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Librarian Capital
Many forget how fragmented alcohol industry is
Total Beverage Alcohol (TBA) is ~40% Beer by value
International Spirits only 20-25%
Diageo $DGE $DEO trying to go from 4% of TBA to 6%; whether it grows can be independent of big sector things like alcohol addiction & GLP-1 drugs https://t.co/opizzG2hg5
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Many forget how fragmented alcohol industry is
Total Beverage Alcohol (TBA) is ~40% Beer by value
International Spirits only 20-25%
Diageo $DGE $DEO trying to go from 4% of TBA to 6%; whether it grows can be independent of big sector things like alcohol addiction & GLP-1 drugs https://t.co/opizzG2hg5
"Diageo: FY24 Not That Bad; Growth Outside the Americas"
Shares fell ~10% initially after results and remain near their multi-year low; P/E is ~17x even on FY19 EPS
$DGE $DEO $RI $BF.B $RCO
Article link: https://t.co/mCRPLV05lb https://t.co/Q4FOEeSTnJ tweet
Offshore
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Librarian Capital
Costco $COST: Brief mention in Hosking 24Q2 review
"Two other top ten contributors to performance that can be found towards the crest of the capital cycle curve were 3i and Costco. Via its ownership of European hard discount retailer Action, 3i is very much Costco’s disciple" https://t.co/fISBnnbKdO
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Costco $COST: Brief mention in Hosking 24Q2 review
"Two other top ten contributors to performance that can be found towards the crest of the capital cycle curve were 3i and Costco. Via its ownership of European hard discount retailer Action, 3i is very much Costco’s disciple" https://t.co/fISBnnbKdO
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Librarian Capital
Ingersoll-Rand $IR 24Q2 - Precision & Science Tech segment (for Spirax $SPX Watson-Marlow read-across)
Revenues -1.1% organic; +10.0% with acquisitions
Orders +5.8% organic; +5.8% reported
"Organic order growth was strong across both Life Sciences and the Industrial businesses" https://t.co/93ClyhigDA
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Ingersoll-Rand $IR 24Q2 - Precision & Science Tech segment (for Spirax $SPX Watson-Marlow read-across)
Revenues -1.1% organic; +10.0% with acquisitions
Orders +5.8% organic; +5.8% reported
"Organic order growth was strong across both Life Sciences and the Industrial businesses" https://t.co/93ClyhigDA
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Librarian Capital
Turning Point Brands $TPB slide on nicotine pouches
"Expanding FRĒ distribution in 2024"
"Does not require significant market share ... to have a meaningful impact on the bottom line"
Volume chart shows market growth slowed in 24Q2, presumably due to $PM ZYN suppy constraints https://t.co/vpqYSxmhSX
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Turning Point Brands $TPB slide on nicotine pouches
"Expanding FRĒ distribution in 2024"
"Does not require significant market share ... to have a meaningful impact on the bottom line"
Volume chart shows market growth slowed in 24Q2, presumably due to $PM ZYN suppy constraints https://t.co/vpqYSxmhSX
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Librarian Capital
More FDA warning letters to vape shops
"The FDA has authorized 34 e-cigarette products and devices. The agency maintains a printable 1-page flyer of all authorized e-cigarette products"
All 34 come from 3 companies: Logic (Japan Tobacco), NJOY (Altria $MO), Reynolds $BATS $BTI https://t.co/92arZGHbvd
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More FDA warning letters to vape shops
"The FDA has authorized 34 e-cigarette products and devices. The agency maintains a printable 1-page flyer of all authorized e-cigarette products"
