⁠Matt McGarry
My newsletter reached 25,000 subscribers.

Interesting finding about its growth:

The acquisition sources chart for the first 10,000 looks almost identical to the one for 25,000 subscribers.

Translation: Find winning levers, and pull them. https://t.co/wVPu0D5pXa
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⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $CRM 🧘🏽‍♂️

•NTM P/E Ratio: 24.18x
•1-Year Mean: 26.97x

•NTM FCF Yield: 5.12%
•1-Year Mean: 4.40%

As you can see, $CRM appears to be trading below fair value

Going forward, investors can expect to receive ~12% MORE in earnings per share & ~16% MORE in FCF per share🧠***

Before we get into valuation, let’s take a look at why $CRM is a good business

BALANCE SHEET✅
•Cash & Equivalents: $12.64B
•Long-Term Debt: $8.43B

$CRM has an excellent balance sheet, an A+ S&P Credit Rating & 352x FFO Interest Coverage Ratio

RETURN ON CAPITAL🆗
•2020: 1.2%
•2021: 0.9%
•2022: 0.8%
•2023: 2.5%
•2024: 8.2%
•LTM: 10.0%

RETURN ON EQUITY🆗
•2020: 0.5%
•2021: 10.8%
•2022: 2.9%
•2023: 0.4%
•2024: 7.0%
•LTM: 9.3%

$CRM return metrics are ok, although more recently trending in the right direction

REVENUES✅
•2014: $4.07B
•2024: $34.86B
•CAGR: 23.95%

FREE CASH FLOW✅
•2014: $576.36M
•2024: $9.49B
•CAGR: 32.34%

NORMALIZED EPS✅
•2014: $0.35
•2024: $8.22
•CAGR: 37.11%

SHARE BUYBACKS❌
•2014 Shares Outstanding: 597.61M
•LTM Shares Outstanding: 980.00M

By increasing its shares outstanding ~64%, $CRM diluted its EPS by ~40% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 76.3%
•LTM Operating Margins: 19.1%
•LTM Net Income Margins: 15.4%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~12% MORE in EPS & ~16% MORE FCF per share

Using Benjamin Graham’s 2G rule of thumb, $CRM has to grow earnings at a 12.09% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be slightly more than the (12.09%) required growth rate:

2025E: $10.09 (22.8% YoY) *FY Jan
2026E: $11.13 (10.3% YoY)
2027E: $12.69 (14.0% YoY)

$CRM has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $CRM ends 2027 with $12.69 in EPS & see its CAGR potential assuming different multiples

26x P/E: $329.94💵 … ~12.4% CAGR

25x P/E: $317.25💵 … ~10.6% CAGR

24x P/E: $304.56💵 … ~8.8% CAGR

As you can see, we’d have to assume ~25x earnings for $CRM to have double digit CAGR potential (a multiple justified by its growth rate & moat)

Today at $252💵 $CRM appears to be worthwhile consideration for investment especially when you assess the trajectory of the company’s FCF & Net Income margins (steadily trending higher with further room to expand)

To ensure some margin of safety, if there’s further weakness, it could be wise to piece into the position, for example:

Initiating ~50% of the position at ~$252💵 & adding a second tranche at ~$210💵 or at ~20x NTM earnings

#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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⁠Bourbon Capital
Good morning everyone, I hope you are having a good weekend

Welcome to September, the best month of the year for investors
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⁠Bourbon Capital
Vaxcyte, Inc. $PCVX its up 31% premarket

Vaxcyte’s stock soars 31% after trial shows positive data for pneumococcal vaccine https://t.co/XZHcOC59jW
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⁠Quality Stocks
🇺🇸 Fortinet $FTNT vs 🇺🇸 Palo Alto $PANW
🥊 A stock duel!

As promised, here are the results of the clash between these two cybersecurity giants! 👇

Fortinet takes the win, but it was a close fight. Both companies have their strengths and weaknesses.

Fortinet is more profitable and focused on shareholder returns, while Palo Alto is the market leader with faster growth. However, its stock-based compensations are notably high.

Which one do you prefer?
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⁠Ahmad Jivraj
I find that some of the most powerful investments occur when a company offers both resilience AND optionality.

$AMZN is the perfect example, where their eCommerce business provided resilience, while AWS optionality.

This turned out to be a superb combination.

This represents a classic barbell strategy, but within a single company.
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⁠Bourbon Capital
You supposed to be happy when $GOOG is down
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⁠Stock Analysis Compilation
Brown Advisory on Autozone $AZO US

Thesis: AutoZone’s strong market position in the growing used car parts market, combined with exceptional cash flow management and sustainability efforts, positions it for continued success

(Extract from their Q2 letter) https://t.co/2m5A8YqojR
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⁠Bourbon Capital
Remember,

When a quality stock gets in trouble, people panic and sell. I've never understood why; it's your best chance to make money.This can present a buying opportunity as strong companies are likely to recover over the long term

$UNH crashed from $530 to $439, bad news, today is back to all-time high and close to $600

$GOOG is having a hard time right now, What do you think?
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⁠Quiver Quantitative
🚨 BREAKING: We just caught 143 STOCK Act violations by Representative John James.

We have now caught 12 members of Congress breaking the insider trading law in the last month.

This coincidentally comes after bill was advanced that would increase penalties for violations.

The fine is just $200 right now.

Full trade list up on Quiver.
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⁠Librarian Capital
Constellation Brands $STZ cuts FY25 outlook

Wine & Spirits sales to fall 4-6% (was -0.5% to +0.5%)
$1.5-2.5bn GW impairment

"Incremental macroeconomic headwinds affecting consumer, particularly unemployment, and prolonged inventory destocking"

cc: $DGE https://t.co/BlWFAoyIht
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