⁠Stock Analysis Compilation
Harris Associates on Corebridge Financial $CRBG US

Thesis: Corebridge offers a strong market position in retirement solutions with a diversified earnings profile, making it an attractive investment at a discount following reduced AIG ownership

(Extract from their Q2 letter) https://t.co/utFKooQHty
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AkhenOsiris
25 or 50?
- 25
- 50
- Doesn't matter
- This poll sucks
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⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: 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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⁠Librarian Capital
Suppose you and a friend were to meet a deity

The deity offers to give you each a special power:
Both of you can predict Fed rate a year from now
You will be accurate to 25bps; your friend to 50bps

Equities only; no derivatives
Can you make more money than your friend? How?
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⁠Dimitry Nakhla | Babylon Capital®
One month ago I stated:

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

Since then, $BKNG shares rallied +11.70% ✅

As I suggested in the post attached below👇🏽

“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”

#stocks #investing

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. - Dimitry Nakhla | Babylon Capital®
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⁠Hidden Value Gems
This latest piece by IEA as well as other oil market analyses suggest that the oil demand is quite weak this (+0.8mb/d in 1H24) with OPEC playing the key role in balancing the market. Non-OPEC supply is c. +1.5mb/d with more production expected next year (driven by Brazil and Guyana).

Even though I try to avoid macro forecasts, it looks like more downside for oil prices.

Would not rush to add to the oil holdings on recent correction, better to be cautious.

PS: I know IEA is often wrong and there is tension in the Middle East, but still ...
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⁠Librarian Capital
They don’t ring a bell at the top, governance edition

Campari $CPR: "(New) plan … allows the dominant shareholder to sell half their shares (or more) without losing control of the company” (7-Aug-23)

Shares have since fallen ~40%
CEO Matteo Fantacchiotti has just resigned https://t.co/o4hk28PuDd

Some comments on Campari corporate governance.

https://t.co/rCZtoGgZrf - John_Hempton
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