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โ Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: And I still believe market participants are underestimating $AMZN FCF growth potential ๐๐ฝ
#stocks #investing https://t.co/oPSI0YN0RD
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RT @DimitryNakhla: And I still believe market participants are underestimating $AMZN FCF growth potential ๐๐ฝ
#stocks #investing https://t.co/oPSI0YN0RD
Interesting to compare FCF Estimates of $AMZN $NVDA $GOOG & $MSFT ๐ต
โข By the end of 2028, $AMZN is projected to generate more FCF ($142.34B) than the rest ๐ธ
โข $NVDA is projected to nearly triple its FCF in 2 years (2024-2026) ๐คฏ
โข Despite $NVDA outstanding growth, $GOOG & $MSFT FCF projections are still impressive ๐
Current valuations:
โข $AMZN 1.96T
โข $NVDA 3.00T
โข $GOOG 2.25T
โข $MSFT 3.34T
Any thoughts? Comment below ๐๐ฝ
#stocks #investing tweet
Offshore
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โ Dimitry Nakhla | Babylon Capitalยฎ
A sober valuation analysis on $DHR ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 30.69x
โข10-Year Mean: 25.18x
โขNTM FCF Yield: 4.34%
โข10-Year Mean: 3.24%
As you can see, $DHR appears to be trading above fair value
Going forward, investors can receive ~18% LESS in earnings per share & ~25% LESS in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $DHR is a quality business
BALANCE SHEETโ
โขCash & Short-Term Inv: $7.03B
โขLong-Term Debt: $16.42B
$DHR has a great balance sheet, an A- S&P Credit Rating, & 22x FFO Interest Coverage
RETURN ON CAPITAL๐*
โข2019: 6.2%
โข2020: 7.8%
โข2021: 10.3%
โข2022: 10.7%
โข2023: 7.4%
โขLTM: 7.2%
*ROIC relatively low partly due to $DHR growth strategy (acquisitions, capital allocation, etc)
RETURN ON EQUITY๐
โข2019: 8.3%
โข2020: 10.8%
โข2021: 12.8%
โข2022: 13.3%
โข2023: 8.2%
โขLTM: 7.8%
$DHR has decent return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2018: $17.05B
โข2023: $23.89B
โขCAGR: 6.97%
FREE CASH FLOWโ
โข2018: $3.44B
โข2023: $5.78B
โขCAGR: 10.93%
NORMALIZED EPSโ
โข2018: $7.58
โข2023: $4.52
โขCAGR: 10.89%
SHARE BUYBACKSโ
โข2018 Shares Outstanding: 0.70B
โขLTM Shares Outstanding: 0.74B
MARGINSโ
โขLTM Gross Margins: 58.9%
โขLTM Operating Margins: 21.9%
โขLTM Net Income Margins: 17.1%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~18% LESS in EPS & ~25% LESS in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $DHR has to grow earnings at a 15.35% 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 (15.35%) required growth rate:
2024E: $7.62 (0.5% YoY) *FY Dec
2025E: $8.74 (14.8% YoY)
2026E: $9.71 (11.0% YoY)
$DHR has a decent track record of meeting analyst estimates ~2 years out, so letโs assume $DHR ends 2026 with $9.71 in EPS & see its CAGR potential assuming different multiples
32x P/E: $310.72๐ต โฆ ~11.3% CAGR
28x P/E: $271.88๐ต โฆ ~5.5% CAGR
27x P/E: $262.16๐ต โฆ ~4.0% CAGR
26x P/E: $252.46๐ต โฆ ~2.5% CAGR
25x P/E: $242.75๐ต โฆ ~1.0% CAGR
As you can see, $DHR needs to trade above 32x to have attractive return potential
While possible, I wouldnโt want to rely on that assumption as it doesnโt leave us with any margin of safety
While the 10-year mean multiple is 25.18x, Iโd be content relying on somewhere closer to 27x - 28x earnings given $DHR quality, culture, competitive advantage, earnings growth rate & the quality of earnings, & long-term tailwinds in the sector
Yet, even at 27x - 28x earnings, the return potential outlook is bleak
Today at $240๐ต $DHR is trading at a substantial premium
Iโd become interested in $DHR closer to $200๐ต or at ~25.50x NTM earnings (roughly 16.7% below todayโs price)
At that price, I can reasonably expect ~12% CAGR while assuming 27x & ~10.2% CAGR while assuming 26x, a multiple I view as fair for $DHR
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐.
