Offshore
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App Economy Insights
US TV Time July 2024:
Streaming 41.4% (+2.7pp Y/Y).
• YouTube 10.4% (+1.2pp Y/Y).
• Netflix 8.4% (+0.3pp Y/Y).
• Prime Video 3.4% (flat Y/Y).
• Hulu 2.7% (-0.9pp Y/Y).
• Disney+ 2.1% (+0.1pp Y/Y).
Source: Nielsen. $GOOG $NFLX $AMZN $DIS https://t.co/TMJCQomZMx
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US TV Time July 2024:
Streaming 41.4% (+2.7pp Y/Y).
• YouTube 10.4% (+1.2pp Y/Y).
• Netflix 8.4% (+0.3pp Y/Y).
• Prime Video 3.4% (flat Y/Y).
• Hulu 2.7% (-0.9pp Y/Y).
• Disney+ 2.1% (+0.1pp Y/Y).
Source: Nielsen. $GOOG $NFLX $AMZN $DIS https://t.co/TMJCQomZMx
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Quiver Quantitative
We posted this report on insider buying at Carvana, when people were saying a bankruptcy was imminent.
$CVNA has now risen 3,400% since then.
Follow @InsiderRadar to see new alerts from our insider trading data. https://t.co/hCDKdcVdw3
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We posted this report on insider buying at Carvana, when people were saying a bankruptcy was imminent.
$CVNA has now risen 3,400% since then.
Follow @InsiderRadar to see new alerts from our insider trading data. https://t.co/hCDKdcVdw3
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Invest In Assets 📈
RT @ValueInvestorAc: Warren Buffett said the late Charlie Munger had "the best 30-second mind in the world".
To celebrate 50k followers I'm giving away my new guide.
Mental Models: Systems for Smarter Decisions
Get your free copy
1️⃣ Follow (so I can DM you)
2️⃣ RT & Like this
3️⃣ Reply 'Mental' below
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RT @ValueInvestorAc: Warren Buffett said the late Charlie Munger had "the best 30-second mind in the world".
To celebrate 50k followers I'm giving away my new guide.
Mental Models: Systems for Smarter Decisions
Get your free copy
1️⃣ Follow (so I can DM you)
2️⃣ RT & Like this
3️⃣ Reply 'Mental' below
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Offshore
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Value Spotlight (Andrew Sather)
RT @ValueSpotlight: Is Tesla a capital efficient business? (Tutorial):
$TSLA in <90 seconds https://t.co/aqgww6uoij
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RT @ValueSpotlight: Is Tesla a capital efficient business? (Tutorial):
$TSLA in <90 seconds https://t.co/aqgww6uoij
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A sober valuation analysis on $PYPL 🧘🏽♂️
•NTM P/E Ratio: 15.11x
•3-Year Mean: 20.45
•NTM FCF Yield: 8.89%
•3-Year Mean: 7.12%
As you can see, $PYPL appears to be trading below fair value
Going forward, investors can receive ~35% MORE in earnings per share & ~25% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $PYPL is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $13.62B
•Long-Term Debt: $9.73V
$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20.78x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 15.8%
RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.0%
$PYPL has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $15.45B
•2023: $29.77B
•CAGR: 14.01%
FREE CASH FLOW❌*
•2018: $4.66B
•2023: $4.22B
•Decrease: (9.44%)
*2024 FCF Estimate is $5.98B 📈
*Also, FCF in 2017 was $1.86B, so FCF rose ~150% in 2018 start date (“normalizing” the decline above)
NORMALIZED EPS✅
•2018: $2.42
•2023: $5.10
•CAGR: 16.07%
SHARE BUYBACKS✅
•2015 Shares Outstanding: 1.23B
•LTM Shares Outstanding: 1.08B
By reducing its shares outstanding by 12.2%, $PYPL increased its EPS by 13.9% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 39.6%
•LTM Operating Margins: 17.1%
•LTM Net Income Margins: 14.3%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~35% MORE in EPS & ~25% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 7.56% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be greater than the (7.56%) required growth rate:
2024E: $4.40 (-13.8% YoY) *FY Dec
2025E: $4.82 (9.7% YoY)
2026E: $5.39 (11.8% YoY)
$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2026 with $5.39 in EPS & see its CAGR potential assuming different multiples
18x P/E: $97.02💵 … ~15.7% CAGR
17x P/E: $91.63💵 … ~12.8% CAGR
16x P/E: $86.24💵 … ~10.0% CAGR
As you can see, $PYPL appears to have attractive return potential if we assume >16 earnings & aggressive return potential if we assume >18x earnings
The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption
There’s still negative sentiment around $PYPL and this sentiment can be flipped in a few quarters if management continues to make progress towards its goals as we’ve seen in the most recent report
I believe they will — however, investors concerned with the “turnaround risks” associated with $PYPL can still benefit by allocating a smaller % to $PYPL
Today at $69💵 $PYPL appears to be a strong consideration for investment (albeit, with some turnaround & competitive risks)
#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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RT @DimitryNakhla: A sober valuation analysis on $PYPL 🧘🏽♂️
•NTM P/E Ratio: 15.11x
•3-Year Mean: 20.45
•NTM FCF Yield: 8.89%
•3-Year Mean: 7.12%
As you can see, $PYPL appears to be trading below fair value
Going forward, investors can receive ~35% MORE in earnings per share & ~25% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $PYPL is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $13.62B
