⁠Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $ASML 🧘🏽‍♂️

•NTM P/E Ratio: 28.96x
•10-Year Mean: 31.05x

•NTM FCF Yield: 3.09%
•10-Year Mean: 3.07%

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

Going forward, investors can receive ~7% MORE in earnings per share & ~1% MORE in FCF per share🧠***

Before we get into valuation, let’s take a look at why $ASML is an excellent business (*Financials in USD*)

BALANCE SHEET✅
•Cash & Short Term Inv: $9.85B
•Long-Term Debt: $3.98B

$ASML has a strong balance sheet & 70x FFO Interest Coverage

RETURN ON CAPITAL✅
•2021: 43.8%
•2022: 48.0%
•2023: 48.7%
•2024: 38.3%
•LTM: 48.2%

RETURN ON EQUITY✅
•2021: 49.0%
•2022: 59.4%
•2023: 70.4%
•2024: 47.4%
•LTM: 55.6%

$ASML has excellent return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2014: $7.09B
•2024: $29.28B
•CAGR: 15.23%

FREE CASH FLOW*
• $ASML FCF is very sporadic due to heavy capital expenditures & isn’t necessarily the most reliable way to analyze the company’s value

NORMALIZED EPS✅
•2014: $3.15
•2024: $20.03
•CAGR: 20.31%

SHARE BUYBACKS✅
•2018 Shares Outstanding: 426.40M
•LTM Shares Outstanding: 393.30M

By reducing its shares outstanding ~7.7%, $ASML increased its EPS by ~8.3% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 52.0%
•LTM Operating Margins: 33.8%
•LTM Net Income Margins: 28.3%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~7% MORE in EPS & 1% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $ASML has to grow earnings at a 14.48% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (14.48%) required growth rate:

2025E: $27.13 (22.0% YoY) *FY Dec
2026E: $30.87 (13.8% YoY)
2027E: $37.44 (21.3% YoY)

$ASML has a decent track record of meeting analyst estimates ~2 years out. HOWEVER, let’s be conservative & assume $ASML ends 2027 with $35.00*** in EPS (~6% below current estimates) & see its CAGR potential assuming different multiples:

31x P/E: $1,085💵 … ~13.4% CAGR

30x P/E: $1,050💵 … ~12.0% CAGR

29x P/E: $1,015💵 … ~10.5% CAGR

28x P/E: $980💵 … ~9.0% CAGR

27x P/E: $945💵 … ~7.5% CAGR

As you can see, $ASML appears to have attractive return potential if we assume greater or equal to 29x EPS (below its 10-year mean, current multiple, & justified given its quality, moat & growth rate)

Today at $807💵 $ASML appears to be a good consideration for investment, albeit with extreme volatility

Less than 2 months ago (in the latest $ASML analysis) I stated:

“Today at $687💵 $ASML appears to be a strong consideration for investment”

Of course $ASML was a much better deal then, yet those looking to accumulate today can account for a margin of safety by accumulating in tranches (e.g. 1/3 at $807, 1/3 at $710, 1/3 at $625)

#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. tweet

⁠Dimitry Nakhla | Babylon Capital®
There are plenty of discussions revolving around the Fed and Interest Rates 🏦

Here’s what the Fed SHOULD do, & it’s simple

1. A 0.25% cut (in the next 2 months)

2. Patiently assess the situation until Oct / Nov

3. Hold steady or one more 0.25% cut in Nov / Dec (pending data)
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⁠Quiver Quantitative
JUST IN: Senator Adam Schiff has introduced legislation to ban government officials from issuing meme coins.

Track the bill on Quiver: https://t.co/p2UcuHXvAw
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RFK Jr. was just asked about his portfolio.

He said: "I own Bitcoin"

If you followed Quiver you'd already know! https://t.co/B8b0tQ5PZ7
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⁠Investing visuals
How $HIMS makes money 🫰 https://t.co/L0ONULQPBg
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⁠Quiver Quantitative
Look at this.

At the beginning of the year, we sounded the alarm when Congress suddenly started buying up Palantir stock.

$PLTR has now risen 108% since they started buying. https://t.co/djxyXJZFcP
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⁠The All-In Podcast
Chamath: Tesla and Google are best positioned to win AI because they are building the full-stack

Jason:

"The game here is who wins the AI prize five years from now?"

"Chamath, who's your number one and number two?"

Chamath:

" Tesla's one and Google's two."

"And the reason is because they are the closest to having that vertically integrated stack that I spoke about."

TESLA 1⃣

"I think that Tesla has the best vision models."

"Now with xAI, they'll have one of the best LLMs and reasoning models."

"And they'll be able to eventually stick that on Dojo."

"And then all of that will be in all of the physical AI that you will interact with in your daily life."

"Whether it's a robot, or whether it's a car, or whether it's a Robotaxi. So that's number one."

GOOGLE 2⃣

"And then number two, for many of the same reasons, I think Google."

"Because you'll have the Gemini family of models, which just absolutely kick ass."

"Like Veo 3, which we haven't really spoke about, is gonna destroy Hollywood in the next year, like Hollywood is done, I think."

"But they're landing model after model."

"They have the TPU, and the next generation TPU I think is exceptional."

"They're baking quantum."

"And then they have an entire funnel of billions of people that they can direct experiences to."

"So Tesla one, Google two."
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⁠Investing visuals
Seeing a lot of bullish buy-the-dip takes on $HIMS.

But there's a major risk that came into full view yesterday and isn't talked about enough IMO.

High legal & regulatory exposure.

The compounded GLP-1 model is under fire. If regulators crack down, $HIMS could lose a key growth driver plus face legal pressure and credibility damage.

This isn’t new, but it’s now impossible to ignore.

$HIMS is down 🔻32% on the $HIMS – $NVO partnership termination.

5 Key highlights👇

1 - Reason for termination 🔍
$NVO ended the agreement with $HIMS to supply Wegovy, citing concerns over “illegitimate” compounded versions. $NVO accuses $HIMS of deceptive marketing and mass compounding of unapproved GLP-1s.

2 - Short-term revenue impact 🫰
Minimal near-term impact: Wegovy was not yet widely available on the $HIMS platform. Compounded GLP-1s remain the core of its current offering.

3 - Long(er)-term revenue impact 💰
While not directly stated by either company, the deal’s collapse and regulatory trends imply future access to branded GLP‑1s could be harder.

4 - Brand trust risk ⚠️
Accusations of deceptive practices may damage $HIMS credibility with regulators, pharma partners, and consumers.

5 - Moving forward with GLP-1 🔮
$HIMS will continue offering compounded and personalized GLP-1 treatments through its own clinical program.

If I missed anything important, feel free to add other insights or important snippets.

Does this change your $HIMS thesis? - Investing visuals
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⁠Quiver Quantitative
NEW: Stephen Miller now owns up to $250K of Palantir stock.

Miller is the US Homeland Security advisor.

We've seen multiple members of the House Homeland Security Committee (from both parties) start buying up Palantir stock this year.

Track politicians' portfolios on Quiver.
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