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A sober valuation analysis on $DHR ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 30.69x
โข10-Year Mean: 25.18x
โขNTM FCF Yield: 4.34%
โข10-Year Mean: 3.24%
As you can see, $DHR appears to be trading above fair value
Going forward, investors can receive ~18% LESS in earnings per share & ~25% LESS in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $DHR is a quality business
BALANCE SHEETโ
โขCash & Short-Term Inv: $7.03B
โขLong-Term Debt: $16.42B
$DHR has a great balance sheet, an A- S&P Credit Rating, & 22x FFO Interest Coverage
RETURN ON CAPITAL๐*
โข2019: 6.2%
โข2020: 7.8%
โข2021: 10.3%
โข2022: 10.7%
โข2023: 7.4%
โขLTM: 7.2%
*ROIC relatively low partly due to $DHR growth strategy (acquisitions, capital allocation, etc)
RETURN ON EQUITY๐
โข2019: 8.3%
โข2020: 10.8%
โข2021: 12.8%
โข2022: 13.3%
โข2023: 8.2%
โขLTM: 7.8%
$DHR has decent return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2018: $17.05B
โข2023: $23.89B
โขCAGR: 6.97%
FREE CASH FLOWโ
โข2018: $3.44B
โข2023: $5.78B
โขCAGR: 10.93%
NORMALIZED EPSโ
โข2018: $7.58
โข2023: $4.52
โขCAGR: 10.89%
SHARE BUYBACKSโ
โข2018 Shares Outstanding: 0.70B
โขLTM Shares Outstanding: 0.74B
MARGINSโ
โขLTM Gross Margins: 58.9%
โขLTM Operating Margins: 21.9%
โขLTM Net Income Margins: 17.1%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~18% LESS in EPS & ~25% LESS in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $DHR has to grow earnings at a 15.35% 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 (15.35%) required growth rate:
2024E: $7.62 (0.5% YoY) *FY Dec
2025E: $8.74 (14.8% YoY)
2026E: $9.71 (11.0% YoY)
$DHR has a decent track record of meeting analyst estimates ~2 years out, so letโs assume $DHR ends 2026 with $9.71 in EPS & see its CAGR potential assuming different multiples
32x P/E: $310.72๐ต โฆ ~11.3% CAGR
28x P/E: $271.88๐ต โฆ ~5.5% CAGR
27x P/E: $262.16๐ต โฆ ~4.0% CAGR
26x P/E: $252.46๐ต โฆ ~2.5% CAGR
25x P/E: $242.75๐ต โฆ ~1.0% CAGR
As you can see, $DHR needs to trade above 32x to have attractive return potential
While possible, I wouldnโt want to rely on that assumption as it doesnโt leave us with any margin of safety
While the 10-year mean multiple is 25.18x, Iโd be content relying on somewhere closer to 27x - 28x earnings given $DHR quality, culture, competitive advantage, earnings growth rate & the quality of earnings, & long-term tailwinds in the sector
Yet, even at 27x - 28x earnings, the return potential outlook is bleak
Today at $240๐ต $DHR is trading at a substantial premium
Iโd become interested in $DHR closer to $200๐ต or at ~25.50x NTM earnings (roughly 16.7% below todayโs price)
At that price, I can reasonably expect ~12% CAGR while assuming 27x & ~10.2% CAGR while assuming 26x, a multiple I view as fair for $DHR
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐.
