Offshore
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Dimitry Nakhla | Babylon Capital®
7 Reasons WHY $BKNG (Booking Holdings) Should Be On Your Watchlist 💸
1️⃣ $BKNG has grown revenue for 19 out of the last 20 years
2️⃣ $BKNG has increased earnings per share (EPS) for 19 out of the last 20 years
3️⃣ Strong & consistent ROIC (drop in 2020 due to global restrictions)
4️⃣ Opportunity for growth in operating and net income margins
5️⃣ A fortress balance sheet with $16.33B in cash & $13.36B in long term debt
6️⃣ Aggressive share buybacks (33% decrease in shares outstanding since 2013 leading to a 50% boost in EPS)
7️⃣ $BKNG recently initiated a $35.00 per share dividend that will likely grow at an attractive rate (8% - 11%)
#stocks #investing
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7 Reasons WHY $BKNG (Booking Holdings) Should Be On Your Watchlist 💸
1️⃣ $BKNG has grown revenue for 19 out of the last 20 years
2️⃣ $BKNG has increased earnings per share (EPS) for 19 out of the last 20 years
3️⃣ Strong & consistent ROIC (drop in 2020 due to global restrictions)
4️⃣ Opportunity for growth in operating and net income margins
5️⃣ A fortress balance sheet with $16.33B in cash & $13.36B in long term debt
6️⃣ Aggressive share buybacks (33% decrease in shares outstanding since 2013 leading to a 50% boost in EPS)
7️⃣ $BKNG recently initiated a $35.00 per share dividend that will likely grow at an attractive rate (8% - 11%)
#stocks #investing
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Offshore
Video
Aswath Damodaran (Youtube)
Chapter/Session 6: Business Investing across the Life Cycle
Session Description: It is inarguable that deciding whether to invest and where to invest is central to building a successful business. I look at the the investment decision in terms of both coming up with an accetable hurdle rate as well as measuring returns on an investment project, and examine why the way that businesses assess hurdle rates and assess investment quality change over a company's life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch6.pdf
Exercise:
a. Estimate the costs of equity, debt and capital for each of the companies in your group. Discuss the differences.
b. Estimate the accounting returns (to equity and invested capital) for each of the companies in your group. How would you read the excess returns that you get from comparing accounting returns to costs of equity/capital?
c. What does a typical project (if any) look like for your company? What challenges would you face in assessing whether it is a good or bad investment?
d. Is there optionality in investments in any of your companies? How would you make that judgment?
Chapter/Session 6: Business Investing across the Life Cycle
Session Description: It is inarguable that deciding whether to invest and where to invest is central to building a successful business. I look at the the investment decision in terms of both coming up with an accetable hurdle rate as well as measuring returns on an investment project, and examine why the way that businesses assess hurdle rates and assess investment quality change over a company's life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch6.pdf
Exercise:
a. Estimate the costs of equity, debt and capital for each of the companies in your group. Discuss the differences.
b. Estimate the accounting returns (to equity and invested capital) for each of the companies in your group. How would you read the excess returns that you get from comparing accounting returns to costs of equity/capital?
c. What does a typical project (if any) look like for your company? What challenges would you face in assessing whether it is a good or bad investment?
d. Is there optionality in investments in any of your companies? How would you make that judgment?
Offshore
Video
Aswath Damodaran (Youtube)
Chapter/Session 8: Cash Return (Dividends) across the Life Cycle
Session Description: If dividends represent residual cash flows, i.e., cash flows left over after every other need (taxes, reinvestment, debt payments) have been met, it stands to reason that the cash returned by a firm should reflect where it is in the life cycle. In this session, in addition to looking at cash return (potential and actual) as companies age, I also look at how the choice between dividends and stock buybacks can be affected a company's positioning in the life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch8.pdf
Exercise:
a. How much cash (FCFE) could each of your firms have returned in the most recent year(s)?
b. How much cash did your firms return in the most recent years?
c. In what form (dividends or buybacks) was the cash returned, if at all?