•Long-Term Debt: $9.73V
$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20.78x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 15.8%
RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.0%
$PYPL has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $15.45B
•2023: $29.77B
•CAGR: 14.01%
FREE CASH FLOW❌*
•2018: $4.66B
•2023: $4.22B
•Decrease: (9.44%)
*2024 FCF Estimate is $5.98B 📈
*Also, FCF in 2017 was $1.86B, so FCF rose ~150% in 2018 start date (“normalizing” the decline above)
NORMALIZED EPS✅
•2018: $2.42
•2023: $5.10
•CAGR: 16.07%
SHARE BUYBACKS✅
•2015 Shares Outstanding: 1.23B
•LTM Shares Outstanding: 1.08B
By reducing its shares outstanding by 12.2%, $PYPL increased its EPS by 13.9% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 39.6%
•LTM Operating Margins: 17.1%
•LTM Net Income Margins: 14.3%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~35% MORE in EPS & ~25% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 7.56% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be greater than the (7.56%) required growth rate:
2024E: $4.40 (-13.8% YoY) *FY Dec
2025E: $4.82 (9.7% YoY)
2026E: $5.39 (11.8% YoY)
$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2026 with $5.39 in EPS & see its CAGR potential assuming different multiples
18x P/E: $97.02💵 … ~15.7% CAGR
17x P/E: $91.63💵 … ~12.8% CAGR
16x P/E: $86.24💵 … ~10.0% CAGR
As you can see, $PYPL appears to have attractive return potential if we assume >16 earnings & aggressive return potential if we assume >18x earnings
The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption
There’s still negative sentiment around $PYPL and this sentiment can be flipped in a few quarters if management continues to make progress towards its goals as we’ve seen in the most recent report
I believe they will — however, investors concerned with the “turnaround risks” associated with $PYPL can still benefit by allocating a smaller % to $PYPL
Today at $69💵 $PYPL appears to be a strong consideration for investment (albeit, with some turnaround & competitive risks)
#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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PitchDeckGuy
From just a few car sales a month in the '50s to $300B+ in revenue today
Here’s Toyota's deck: https://t.co/0bHJTsibLa
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From just a few car sales a month in the '50s to $300B+ in revenue today
Here’s Toyota's deck: https://t.co/0bHJTsibLa
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Offshore
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Stock Analysis Compilation
Madison Funds on Starbucks $SBUX US
Thesis: Starbucks' efforts to address operational challenges and enhance customer experience make it a promising investment, particularly at its current discounted valuation
(Extract from their Q2 letter) https://t.co/1XiJA3FGlP
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Madison Funds on Starbucks $SBUX US
Thesis: Starbucks' efforts to address operational challenges and enhance customer experience make it a promising investment, particularly at its current discounted valuation
(Extract from their Q2 letter) https://t.co/1XiJA3FGlP
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Offshore
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Hidden Value Gems
Passed on $SCHW last year. Here is a good article in @WSJ
🧵👇🏼
✅ Roughly half of the brokerage’s revenue comes from banking. Schwab’s playbook of making easy money on customer deposits was upended when interest rates rose rapidly and people moved their cash to chase higher yields.
✅ Schwab is now looking to make its bank more nimble.
✅ The company said it is investing in technology to streamline the loan application and approval process, and hiring experienced bankers to work on more-complex loans.
✅ Another area Schwab wants to expand is its financial advice and wealth management services, which bring in fee-based revenue that isn’t as dependent on market conditions.
✅ Analysts largely believe the shift in bank strategy could benefit Schwab over time, but some question how Schwab would replace its interest-related earnings.
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Passed on $SCHW last year. Here is a good article in @WSJ
🧵👇🏼
✅ Roughly half of the brokerage’s revenue comes from banking. Schwab’s playbook of making easy money on customer deposits was upended when interest rates rose rapidly and people moved their cash to chase higher yields.
✅ Schwab is now looking to make its bank more nimble.
✅ The company said it is investing in technology to streamline the loan application and approval process, and hiring experienced bankers to work on more-complex loans.
✅ Another area Schwab wants to expand is its financial advice and wealth management services, which bring in fee-based revenue that isn’t as dependent on market conditions.
✅ Analysts largely believe the shift in bank strategy could benefit Schwab over time, but some question how Schwab would replace its interest-related earnings.
One of the stocks I added to my watchlist last month was $SCHW. A great business that delivered 18% annual returns for shareholders (before dividends) over the past 34 years.
Here are some follow-up thoughts 🧵👇🏼 tweet