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AkhenOsiris
$DDOG
Loop Capital reiterates Buy rating and $160 price target, to see at least modest upside in Q2 revenue.
Loop Capital analyst Yun Kim keeps a Buy rating and $160 price target on Datadog while noting that the firm anticipates "'at least a modest revenue upside" to its Q2. Loop notes that the qualitative checks into the company's business suggest that the overall usage trend around non-Al workloads in the quarter remained steady from Q1's positive trajectory, adding that its industry checks also indicated favorable spending trends for new cloud deployments in the first half, which should lead to a ramp of new workloads in the second half as these new deployments go into production.
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$DDOG
Loop Capital reiterates Buy rating and $160 price target, to see at least modest upside in Q2 revenue.
Loop Capital analyst Yun Kim keeps a Buy rating and $160 price target on Datadog while noting that the firm anticipates "'at least a modest revenue upside" to its Q2. Loop notes that the qualitative checks into the company's business suggest that the overall usage trend around non-Al workloads in the quarter remained steady from Q1's positive trajectory, adding that its industry checks also indicated favorable spending trends for new cloud deployments in the first half, which should lead to a ramp of new workloads in the second half as these new deployments go into production.
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Offshore
Photo
โ Dimitry Nakhla | Babylon Capitalยฎ
A sober valuation analysis on $MA ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 30.52x
โข10-Year Mean: 31.29x
โขNTM FCF Yield: 3.32%
โข10-Year Mean: 3.42%
As you can see, $MA appears to be trading near fair value
Going forward, investors can receive ~3% MORE in earnings per share & ~3% LESS in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $MA is a super business
BALANCE SHEETโ
โขCash & Short Term Inv: $7.66B
โขLong-Term Debt: $13.54B
$MA has a strong balance sheet, an A+ S&P Credit Rating & 19.79x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 62.9%
โข2020: 40.6%
โข2021: 45.7%
โข2022: 58.5%
โข2023: 61.1%
โขLTM: 64.1%
RETURN ON EQUITYโ
โข2019: 141.4%
โข2020: 102.5%
โข2021: 124.7%
โข2022: 144.0%
โข2023: 167.4%
โขLTM: 186.3%
$MA has excellent return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $8.31B
โข2023: $25.10B
โขCAGR: 11.68%
FREE CASH FLOWโ
โข2013: $3.98B
โข2023: $11.61B
โขCAGR: 11.30%
NORMALIZED EPSโ
โข2013: $2.61
โข2023: $12.26
โขCAGR: 16.73%
PAID DIVIDENDSโ
โข2013: $0.29
โข2023: $2.37
โขCAGR: 23.37%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 1.21B
โขLTM Shares Outstanding: 939M
By reducing its shares outstanding ~22.4%, $MA increased its EPS by ~28.8% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 100.0%
โขLTM Operating Margins: 58.1%
โขLTM Net Income Margins: 46.1%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~3% MORE in EPS & ~3% LESS in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $MA has to grow earnings at a 15.26% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be slightly more than the (15.26%) required growth rate:
2024E: $14.27 (16.4% YoY) *FY Dec
2025E: $16.58 (16.2% YoY)
2026E: $19.34 (16.6% YoY)
$MA has a good track record of meeting analyst estimates ~2 years out, but letโs assume $MA ends 2026 with $19.34 in EPS & see its CAGR potential assuming different multiples
31x P/E: $599.54๐ต โฆ ~12.8% CAGR
29.5x P/E: $570.53๐ต โฆ ~10.6% CAGR
28x P/E: $541.52๐ต โฆ ~8.4% CAGR
As you can see, $MA appears to have attractive return potential if we assume greater or equal to 29.5x earnings (slightly below the 10-year mean & justified given its quality & growth rate)