Chapter/Session 8: Cash Return (Dividends) across the Life Cycle
Session Description: If dividends represent residual cash flows, i.e., cash flows left over after every other need (taxes, reinvestment, debt payments) have been met, it stands to reason that the cash returned by a firm should reflect where it is in the life cycle. In this session, in addition to looking at cash return (potential and actual) as companies age, I also look at how the choice between dividends and stock buybacks can be affected a company's positioning in the life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch8.pdf
Exercise:
a. How much cash (FCFE) could each of your firms have returned in the most recent year(s)?
b. How much cash did your firms return in the most recent years?
c. In what form (dividends or buybacks) was the cash returned, if at all?
Offshore
Video
Aswath Damodaran (Youtube)
Chapter/Session 7: Business Financing across the Life Cycle
Session Description: There are only two ways that a business can be fund itself - your own money (equity) and borrowed money (debt). In this session, I look at the tradeoffs - illusory, financial and friction-driven - that drive the trade off between debt and equity, and how it plays out across the life cycle. I move on to to look at the right type of debt a firm, as one that matches its assets, and use this insight to look at why debt design is different for growth as opposed to mature firms.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch7.pdf
Exercise:
a. Evaluate the mix of debt and equity used by each of your companies to fund their businesses.
b. If your company has debt, what type of debt does it have? (Debt maturity, currency, straight or convertible etc.)
c. What tax benefits to each of your companies get from debt? (Look at marginal and effective tax rates, whether the company is making money, net operating losses carried forward)
d. What is the expected bankruptcy cost from debt to each firm? (Look at volatility in earnings, current bond ratings if any, interest coverage ratios)?
Chapter/Session 7: Business Financing across the Life Cycle
Session Description: There are only two ways that a business can be fund itself - your own money (equity) and borrowed money (debt). In this session, I look at the tradeoffs - illusory, financial and friction-driven - that drive the trade off between debt and equity, and how it plays out across the life cycle. I move on to to look at the right type of debt a firm, as one that matches its assets, and use this insight to look at why debt design is different for growth as opposed to mature firms.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch7.pdf
Exercise:
a. Evaluate the mix of debt and equity used by each of your companies to fund their businesses.
b. If your company has debt, what type of debt does it have? (Debt maturity, currency, straight or convertible etc.)
c. What tax benefits to each of your companies get from debt? (Look at marginal and effective tax rates, whether the company is making money, net operating losses carried forward)
d. What is the expected bankruptcy cost from debt to each firm? (Look at volatility in earnings, current bond ratings if any, interest coverage ratios)?
Offshore
Video
Aswath Damodaran (Youtube)
Chapter/Session 9: Valuation and Pricing 101
Session Description: In this session, I start by contrasting valuation, where we attach a number to an asset, based upon its cashflows, growth and risk, and pricing, where we decide how much to pay, based on what other investors are paying for similar assets. In the context of intrinsic valuation, I look at the drivers of value and then examine why the importance of the drivers can change as companies move through the life cycle, and in the context of pricing, I examine why pricing metrics and peer groups can shift across the life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch9.pdf
Exercise:
a. Estimate the historical values for revenue growth, margins and reinvestment (sales to capital) for each of your firms.
b. Estimate at least three pricing multiples for each of your firms, with a mix of equity and enterprise value ratios.
c. Find peer group companies for each of your firms, with median (and average) values for the pricing multiples of your choice.
Chapter/Session 9: Valuation and Pricing 101
Session Description: In this session, I start by contrasting valuation, where we attach a number to an asset, based upon its cashflows, growth and risk, and pricing, where we decide how much to pay, based on what other investors are paying for similar assets. In the context of intrinsic valuation, I look at the drivers of value and then examine why the importance of the drivers can change as companies move through the life cycle, and in the context of pricing, I examine why pricing metrics and peer groups can shift across the life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch9.pdf
Exercise:
a. Estimate the historical values for revenue growth, margins and reinvestment (sales to capital) for each of your firms.
b. Estimate at least three pricing multiples for each of your firms, with a mix of equity and enterprise value ratios.
c. Find peer group companies for each of your firms, with median (and average) values for the pricing multiples of your choice.
Offshore
Video
Aswath Damodaran (Youtube)
Chapter/Session 10: Valuing and Pricing Start-ups and Young High Growth Firms
Session Description: In this session, I look at why the absence of historical data, the lack of a working business model and the uncertainty about survival and success make valuation more challenging at young firms and start-ups, and why the payoff to making your best estimates, in the face of these challenges, is so large. I then examine the process of valuing and pricing a young firm or start-up, and techniques that can be used to face up to the uncertainty in your estimates.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch10.pdf
Exercise:
For the youngest company in your peer group:
a. Given what you have learned about your company, what is your valuation story?
b. Does your valuation story pass the 3P test?
c. How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d. Given these valuation inputs, what is your valuation for the company?
e. How uncertain are you about this valuation? How do you deal with this uncertainty?
f. Is there any optionality in this company? If yes, why and what drives that option’s value?
