E: €30.12 (-0.7% YoY)* Dec
2025E: €33.57 (11.4% YoY)
2026E: €36.73 (9.4% YoY)
So, let’s assume $LVMH ends 2026 with €36.73 in EPS & see its CAGR potential (dividends included) assuming different multiples:
23x P/E: €844.79💵 … ~14.1% CAGR
22x P/E: €808.06💵 … ~12.1% CAGR
21x P/E: €771.33💵 … ~10.0% CAGR
20x P/E: €734.60💵 … ~8.0% CAGR
As you can see, we’d have to assume 22x for $LVMH to have attractive return potential & while 22x 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
If we “normalize” the multiple & use the 5-year average period from 2014-2019 we have a mean of 20.83x 🔎
While $LVMH deserves to trade at a premium multiple due to its quality, I’m hesitant to rely on 23x because I want to ensure some margin of safety
It’s safer to rely on ~21x earnings & be pleasantly surprised with some multiple expansion (rather than have the risk of multiple compression)
At 21x, we can still reasonably expect double-digit returns with some multiple expansion if growth estimates rise
Today at €636💵 $LVMH appears to be a decent consideration for investment (perhaps with a second tranche of accumulation if it gets to €585💵)
$MC $LVMHF $LVMUY
#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.
tweet
RT @DimitryNakhla: A sober valuation analysis on $LVMH 🧘🏽♂️
•NTM P/E Ratio: 19.97x
•10-Year Mean: 23.92x
•NTM FCF Yield: 4.87%
•10-Year Mean: 4.13%
As you can see, $LVMH appears to be trading below fair value
Going forward, investors can receive ~19% MORE in earnings per share & ~13% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $LVMH is a high-quality business
*Financials In Euros €*
BALANCE SHEET✅
•Cash & Short-Term Inv: €11.09B
•Long-Term Debt: €11.64B
$LVMH has a strong balance sheet, reflected by its AA- S&P Credit Rating & 16x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 16.6%
•2020: 10.2%
•2021: 18.9%
•2022: 21.2%
•2023: 21.0%
•LTM: 19.1%
RETURN ON EQUITY✅
•2019: 21.5%
•2020: 12.8%
•2021: 28.9%
•2022: 28.0%
•2023: 26.7%
•LTM: 22.8%
$LVMH has excellent return metrics, highlighting the company’s financial efficiency
REVENUES✅
•2013: €29.02B
•2023: €86.15B
•CAGR: 11.49%
FREE CASH FLOW✅
•2013: €2.99B
•2023: €11.59B
•CAGR: 14.52%
NORMALIZED EPS✅
•2013: €6.83
•2023: €30.33
•CAGR: 16.07%
SHARE BUYBACKS❌
•2013 Shares Outstanding: 503.22M
•LTM Shares Outstanding: 499.83M
MARGINS✅
•LTM Gross Margins: 68.5%
•LTM Operating Margins: 25.6%
•LTM Net Income Margins: 16.3%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~19% MORE in EPS & ~13% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $LVMH has to grow earnings at a 9.99% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be less than (10.95%) the required growth rate:
2024E: €30.12 (-0.7% YoY)* Dec
2025E: €33.57 (11.4% YoY)
2026E: €36.73 (9.4% YoY)
So, let’s assume $LVMH ends 2026 with €36.73 in EPS & see its CAGR potential (dividends included) assuming different multiples:
23x P/E: €844.79💵 … ~14.1% CAGR
22x P/E: €808.06💵 … ~12.1% CAGR
21x P/E: €771.33💵 … ~10.0% CAGR
20x P/E: €734.60💵 … ~8.0% CAGR
As you can see, we’d have to assume 22x for $LVMH to have attractive return potential & while 22x 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
If we “normalize” the multiple & use the 5-year average period from 2014-2019 we have a mean of 20.83x 🔎
While $LVMH deserves to trade at a premium multiple due to its quality, I’m hesitant to rely on 23x because I want to ensure some margin of safety
It’s safer to rely on ~21x earnings & be pleasantly surprised with some multiple expansion (rather than have the risk of multiple compression)
At 21x, we can still reasonably expect double-digit returns with some multiple expansion if growth estimates rise
Today at €636💵 $LVMH appears to be a decent consideration for investment (perhaps with a second tranche of accumulation if it gets to €585💵)
$MC $LVMHF $LVMUY
#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.
tweet
Offshore
Photo
Dimitry Nakhla | Babylon Capital®
RT @BritishDividend: I need to know the remaining 2% because this guy is the 🐐!
tweet
RT @BritishDividend: I need to know the remaining 2% because this guy is the 🐐!
My TipRanks Weekly .. Not too bad 👌🏽🧘🏽♂️
Top 2% among ~751K investors 💯
#stocks #investing https://t.co/JusEVlEiiW tweet
Offshore
Photo
Capital Employed
Very inspiring article from @iancassel for all private investors who want to go full-time.
Becoming a full-time private investor is the pinnacle of financial achievement.
https://t.co/dR2CW4JLtK
tweet
Very inspiring article from @iancassel for all private investors who want to go full-time.
Becoming a full-time private investor is the pinnacle of financial achievement.
https://t.co/dR2CW4JLtK
tweet