While there isnโt a great margin of safety today, $MA is such a high-quality business & has the potential to compound in the mid teens for the next 5 years & companies with strong & consistent earnings growth tend to look cheap years later (even if we thought they were โexpensiveโ or even better, fairly valued at the time)
Today at $449๐ต $MA appears to be a worthwhile consideration for investment
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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A sober valuation analysis on $MA ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 30.52x
โข10-Year Mean: 31.29x
โขNTM FCF Yield: 3.32%
โข10-Year Mean: 3.42%
As you can see, $MA appears to be trading near fair value
Going forward, investors can receive ~3% MORE in earnings per share & ~3% LESS in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $MA is a super business
BALANCE SHEETโ
โขCash & Short Term Inv: $7.66B
โขLong-Term Debt: $13.54B
$MA has a strong balance sheet, an A+ S&P Credit Rating & 19.79x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 62.9%
โข2020: 40.6%
โข2021: 45.7%
โข2022: 58.5%
โข2023: 61.1%
โขLTM: 64.1%
RETURN ON EQUITYโ
โข2019: 141.4%
โข2020: 102.5%
โข2021: 124.7%
โข2022: 144.0%
โข2023: 167.4%
โขLTM: 186.3%
$MA has excellent return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $8.31B
โข2023: $25.10B
โขCAGR: 11.68%
FREE CASH FLOWโ
โข2013: $3.98B
โข2023: $11.61B
โขCAGR: 11.30%
NORMALIZED EPSโ
โข2013: $2.61
โข2023: $12.26
โขCAGR: 16.73%
PAID DIVIDENDSโ
โข2013: $0.29
โข2023: $2.37
โขCAGR: 23.37%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 1.21B
โขLTM Shares Outstanding: 939M
By reducing its shares outstanding ~22.4%, $MA increased its EPS by ~28.8% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 100.0%
โขLTM Operating Margins: 58.1%
โขLTM Net Income Margins: 46.1%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~3% MORE in EPS & ~3% LESS in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $MA has to grow earnings at a 15.26% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be slightly more than the (15.26%) required growth rate:
2024E: $14.27 (16.4% YoY) *FY Dec
2025E: $16.58 (16.2% YoY)
2026E: $19.34 (16.6% YoY)
$MA has a good track record of meeting analyst estimates ~2 years out, but letโs assume $MA ends 2026 with $19.34 in EPS & see its CAGR potential assuming different multiples
31x P/E: $599.54๐ต โฆ ~12.8% CAGR
29.5x P/E: $570.53๐ต โฆ ~10.6% CAGR
28x P/E: $541.52๐ต โฆ ~8.4% CAGR
As you can see, $MA appears to have attractive return potential if we assume greater or equal to 29.5x earnings (slightly below the 10-year mean & justified given its quality & growth rate)
While there isnโt a great margin of safety today, $MA is such a high-quality business & has the potential to compound in the mid teens for the next 5 years & companies with strong & consistent earnings growth tend to look cheap years later (even if we thought they were โexpensiveโ or even better, fairly valued at the time)
Today at $449๐ต $MA appears to be a worthwhile consideration for investment
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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โ Dimitry Nakhla | Babylon Capitalยฎ
10 Investment & Stock Market Quotes ๐๐ญ
1. โInvesting is a business of probabilities, not certainties.โ -Benjamin Graham
2. โThe biggest risk is not taking any risk.โ -Mark Zuckerberg
3. โThe best time to buy is when there's blood in the streets.โ -Baron Rothschild
4. โPrice is what you pay. Value is what you get.โ -Warren Buffett
5. โInvest for the long haul. It's the best way to tame the market's volatility.โ -Peter Lynch