Chapter/Session 10: Valuing and Pricing Start-ups and Young High Growth Firms
Session Description: In this session, I look at why the absence of historical data, the lack of a working business model and the uncertainty about survival and success make valuation more challenging at young firms and start-ups, and why the payoff to making your best estimates, in the face of these challenges, is so large. I then examine the process of valuing and pricing a young firm or start-up, and techniques that can be used to face up to the uncertainty in your estimates.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch10.pdf
Exercise:
For the youngest company in your peer group:
a. Given what you have learned about your company, what is your valuation story?
b. Does your valuation story pass the 3P test?
c. How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d. Given these valuation inputs, what is your valuation for the company?
e. How uncertain are you about this valuation? How do you deal with this uncertainty?
f. Is there any optionality in this company? If yes, why and what drives that option’s value?
Offshore
Photo
Aswath Damodaran (Youtube)
Chapter/Session 11: Valuing Growth Firms
Session Description: In this session, I examine the big questions involved in valuing high-growth firms, with established business models, but where the key question becomes one of whether and if yes, how much, a firm with strong past growth can continue to grow. I also look at pricing high growth firms, where the key difference to control for is in expected growth.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch11.pdf
Exercise:
For the high growth company in your peer group:
a. Given what you have learned about your company, what is your valuation story?
b. Does your valuation story pass the 3P test?
c. How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d. Given these valuation inputs, what is your valuation for the company?
e. How uncertain are you about this valuation? How do you deal with this uncertainty?
f. What is the value that growth is adding (or destroying) in your company?
Chapter/Session 11: Valuing Growth Firms
Session Description: In this session, I examine the big questions involved in valuing high-growth firms, with established business models, but where the key question becomes one of whether and if yes, how much, a firm with strong past growth can continue to grow. I also look at pricing high growth firms, where the key difference to control for is in expected growth.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch11.pdf
Exercise:
For the high growth company in your peer group:
a. Given what you have learned about your company, what is your valuation story?
b. Does your valuation story pass the 3P test?
c. How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d. Given these valuation inputs, what is your valuation for the company?
e. How uncertain are you about this valuation? How do you deal with this uncertainty?
f. What is the value that growth is adding (or destroying) in your company?
YouTube
Chapter/Session 11: Valuing Growth Firms
Session Description: In this session, I examine the big questions involved in valuing high-growth firms, with established business models, but where the key question becomes one of whether and if yes, how much, a firm with strong past growth can continue…
Offshore
Video
Aswath Damodaran (Youtube)
Chapter/Session 12: Valuing Mature Firms
Session Description: With long financial histories, and settled business models, firms in their mature phase should be easiest to value and price. That said, in this session, I look at the questions of how best to deal with the effects of changing the management of a mature firm, as well as imminent disruption of the core business. I argue that all mature firms can be valued for the status quo (existing management) and with change, and that the expected value of control stems from the difference between the two values.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch12.pdf
Exercise:
For the mature company in your peer group:
a. Given what you have learned about your company, what is your valuation story?
b. Does your valuation story pass the 3P test?
c. How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d. Given these valuation inputs, what is your valuation for the company?
e. How uncertain are you about this valuation? How do you deal with this uncertainty?
Chapter/Session 12: Valuing Mature Firms
Session Description: With long financial histories, and settled business models, firms in their mature phase should be easiest to value and price. That said, in this session, I look at the questions of how best to deal with the effects of changing the management of a mature firm, as well as imminent disruption of the core business. I argue that all mature firms can be valued for the status quo (existing management) and with change, and that the expected value of control stems from the difference between the two values.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch12.pdf
Exercise:
For the mature company in your peer group:
a. Given what you have learned about your company, what is your valuation story?
b. Does your valuation story pass the 3P test?
c. How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d. Given these valuation inputs, what is your valuation for the company?
e. How uncertain are you about this valuation? How do you deal with this uncertainty?