AkhenOsiris
@LizThomasStrat says

"I still think we are in late cycle, although an elongated late cycle"

So we were or still are basically mid-cycle? Word salad?
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⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $TMO 🧘🏽‍♂️

•NTM P/E Ratio: 24.31x
•5-Year Mean: 24.64x

•NTM FCF Yield: 3.96%
•5-Year Mean: 3.60%

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

Going forward, investors can receive ~1% MORE in earnings per share & ~10% MORE in FCF per share 🧠***

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

BALANCE SHEET🆗
•Cash & Short-Term Inv: $7.25B
•Long-Term Debt: $31.00B

$TMO has a decent balance sheet, an A- S&P Credit Rating, & 6.23x FFO Interest Coverage

RETURN ON CAPITAL🆗*
•2019: 8.3%
•2020: 13.4%
•2021: 12.8%
•2022: 10.3%
•2023: 8.7%
•LTM: 8.9%

*ROIC relatively low partly due to $TMO growth strategy (acquisitions, capital allocation, etc)

RETURN ON EQUITY✅
•2019: 12.9%
•2020: 19.9%
•2021: 20.5%
•2022: 16.4%
•2023: 13.1%
•LTM: 13.6

$TMO has solid return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2013: $13.09B
•2023: $42.86B
•CAGR: 12.59%

FREE CASH FLOW✅
•2013: $1.73B
•2023: $6.93B
•CAGR: 14.88%

NORMALIZED EPS✅
•2013: $5.42
•2023: $21.55
•CAGR: 14.80%

SHARE BUYBACKS❌
•2013 Shares Outstanding: 0.37B
•LTM Shares Outstanding: 0.39B

MARGINS✅
•LTM Gross Margins: 40.4%
•LTM Operating Margins: 17.4%
•LTM Net Income Margins: 14.2%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~1% MORE in EPS & ~10% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $TMO has to grow earnings at a 12.16% 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 (12.16%) required growth rate:

2024E: $21.72 (0.8% YoY) *FY Dec
2025E: $24.30 (11.9% YoY)
2026E: $27.12 (11.6% YoY)

$TMO has a great track record of meeting analyst estimates ~2 years out, so let’s assume $TMO ends 2026 with $27.12 in EPS & see its CAGR potential assuming different multiples

25x P/E: $678.00💵 … ~10.1% CAGR

24x P/E: $650.88💵 … ~8.3% CAGR

23x P/E: $623.76💵 … ~6.5% CAGR

22x P/E: $596.64💵 … ~4.7% CAGR

As you can see, $TMO needs to trade above 25x to have attractive return potential

While possible, I wouldn’t want to rely on that assumption as it doesn’t leave us with much margin of safety

Today at $536💵 $TMO is JUST starting to get interesting but not a buy for me yet

Given its moat & historically strong growth in EPS & FCF, I’d be happy to re-consider $TMO closer to 23.50x NTM earnings, or at ~$500💵 (~6% below today’s price)

At that price, I can reasonably expect ~9.5% CAGR while assuming 23x & ~11.4% CAGR while assuming 24x, a multiple I view as more than fair for $TMO

#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.
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⁠Dimitry Nakhla | Babylon Capital®
$V & $MA are arguably two of the greatest businesses in the world & are both trading at a slight discount to historical valuations & growth estimates more than justify their respective multiples 💸

#stocks #investing
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AkhenOsiris
$AMZN

FT:

Amazon's international unit is expected to report an annual profit as the retailer's logistics operations bear fruit after years of losses. The $131B unit could report an operating profit of $1.6B this year, according to analysts in a recent Refinitiv poll, after posting a $2.7B operating loss last year. Amazon has worked to better organize its warehouses and delivery operations in key overseas markets, such as Germany and the U.K., leading to faster delivery times and cheaper local operations.
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AkhenOsiris
$CRWD Downgrade on Valuation at Piper Sandler

"Shares have deservedly risen to the highest revenue multiple of any public software company above $75B in market cap," the analysts note, adding they "do not see a near-term catalyst for raising" their $400 price target.

This downgrade is a "valuation call," according to Piper Sandler. They acknowledge CrowdStrike's strong performance and momentum but believe the current stock price has already priced in much of this future growth.

The firm adds that by reaching an annual recurring revenue (ARR) of $3.6 billion and a fiscal 2025 revenue forecast exceeding $4 billion, CrowdStrike's large scale makes significant upside more challenging as growth rates face the "law of large numbers." This could lead to returns lagging behind other cybersecurity companies.

