⁠Ahmad Jivraj
Do you doubt yourself when it comes to the stock market? Then read this 👇

1/18 Thread: Imposter Syndrome in the Stock Market...and How to Deal With It

Nothing screws over an investor more than self doubt.

It is easy to fall into a trap of thinking “there are so many institutions investing in the stock market today, so how can I possibly compete?” https://t.co/htFjBetzy9 - Ahmad Jivraj
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⁠Dimitry Nakhla | Babylon Capital®
Excellent all around earnings reports from $MA $TMO $ROP & $BX 💰

Source: Earnings Hub https://t.co/5aPaCzZjOK
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⁠InsideArbitrage
🏡 $PHM PulteGroup Announces Q4 2024 Financial Results;

🏠 Approves a $1.5 billion increase to the company’s share repurchase authorization, bringing the remaining authorization to $2.1 billion. This represents around 6.5% of its market cap at announcement

🏠 The Atlanta-based homebuilder leveraged targeted sales incentives to attract hesitant homebuyers as 30-year U.S. mortgage rates surpassed 7%, the highest since May 2024

🏠 CEO: “PulteGroup’s strong fourth quarter financial results completed a record-setting year. For the full year, PulteGroup generated nearly $18 billion in revenues and net income of $3.1 billion, while generating a return on equity of 27.5%*. These results allowed us to invest $5.3 billion into our business, return $1.4 billion to our shareholders through stock repurchases and dividends, and retire $310 million of senior notes"

Q4 2024 financial highlights:

Earnings Per Share (EPS): $4.43
Home Closings: Increased by 6% to 8,103 units
Home Sale Revenues: Rose 13% to $4.7 billion
Home Sale Gross Margin: 27.5%
Net New Orders: 6,167 homes valued at $3.5 billion
Backlog: 10,153 homes valued at $6.5 billion
Share Repurchases: $320 million worth of common shares bought back during the quarter
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⁠InsideArbitrage
RT @tobaccoinsider: Altria: Q4 2024 Results $mo
Beats both the top-line and bottom-line estimates

Revenue: $5.11Bn (exp. $5.04Bn)
EPS: $1.29 (exp. $1.28)

Follow our live write-up:
https://t.co/JTAuXeU8uA

Announces a new $1Bn share repurchase program https://t.co/2cvkHuuNAQ
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⁠Stock Analysis Compilation
Laughing Water Capital on Vistry Group PLC $VTY LN

Thesis: Vistry Group PLC is currently undervalued despite recent setbacks in its transition to a Partnerships model, with potential for significant earnings growth in the near future.

(Extract from their Q4 letter) https://t.co/XEAqQWGfpG
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⁠InsideArbitrage
Teoxane Withdraws Bid for Revance $RVNC -
✴️Teoxane announced that, despite its efforts to secure financing since submitting its proposal to Revance, it is unable to obtain committed financing within the timeline of Crown’s revised offer.
✴️Consequently, Teoxane is withdrawing its proposal effective immediately and will tender all its Revance shares into Crown’s revised offer.

Crown Laboratories and Revance Therapeutics $RVNC announced that on January 17, they amended the Merger Agreement.
✴️Revance’s stockholders will receive $3.65 per share of common stock.
✴️Crown will extend its existing tender offer for all of Revance’s outstanding Shares until February 4, 2025.
✴️The transaction is expected to close by February 6, 2025. - InsideArbitrage
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⁠Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $INTU 🧘🏽‍♂️

•NTM P/E Ratio: 30.06x
•5-Year Mean: 36.49x

•NTM FCF Yield: 3.45%
•5-Year Mean: 3.27%

As you can see, $INTU appears to be trading somewhere below fair value & near fair value

Going forward, investors can receive ~21% MORE in earnings per share & ~5% MORE in FCF per share 🧠***

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

BALANCE SHEET✅
•Cash & Short-Term Inv: $3.36B
•Long-Term Debt: $5.63B

$INTU has a strong balance sheet, an A- S&P Credit Rating & 20x FFO Interest Coverage

RETURN ON CAPITAL✅
•2019: 43.9%
•2020: 25.2%
•2021: 19.7%
•2022: 10.7%
•2023: 13.1%
•2024: 15.5%

RETURN ON EQUITY✅
•2019: 47.4%
•2020: 41.2%
•2021: 27.5%
•2022: 15.7%
•2023: 14.1%
•2024: 16.6%

$INTU has strong return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2014: $4.24B
•2024: $16.29B
•CAGR: 14.40%

FREE CASH FLOW✅
•2014: $1.34B
•2024: $4.69B
•CAGR: 13.34%

NORMALIZED EPS✅
•2014: $3.49
•2024: $16.94
•CAGR: 17.11%

PAID DIVIDENDS✅
•2014: $0.76
•2024: $3.60
•CAGR: 16.82%

SHARE BUYBACKS🆗
•2014 Shares Outstanding: 291.00M
•LTM Shares Outstanding: 284.00M

By reducing its shares outstanding ~2.4%, $INTU increased its EPS by ~2.5% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 79.6%
•LTM Operating Margins: 23.1%
•LTM Net Income Margins: 17.6%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~22% MORE in EPS & ~5% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $INTU has to grow earnings at a 15.08% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be less than the (15.08%) required growth rate:

2025E: $19.29 (13.9% YoY) *FY Jul
2026E: $22.08 (14.4% YoY)
2027E: $25.14 (13.9% YoY)

$INTU has a great track record of meeting analyst estimates ~2 years out, but let’s assume $INTU ends 2027 with $25.14 in EPS & see its CAGR potential assuming different multiples:

32x P/E: $804.48💵 … ~13.6% CAGR

31x P/E: $779.34💵 … ~12.2% CAGR

30x P/E: $754.20💵 … ~10.7% CAGR

29x P/E: $729.06💵 … ~9.2% CAGR

28x P/E: $703.92💵 … ~7.7% CAGR

While it’s certainly reasonable for $INTU to trade for 32x, I wouldn’t want to rely on that assumption as it doesn’t leave us with a substantial margin of safety

Yet, given its quality, moat, predictability, & growth rate, I am comfortable relying on 30x - 31x multiple, making $INTU a good purchase today at $593💵

I’d consider $INTU a strong purchase with a substantial margin of safety closer to $550💵, or ~27.60x NTM earnings (~8% below todays price)

Given today’s estimates, at $550💵 I can reasonably expect ~11% CAGR while assuming an attractive & conservative 28x multiple
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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 𝐚[...]

𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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