All 34 come from 3 companies: Logic (Japan Tobacco), NJOY (Altria $MO), Reynolds $BATS $BTI https://t.co/92arZGHbvd
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: Last week, after reporting strong quarterly results, $ELV traded down to an attractive level of valuation. As I stated in my analysis:
“As you can see, $ELV has attractive CAGR potential if we assume a >13.5x multiple (below its 14.00x 5-year mean & below its 14.21x 10-year mean)
This assumption is MORE than reasonable for a business that’s growing earnings at a >10% rate & has a strong history of linear earnings growth ( $ELV has increased EPS annually since 2008 🎯)
***I also like the negative price correlation $ELV can have, relative to tech, in the short-term … adding a layer of safety in a portfolio***
In short, $ELV appears to be a worthwhile consideration at $500💵”
___
I want to RE-EMPHASIZE this point:
***I also like the negative price correlation $ELV can have, relative to tech, in the short-term … adding a layer of safety in a portfolio***
Since last week’s post ‼️
Nasdaq: -3.80% 🔴 $QQQ
Elevance: +7.29% 🟢 $ELV
_______
#stocks #investing"
A sober valuation analysis on $ELV 🧘🏽♂️
•NTM P/E Ratio: 12.61x
•5-Year Mean: 14.00x
•NTM FCF Yield: 6.28%
•5-Year Mean: 7.00%
As you can see, $ELV appears to be trading somewhere near fair value
Going forward, investors can expect to receive ~11% MORE in earnings per share & ~10% LESS in FCF per share🧠***
Before we get into valuation, let’s take a look at why $ELV is a quality business
BALANCE SHEET✅
•Cash & Equivalents: $6.50B
•Total Investments: $37.15B
•Long-Term Debt: $24.56B
$ELV has a strong balance sheet, an A S&P Credit Rating & 7.83x FFO Interest Coverage Ratio
RETURN ON CAPITAL✅
•2019: 12.3%
•2020: 14.7%
•2021: 14.3%
•2022: 13.6%
•2023: 14.7%
•LTM: 14.6%
RETURN ON EQUITY✅
•2019: 16.0%
•2020: 14.1%
•2021: 17.7%
•2022: 16.3%
•2023: 15.8%
•LTM: 16.6%
$ELV has solid return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2013: $71.02B
•2023: $171.34B
•CAGR: 9.20%
FREE CASH FLOW✅
•2013: $2.41B
•2023: $6.77B
•CAGR: 10.88%
NORMALIZED EPS✅
•2013: $8.52
•2023: $33.14
•CAGR: 14.54%
SHARE BUYBACKS✅
•2013 Shares Outstanding: 303.80M
•LTM Shares Outstanding: 234.95M
By reducing its shares outstanding ~22.6%, $ELV increases its EPS by ~29.1% (assuming 0 growth)
MARGINS🆗
•LTM Gross Margins: 9.4%
•LTM Operating Margins: 6.1%
•LTM Net Income Margins: 3.9%
PAID DIVIDENDS✅
•2013: $1.50
•2023: $5.92
•CAGR: 14.71%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~11% MORE in EPS & ~10% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $ELV has to grow earnings at a 6.31% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be greater than the (6.31%) required growth rate:
2024E: $37.27 (12.4% YoY) *FY Dec
2025E: $41.71 (11.9% YoY)
2026E: $47.00 (12.7% YoY)
$ELV has a great track record of meeting analyst estimates ~2 years out, so let’s assume $ELV ends 2026 with $47.00 in EPS & see its CAGR potential assuming different multiples
15x P/E: $705.00💵 … ~16.0% CAGR
14x P/E: $658.00💵 … ~12.9% CAGR
13.5x P/E: $611.00💵 … ~11.3% CAGR
13x P/E: $611.00💵 … ~9.7% CAGR
As you can see, $ELV has attractive CAGR potential if we assume a >13.5x multiple (below its 14.00x 5-year mean & below its 14.21x 10-year mean)
This assumption is MORE than reasonable for a business that’s growing earnings at a >10% rate & has a strong history of linear earnings growth ( $ELV has increased EPS annually since 2008 🎯)
I also like the negative price correlation $ELV can have, relative to tech, in the short-term … adding a layer of safety in a portfolio
In short, $ELV appears to be a worthwhile considerat[...]
