Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $AAPL 🧘🏽‍♂️

•NTM P/E Ratio: 25.48x
•5-Year Mean: 25.57x

•NTM FCF Yield: 4.32%
•5-Year Mean: 4.30%

As you can see, $AAPL appears to be fairly valued

Going forward, investors can expect to receive about the same in earnings per share & FCF per share🧠***

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

BALANCE SHEET✅
•Cash & Equivalents: $61.56B
•Long-Term Debt: $95.28B

$AAPL has an excellent balance sheet, an AA+ S&P Credit Rating & 171x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2018: 32.0%
•2019: 32.2%
•2020: 35.3%
•2021: 54.6%
•2022: 65.2%
•2023: 61.4%

RETURN ON EQUITY✅
•2018: 49.4%
•2019: 55.9%
•2020: 73.7%
•2021: 147.4%
•2022: 175.5%
•2023: 171.9%

$AAPL has great return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2013: $170.91B
•2023: $383.29B
•CAGR: 8.41%

FREE CASH FLOW✅
•2013: $45.50B
•2023: $99.58B
•CAGR: 8.14%

NORMALIZED EPS✅
•2013: $1.42
•2023: $6.13
•CAGR: 15.74%

SHARE BUYBACKS✅
•2013 Shares Outstanding: 26.09B
•LTM Shares Outstanding: 15.81B

By reducing its shares outstanding ~39.4%, $AAPL increased its EPS by ~65.0% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 44.1%
•LTM Operating Margins: 29.8%
•LTM Net Income Margins: 25.3%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive about the same in EPS & FCF per share

Using Benjamin Graham’s 2G rule of thumb, $AAPL has to grow earnings at a 12.74% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be less than the (12.74%) required growth rate:

2024E: $6.56 (6.9% YoY)
2025E: $7.14 (8.9% YoY)
2026E: $7.81 (9.4% YoY)

$AAPL has a good track record of meeting analyst estimates ~2 years out, so let’s assume $AAPL ends 2026 with $7.81 in EPS & see its CAGR potential assuming different multiples

27x P/E: $210.87💵 … ~9.9% CAGR

26x P/E: $203.06💵 … ~8.2% CAGR

25x P/E: $195.25💵 … ~6.4% CAGR

24x P/E: $187.44💵 … ~4.7% CAGR

23x P/E: $179.63💵 … ~2.9% CAGR

As you can see, we’d have to assume >27x earnings for $AAPL to have double digit CAGR potential (given current earnings estimates)

While $AAPL is a superb business, I have a hard time relying on the >27x assumption given their slowing growth rate, among other things

You’ll also notice $AAPL has been “dead money” for 2.5 years (since December 2021)

This can be attributed to its multiple expansion — $AAPL demanded a 31.40x multiple at the time — & its slowing growth rate that recently led to its multiple contraction

Today at $170💵 $AAPL appears to be fully valued

I’d reconsider $AAPL closer to $150💵 or at ~22.50x forward estimates (~11.7% below today’s price) where I can possibly expect double digit return potential assuming a 24x end multiple in 2026

#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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The Long Investor
Rookie numbers https://t.co/2V8TflUrZk
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The Long Investor
RT @TheLongInvest: China is about to ramp up its stimulus program.

While the US tops out, China is starting from the bottom.

China has quantitive easing in its arsenal…..while the US is deliberately trying to cool down its economy.

Which market would you choose for 2024?

It is uncommon for people to step out of their comfort zone of what they know (the US market) and explore new markets (emerging markets and Chinese companies) but look at history, all the greatest investors explored opportunities in every corner of the globe.

Value can be found everywhere but you need to understand economic cycles.

$BABA $KWEB $NIO

President Xi Jinping said on Sunday that China will consolidate and enhance the positive trend of its economic recovery in 2024, and sustain long-term economic development with deeper reforms. #China https://t.co/gxmKZqzTzi - CN Wire
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The Long Investor
HONG KONG absolutely smashed its GDP estimates.

HONG KONG Q1 GDP Y/Y: +2.7% vs. +0.8% est.

HONG KONG Q1 GDP Q/Q: +2.9% vs. +0.9% est. - Stock Talk
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The Long Investor
$SPY we listened to Powell speak yesterday and as he spoke the market pumped which was a clear false pump

So during the speech we prepared for the dump and I added this chart during the speech to our group

A clear head and shoulders pattern was formed

Price hit the trend line and dumped

Powell did not say anything that could change the course of the market.
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The Long Investor
$BABA has made a 6 month high today.

A long way to go before its back to its fair value.
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Dimitry Nakhla | Babylon Capital®
$ZTS with a strong quarterly report & increased guidance for FY 2024 🐶

#stocks #investing https://t.co/upvyNSKnVH

$ZTS Forward Multiple of 25.91x is near the lowest end of its range from 2017 - 2024❗️

Also, $ZTS 1.15% Dividend Yield is nearly double its 5-Year Avg Dividend Yield of 0.63% 💵

#stocks #investing https://t.co/BdmHU7UluE - Dimitry Nakhla | Babylon Capital®
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Giuliano
Poor Charlie's Almanack genuinely changed my life.

Here's why and how: https://t.co/yjvm3lh3R6
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The Long Investor
CNBC asking why China is reversing and nobody expected this reversal?

Hello, welcome to the most important page on X.

$BABA, $BIDU, $KWEB, $YINN
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