Further, Piper Sandler highlights CrowdStrike's premium valuation. Compared to similar software companies, CrowdStrike boasts the highest valuations in terms of both forward-year sales (18.9x) and free cash flow (57x).

Despite the downgrade, Piper Sandler remains "excited about the second act for CRWD," citing its cloud, identity, logging, and IT offerings. They acknowledge CrowdStrike's impressive execution and strong metrics but believe the current price reflects this optimism.

"We are optimistic about the company longer term as well as the opportunity, just not the stock over our 12-month investment horizon," concludes Piper Sandler.
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AkhenOsiris
$AMZN

Mizuho analysts see Amazon on the cusp of an AI inflection point, citing a recent customer survey with a leading channel partner.

The investment firm's survey revealed several key trends that point to accelerated growth for Amazon's cloud computing arm, Amazon Web Services (AWS).

"We see an accelerated sales cycle from increased demand of ECB meetings and incremental exits of data center contracts," the note states. Enterprises are said to be seeking to finalize proposals and prepaying contracts to exit data centers, leading to a faster sales cycle for AWS.

While the spending mix by category remains largely unchanged, with infrastructure spending still dominant, Mizuho highlights a crucial shift: "cost optimization being offset by new services such as app monitoring, chatbot deployments, and large migration programs." This indicates a move towards higher-value services on AWS.

The most exciting finding, according to Mizuho, is the progress on Generative AI (Gen-AI) projects.

"The survey shows external-facing models (20% of total) are only 6 months away from commercial deployment," the report notes. This suggests a potential surge in inferencing activity as these models are rolled out to a large external customer base.

Based on these findings, Mizuho has increased its conviction on AWS revenue growth, forecasting 20% YoY growth compared to the consensus of 17.5%. They maintain AMZN as a Top Pick with a price target of $240.
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⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: 10 Quality Stocks With Double The YTD Return Of $SPY (+12.02%) | NTM P/E | 5-Year Mean P/E 💵

#stocks #investing https://t.co/Tgl4EQ96UF
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⁠Dimitry Nakhla | Babylon Capital®
7 Quality Stocks With >10% CAGR Potential Assuming Lower Multiple & 2026 EPS Est 💵

💳 Visa $V
•10-Year Avg P/E: 28.10x
•2026E Earnings: $12.68
•CAGR Potential w 27x — 12.2% ✅

💸 Mastercard $MA
•10-Year Avg P/E: 31.28x
•2026E Earnings: $19.34
•CAGR Potential w 30x — 11.8% ✅

📦 Amazon $AMZN (P/FCF Used)
•10-Year Avg P/FCF: 37.79x
•2026E FCF: $102.26B
•CAGR Potential w 27x — 12.0% ✅

📊 Salesforce $CRM
•5-Year Avg P/E: 47.63
•2026E Earnings: $11.01
•CAGR Potential w 27x — 10.4% ✅

🩻 UnitedHealth $UNH
•10-Year Avg P/E: 18.64x
•2026E Earnings: $34.97
•CAGR Potential w 18x — 11.5% ✅

🧾 Automatic Data $ADP
•10-Year Avg P/E: 27.28x
•2026E Earnings: $10.85
•CAGR Potential w 26x — 11.5% ✅

📈 FactSet Research $FDS
•10-Year Avg P/E: 26.05x
•2026E Earnings: $19.35
•CAGR Potential w 26x — 10.2% ✅

#stocks #investing
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⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: Interesting to compare FCF Estimates of $AMZN $NVDA $GOOG & $MSFT 💵

• By the end of 2028, $AMZN is projected to generate more FCF ($142.34B) than the rest 💸

• $NVDA is projected to nearly triple its FCF in 2 years (2024-2026) 🤯

• Despite $NVDA outstanding growth, $GOOG & $MSFT FCF projections are still impressive 📈

Current valuations:

• $AMZN 1.96T
• $NVDA 3.00T
• $GOOG 2.25T
• $MSFT 3.34T

Any thoughts? Comment below 👇🏽

#stocks #investing
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AkhenOsiris
RECENT MARKET TOPS

- Chanos closing fund

- Druckenmiller sold NVDA

- Kolanovic departs JPM
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AkhenOsiris
When is last time AMD had a multi-day winning streak 😂
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