6. โThe stock market is a device for transferring money from the impatient to the patient.โ -Warren Buffett
7. โThe four most dangerous words in investing are: 'This time it's different.'โ -Sir John Templeton
8. โIf you can't bear the thought of losing 50% of your portfolio, then you shouldn't be in the stock market.โ -Mohnish Pabrai
9. โThe most important thing is to understand what you're investing in and why.โ -Nick Sleep
10. โInvesting is not about being brilliant, it's about being consistent.โ -Unknown
#stocks #investing
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10 Investment & Stock Market Quotes ๐๐ญ
1. โInvesting is a business of probabilities, not certainties.โ -Benjamin Graham
2. โThe biggest risk is not taking any risk.โ -Mark Zuckerberg
3. โThe best time to buy is when there's blood in the streets.โ -Baron Rothschild
4. โPrice is what you pay. Value is what you get.โ -Warren Buffett
5. โInvest for the long haul. It's the best way to tame the market's volatility.โ -Peter Lynch
6. โThe stock market is a device for transferring money from the impatient to the patient.โ -Warren Buffett
7. โThe four most dangerous words in investing are: 'This time it's different.'โ -Sir John Templeton
8. โIf you can't bear the thought of losing 50% of your portfolio, then you shouldn't be in the stock market.โ -Mohnish Pabrai
9. โThe most important thing is to understand what you're investing in and why.โ -Nick Sleep
10. โInvesting is not about being brilliant, it's about being consistent.โ -Unknown
#stocks #investing
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โ Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: 5 Quality Stocks On My Buy Radar Today ๐ธ
๐ณ Visa $V
โขNTM P/E: 26.30x
โข5-Year Avg: 30.23x
โขEstimated EPS Growth 2025: 12.4%
โขEstimated EPS Growth 2026: 13.1%
โขLTM ROIC: 34.7%
___
๐ Old Dominion Freight Lines $ODFL
โขNTM P/E: 27.67x
โข5-Year Avg: 28.75x
โขEstimated EPS Growth 2025: 18.5%
โขEstimated EPS Growth 2026: 10.6%
โขLTM ROIC: 33.9%
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๐ฑ๏ธ Alphabet $GOOG $GOOGL
โขNTM P/E: 22.63x
โข5-Year Avg: 24.60x
โขEstimated EPS Growth 2025: 13.7%
โขEstimated EPS Growth 2026: 14.9%
โขLTM ROIC: 30.2%
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๐ S&P Global $SPGI
โขNTM P/E: 30.65x
โข5-Year Avg: 29.14x
โขEstimated EPS Growth 2025: 13.2%
โขEstimated EPS Growth 2026: 13.1%
โขLTM ROIC: 9.0%
___
๐ง Monster Beverage $MNST
โขNTM P/E: 28.54x
โข5-Year Avg: 32.28x
โขEstimated EPS Growth 2025: 14.2%
โขEstimated EPS Growth 2026: 13.4%
โขLTM ROIC: 24.0%
___
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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RT @DimitryNakhla: 5 Quality Stocks On My Buy Radar Today ๐ธ
๐ณ Visa $V
โขNTM P/E: 26.30x
โข5-Year Avg: 30.23x
โขEstimated EPS Growth 2025: 12.4%
โขEstimated EPS Growth 2026: 13.1%
โขLTM ROIC: 34.7%
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๐ Old Dominion Freight Lines $ODFL
โขNTM P/E: 27.67x
โข5-Year Avg: 28.75x
โขEstimated EPS Growth 2025: 18.5%
โขEstimated EPS Growth 2026: 10.6%
โขLTM ROIC: 33.9%
___
๐ฑ๏ธ Alphabet $GOOG $GOOGL
โขNTM P/E: 22.63x
โข5-Year Avg: 24.60x
โขEstimated EPS Growth 2025: 13.7%
โขEstimated EPS Growth 2026: 14.9%
โขLTM ROIC: 30.2%
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๐ S&P Global $SPGI
โขNTM P/E: 30.65x
โข5-Year Avg: 29.14x
โขEstimated EPS Growth 2025: 13.2%
โขEstimated EPS Growth 2026: 13.1%
โขLTM ROIC: 9.0%
___
๐ง Monster Beverage $MNST
โขNTM P/E: 28.54x
โข5-Year Avg: 32.28x
โขEstimated EPS Growth 2025: 14.2%
โขEstimated EPS Growth 2026: 13.4%
โขLTM ROIC: 24.0%
___
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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