⁠Librarian Capital
Admiral $ADM: When shares fell in Jun-23 after a high-profile downgrade by Citi, we told you we disagreed

We also added to ADM and made it a top-5 position in our model portfolio

ADM has risen 36% since (plus dividends worth ~5%)

Sign up via our profile for our post-H1 update https://t.co/WnlQ4lR4qi

"Admiral: 6% Fall After Citi Downgrade is Another Opportunity"

$ADM at 14.8x 2019 EPS, -40% from peak
2022 inflation = ST P&L volality
Price hikes since 2022 = good LT margins
Positive trends in recent datapoints
We see 54% upside (21% IRR)

FREE here https://t.co/8UB7FGEevC https://t.co/jFfOk5C5B7 - Librarian Capital
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⁠Librarian Capital
Revenue* Per Available Seat Mile declines (24Q2)

Delta $DAL -3%
Frontier $ULCC -11%
Spirit Airlines $SAVE -12%

Hypothesis: People are spending less on travel, and over-capacity at low-end makes things worse for budget airlines

* Passenger / op. revenue where available
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⁠Invest In Assets 📈
Top 10 investing books on Goodreads:

1. Richer, Wiser, Happier by William Green https://t.co/uRYim1n30r
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⁠Stock Analysis Compilation
Loomis Sayles on Adyen $ADYEN NA

Thesis: Adyen is a high-growth payment solutions provider with significant untapped market potential, currently undervalued despite strong secular growth opportunities

(Extract from their Q2 letter) https://t.co/cATKIKNlBS
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⁠Invest In Assets 📈
The ideal business: https://t.co/BHtAeamQXX
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⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $BKNG 🧘🏽‍♂️

•NTM P/E Ratio: 19.75x
•3-Year Mean: 21.24x

•NTM FCF Yield: 5.63%
•3-Year Mean: 4.79%

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

Going forward, investors can receive ~7% MORE in earnings per share & ~17% MORE in FCF per share 🧠***

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

BALANCE SHEET✅
•Cash & Short-Term Inv: $16.33B
•Long-Term Debt: $13.36B

$BKNG has a great balance sheet, an A- S&P Credit Rating, & 8.41x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2019: 33.3%
•2020: 2.7%
•2021: 14.2%
•2022: 29.1%
•2023: 47.3%
•LTM: 48.4%

$BKNG has strong ROIC, highlighting the financial efficiency of the business

REVENUES✅
•2013: $6.79B
•2023: $21.37B
•CAGR: 12.14%

FREE CASH FLOW✅
•2013: $2.22B
•2023: $7.00B
•CAGR: 12.16%

NORMALIZED EPS✅
•2013: $41.72
•2023: $152.22
•CAGR: 13.81%

SHARE BUYBACKS✅
•2013 Shares Outstanding: 52.41M
•LTM Shares Outstanding: 35.04M

By reducing its shares outstanding 33%, $BKNG increased its EPS by 50% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 97.8%
•LTM Operating Margins: 66.9%
•LTM Net Income Margins: 53.9%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~7% MORE in EPS & ~17% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $BKNG has to grow earnings at a 9.88% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be just more than (9.88%) required growth rate:

2024E: $175.64 (15.4% YoY) *FY Dec
2025E: $201.51 (14.7% YoY)
2026E: $236.96 (17.6% YoY)

$BKNG has a decent track record of meeting analyst estimates ~2 years out, so let’s assume $BKNG ends 2026 with $236.96 in EPS & see its CAGR potential assuming different multiples

21x P/E: $4,976.16💵 … ~15.5% CAGR

20x P/E: $4,739.20💵 … ~13.1% CAGR

19x P/E: $4,502.24💵 … ~10.7% CAGR

18x P/E: $4,265.28💵 … ~8.2% CAGR

17x P/E: $4,028.32💵 … ~5.6% CAGR

As you can see, $BKNG appears to have attractive return potential if we assume >19x earnings, a valuation below both its current & 3-year mean (allowing for slight multiple compression, an added layer of a margin of safety)

Also, $BKNG EPS growth rate ( >10%) more than justifies a >20x multiple

Today at $3,618.86💵 $BKNG appears to be a decent consideration for investment

I’d consider $BKNG a great purchase closer to $3,400 (~18.50x multiple) roughly 6% below today’s share price or at $3,400.00💵

This is where I can reasonably expect ~11% CAGR assuming a conservative 18x 2026 earnings estimates, a large margin of safety

#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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⁠Stock Analysis Compilation
Fairlight Capital on Pool Corp $POOL US

Thesis: Pool Corp, the dominant player in the pool industry, offers strong long-term growth potential, supported by resilient demand and a robust financial track record

(Extract from their Q2 letter) https://t.co/dffZu2qxUJ
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⁠Invest In Assets 📈
RT @InvestInAssets: Price to earnings tells you nothing about the value you are getting

You can't compare Fords to Ferraris

Instead, look for:
•ROIC >20%
•Organic FCF growth >10%
•Cash conversion >80%
•Debt / FCF < 5x
•FCF yield >3%

39 Examples 🧵👇
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