RT @DimitryNakhla: Last week, after reporting strong quarterly results, $ELV traded down to an attractive level of valuation. As I stated in my analysis:
“As you can see, $ELV has attractive CAGR potential if we assume a >13.5x multiple (below its 14.00x 5-year mean & below its 14.21x 10-year mean)
This assumption is MORE than reasonable for a business that’s growing earnings at a >10% rate & has a strong history of linear earnings growth ( $ELV has increased EPS annually since 2008 🎯)
***I also like the negative price correlation $ELV can have, relative to tech, in the short-term … adding a layer of safety in a portfolio***
In short, $ELV appears to be a worthwhile consideration at $500💵”
___
I want to RE-EMPHASIZE this point:
***I also like the negative price correlation $ELV can have, relative to tech, in the short-term … adding a layer of safety in a portfolio***
Since last week’s post ‼️
Nasdaq: -3.80% 🔴 $QQQ
Elevance: +7.29% 🟢 $ELV
_______
#stocks #investing"
A sober valuation analysis on $ELV 🧘🏽♂️
•NTM P/E Ratio: 12.61x
•5-Year Mean: 14.00x
•NTM FCF Yield: 6.28%
•5-Year Mean: 7.00%
As you can see, $ELV appears to be trading somewhere near fair value
Going forward, investors can expect to receive ~11% MORE in earnings per share & ~10% LESS in FCF per share🧠***
Before we get into valuation, let’s take a look at why $ELV is a quality business
BALANCE SHEET✅
•Cash & Equivalents: $6.50B
•Total Investments: $37.15B
•Long-Term Debt: $24.56B
$ELV has a strong balance sheet, an A S&P Credit Rating & 7.83x FFO Interest Coverage Ratio
RETURN ON CAPITAL✅
•2019: 12.3%
•2020: 14.7%
•2021: 14.3%
•2022: 13.6%
•2023: 14.7%
•LTM: 14.6%
RETURN ON EQUITY✅
•2019: 16.0%
•2020: 14.1%
•2021: 17.7%
•2022: 16.3%
•2023: 15.8%
•LTM: 16.6%
$ELV has solid return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2013: $71.02B
•2023: $171.34B
•CAGR: 9.20%
FREE CASH FLOW✅
•2013: $2.41B
•2023: $6.77B
•CAGR: 10.88%
NORMALIZED EPS✅
•2013: $8.52
•2023: $33.14
•CAGR: 14.54%
SHARE BUYBACKS✅
•2013 Shares Outstanding: 303.80M
•LTM Shares Outstanding: 234.95M
By reducing its shares outstanding ~22.6%, $ELV increases its EPS by ~29.1% (assuming 0 growth)
MARGINS🆗
•LTM Gross Margins: 9.4%
•LTM Operating Margins: 6.1%
•LTM Net Income Margins: 3.9%
PAID DIVIDENDS✅
•2013: $1.50
•2023: $5.92
•CAGR: 14.71%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~11% MORE in EPS & ~10% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $ELV has to grow earnings at a 6.31% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be greater than the (6.31%) required growth rate:
2024E: $37.27 (12.4% YoY) *FY Dec
2025E: $41.71 (11.9% YoY)
2026E: $47.00 (12.7% YoY)
$ELV has a great track record of meeting analyst estimates ~2 years out, so let’s assume $ELV ends 2026 with $47.00 in EPS & see its CAGR potential assuming different multiples
15x P/E: $705.00💵 … ~16.0% CAGR
14x P/E: $658.00💵 … ~12.9% CAGR
13.5x P/E: $611.00💵 … ~11.3% CAGR
13x P/E: $611.00💵 … ~9.7% CAGR
As you can see, $ELV has attractive CAGR potential if we assume a >13.5x multiple (below its 14.00x 5-year mean & below its 14.21x 10-year mean)
This assumption is MORE than reasonable for a business that’s growing earnings at a >10% rate & has a strong history of linear earnings growth ( $ELV has increased EPS annually since 2008 🎯)
I also like the negative price correlation $ELV can have, relative to tech, in the short-term … adding a layer of safety in a portfolio
In short, $ELV appears to be a worthwhile considerat[...]