⁠Quiver Quantitative
Wow.

We caught these trades last week, and posted this report.

Ripple, $XRP, has now risen almost 30% since then. https://t.co/mY7lZfHPT6
tweet

⁠Investing visuals
$TSM is kicking off earnings season for the semiconductor industry tomorrow. As a key player and sole supplier for $NVDA, $AAPL, and $QCOM, this one's big!

Earnings preview👇
🔹Est. Revenue: 26 Bln (+36.8%)
🔹Est. EPS: $0.43 (+55.8%)
tweet

⁠Stock Analysis Compilation
Black Bear value partners on ARCH Resources, Inc. $ARCH US

Thesis: ARCH is well-positioned to benefit from a projected rise in met coal demand driven by economic growth in Asia, despite current valuation concerns, due to limited local supply and a looming shortage.

(Extract from their Q4 letter)
tweet

⁠Startup Archive
Netflix founder Reed Hastings on how to fire someone

Netflix is famous for its “keeper test”: If a team member was leaving for a similar role at another company, would the manager fight to keep them?

If the manager wouldn’t fight to keep them, the employee is given a generous severance package so the company can find someone even better for that position.

At a Stanford GSB talk, Reed is asked to demonstrate how to fire someone.

The whole video is worth watching, but the key takeaway is that Reed tries to treat the company like a professional sports team: “it really sucks to get cut from the team, but it’s not an ethical judgment or a moral judgment or a judgment of you as a person.”

He continues:

“What we’re trying to do is get away from ‘you suck.’.. and I’m being honest as opposed to being hurtful… The more it is socialized with all of you as if it was in sports—where it’s not as much a life kind of thing, it’s a performance kind of thing—the better.”

Video source: @StanfordGSB (2024)
tweet

⁠Quiver Quantitative
RT @QuiverCongress: JUST IN: Senator Rick Scott has proposed a bill that would repeal pay raises for members of Congress.

Scott is the richest member of Congress, per our estimates.

We estimate that he is currently worth $547M. https://t.co/gwctsKCYJj
tweet

⁠InsideArbitrage
Provider of concrete pumping services and concrete waste management services - $BBCP Concrete Pumping Holdings announces a special dividend of $1 per share : Payable on Feb 3; Ex-div Jan 23, 2025
tweet

⁠Stock Analysis Compilation
Royce Invest on ESAB Corporation $ESAB US

Thesis: ESAB Corporation is a global leader in welding technology experiencing strong growth and transformation in a favorable market.

(Extract from their article) https://t.co/VayU3NgauF
tweet

⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A quality valuation analysis on $NVDA 🧘🏽‍♂️

•NTM P/E Ratio: 33.80x
•1-Year Mean: 37.21x

•NTM FCF Yield: 2.67%
•1-Year Mean: 2.39%

As you can see, $NVDA appears to be trading somewhere near fair value

Going forward, investors can receive ~10% MORE in earnings per share & ~11% MORE in FCF per share 🧠***

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

BALANCE SHEET✅
•Cash & Short-Term Inv: $38.49B
•Long-Term Debt: $8.46B

$NVDA has a strong balance sheet, an AA- S&P Credit Rating, & 236x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2020: 19.1%
•2021: 19.1%
•2022: 26.0%
•2023: 16.2%
•2024: 60.5%
•LTM: 92.4%

RETURN ON EQUITY✅
•2020: 26.0%
•2021: 29.8%
•2022: 44.8%
•2023: 17.9%
•2024: 91.5%
•LTM: 127.2%

$NVDA has strong return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2020: $16.68B
•2025E: $129.14B
•CAGR: 63.89%

FREE CASH FLOW✅
•2020: $4.27B
•2025E: $64.54B
•CAGR: 72.13%

NORMALIZED EPS✅
•2020: $0.14
•2025E: $2.95
•CAGR: 83.96%

SHARE BUYBACKS🆗 (nominal change)
•2019 Shares Outstanding: 25.00B
•LTM Shares Outstanding: 24.86B

MARGINS✅
•LTM Gross Margins: 75.9%
•LTM Operating Margins: 62.7%
•LTM Net Income Margins: 55.7%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~10% MORE in EPS & ~10% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $NVDA has to grow earnings at a 16.90% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2026 - 2027 EPS growth over the next few years to be more than the (16.90%) required growth rate:

2025E: $2.95 (127.9% YoY) *FY Jan

2026E: $4.45 (50.5% YoY)
2027E: $5.61 (26.1% YoY)

$NVDA has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $NVDA ends 2027 with $5.61 in EPS & see its CAGR potential assuming different multiples

32x P/E: $178.88💵 … ~15.5% CAGR

31x P/E: $173.29💵 … ~13.7% CAGR

30x P/E: $167.70💵 … ~11.9% CAGR

29x P/E: $162.11💵 … ~10.1% CAGR

28x P/E: $156.52💵 … ~8.2% CAGR

As you can see, $NVDA appears to have attractive return potential IF we assume >30x earnings, a multiple generally below its historical averages & a multiple that’s justified given the company’s growth rate & moat

$NVDA is a fair consideration today at $133💵

I am more inclined to buy $NVDA closer to $120💵 where I could reasonably expect ~12% CAGR assuming a 27x end multiple, ensuring a decent margin of safety

What stands out to me is $NVDA consistent ability to exceed ambitious expectations, not just meeting but significantly beating estimates. This impressive performance has justified its previously demanding valuation, with the company effectively growing into its premium valuation 👌🏽

#stocks #investing
___

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 𝐠𝐮𝐚[...]

𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
tweet