⁠Stock Analysis Compilation
Forager on JD Sports $JD/ LN

Thesis: JD Sports, a leader in sports-fashion retail with strong growth and expanding market share, offers compelling upside potential at an attractive valuation.

(Extract from their Q3 letter) https://t.co/IopoYvcUoW
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⁠Capital Employed
Listen to the Massif Capital - 3rd Quarter 2024 Investor Letter🎧

The letter discusses... 👇

Real Assets Strategy 3Q 2024 performance
China's Economic Slowdown Impact
Key Positions in Siemens Energy and Alphamin
Tail-Risk Hedge and Strategic Caution

https://t.co/szZ1a3oK55
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⁠Librarian Capital
Estée Lauder FY25Q1 results, withdraws outlook

Sales -5% organic, incl:
Americas -1%
EMEA -4%
APAC -11%

"Worsened consumer sentiment in China"
"Further (Asia travel) retail market deceleration"

US retail sales +LSD
US online +10% (incl. shipments for EL brand launch)

$EL -19% https://t.co/LZ1gPtqAdi
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⁠Quiver Quantitative
We published the report shown below when a Carvana bankruptcy seemed imminent to most.

$CVNA has now risen 4,000% since then.

That's not a typo.

4,000% https://t.co/NpkysPNwBP
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⁠Startup Archive
Brian Chesky on what your startup can learn from Ernest Shackleton’s famous job ad

At the end of the interview process, the Airbnb founder will usually tell the candidate all of the reasons they shouldn’t take the job:

“It’s going to be the longest hours you’ve ever had. I’m going to hold you to higher standards. It’s going to be day and night. It’s going to be this. It’s going to be that.”

As Brian points out, this is often the opposite of what recruiters will do:

“Recruiters often want to sell their company as a country club - we have great benefits, we have great this, we have great that. And it creates mismanaged expectations.”

But the best people want a challenge.

Brian reads the famous job ad Ernest Shackleton ran in a newspaper to recruit men for his Endurance expedition:

“Men wanted for hazardous journey. Low wages, bitter cold, long hours of complete darkness. Safe return doubtful. Honour and recognition in event of success.”

Brian believes this is one of the best job ads ever:

“Don’t sell a rosy picture of the experience… Why do the most fit people in the world want to be Navy SEALs? Because they want the challenge. The average person doesn’t want a challenge, but the best people want a challenge. And so that will turn off mediocre people, but it will turn on great people.”
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⁠Librarian Capital
Altria $MO 24Q3

Group rev.* +1.3%
Adj. EPS +7.8%

Smokeable volume -8.6%
(-11.5% ex. inventory/calendar)
Rev. +1.2%
Adj. OCI +7.1%

Oral on! volume +46%, total volume +1.2%
Rev. +5.8%
Adj. OCI +2.0%

Reaffirms 2024 guidance
Adj. EPS $5.07-5.15 (+2.5-4%)

* Net rev. after excise https://t.co/ZghPjK07Wh
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⁠Librarian Capital
Mastercard $MA 24Q3 (Adjusted)

Q3 Revenue +13%
OpEx +12%
EBIT +14%
Net Income +12%
EPS +15%

Q4 outlook
Revenue up low-teens
Expenses up "high end of LDD" https://t.co/cXXzALQecZ
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⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $AMZN 🧘🏽‍♂️

•NTM P/OCF Ratio: 18.14x
•10-Year Mean: 24.25x

•NTM FCF Yield: 2.88%
•10-Year Mean: 2.86%

As you can see, $AMZN appears to be slightly undervalued

Going forward, investors can expect to receive ~33% MORE in operating cash flow & ~1% MORE in FCF per share🧠***

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

BALANCE SHEET✅
•Cash & Equivalents: $89.09B
•Long-Term Debt: $61.78B

$AMZN has an excellent balance sheet, an AA S&P Credit Rating & 39x FFO Interest Coverage Ratio

RETURN ON CAPITAL🆗 / ✅
•2019: 10.4%
•2020: 11.6%
•2021: 8.9%
•2022: 4.2%
•2023: 10.1%
•LTM: 13.8%

RETURN ON EQUITY✅
•2019: 21.9%
•2020: 27.4%
•2021: 28.8%
•2022: (1.9%)
•2023: 17.5%
•LTM: 21.9%

$AMZN has solid return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2018: $232.89B
•2023: $574.79B
•CAGR: 19.80%

FREE CASH FLOW✅
•2018: $17.30B
•2023: $32.22B
•CAGR: 13.24%

NORMALIZED EPS✅
•2018: $1.01
•2023: $2.90
•CAGR: 23.48%

SHARE BUYBACKS❌
•2018 Shares Outstanding: 10.00B
•LTM Shares Outstanding: 10.64B

MARGINS🆗➡️✅
•LTM Gross Margins: 48.0%
•LTM Operating Margins: 9.0%
•LTM Net Income Margins: 7.4%

*Important for $AMZN to continue expanding margins & increase profitability

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~33% MORE in OCF & ~1% MORE in FCF per share

We're using P/OCF instead of P/E. Historical data reveals a stronger correlation between AMZN's share price and Operating Cash Flow (OCF)

Today, analysts anticipate aggressive OCF (per share) growth between 2024 - 2026:

2024E: $11.14 (38% YoY) *FY Dec
2025E: $13.22 (19% YoY)
2026E: $16.85 (27% YoY)

$AMZN has a decent track record of meeting analyst estimates ~2 years out, so let’s assume $AMZN ends 2026 with $16.85 in OCF per share & see its CAGR potential assuming different multiples (photos attached below also include these CAGR estimates):

18x P/OCF: $303.28💵 … ~23.3% CAGR

17x P/OCF: $286.43💵 … ~20.0% CAGR

16x P/OCF: $269.58💵 … ~16.7% CAGR

15x P/OCF: $252.73💵 … ~13.3% CAGR

14x P/OCF: $235.88💵 … ~9.8% CAGR

As you can see, $AMZN appears to have aggressive double-digit CAGR potential if we assume ~15x P/OCF, a multiple well below what it’s trading for today (a multiple it hasn’t traded for since 2010) & a multiple that’s justified given its growth rate

Also check out $AMZN FCF growth estimates 📈

2024E: $53.89B (46% YoY)
2025E: $72.40B (34% YoY)
2026E: $97.17B (34% YoY)

AWS & Amazon Ads will continue to drive growth & profitability. In $AMZN Half Year 2024:

☁️AWS revenue: $51.31B
📈Ads revenue: $24.59B

Combined, these segments generated $75.90B net revenue (annualized = $151.80B … with ~37% Operating Income Margin)

Today at $193💵 $AMZN appears to be a good consideration for investment

#stocks #investing

Data: TIKR
Graphs: FAST Graphs
___

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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