⁠Dimitry Nakhla | Babylon Capital®
2 weeks ago I stated: “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”

Now that $NVDA stock traded down to my target price, I’ll share an updated analysis tomorrow 🔔 https://t.co/mTGHSkUvwD

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. �[...]

�𝐚𝐬𝐭 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® tweet

⁠Dimitry Nakhla | Babylon Capital®
Here’s a quality stock you never heard of: Wolter’s Kluwer $WKL 💵

The stock gained +147% in the past 5 years

What’s special about the company?

Their inventive structure is tied to 3 key performance indicators:

1. Sales growth
2. FCF growth
3. Return on Invested Capital https://t.co/7MM202hVdB
tweet

AkhenOsiris
Babies out with the bathwater start to day. I love these.
tweet

AkhenOsiris
Can't keep up with media fear anymore as it is out of control this morning 😂
tweet

AkhenOsiris
If rationality exists, what you would like to see is a rotation within tech and/or buying dip for:

- Software stocks (most obvious beneficiary)

- META (open source LLM, seeing best AI ROI of megas in ad space already)

- AMZN (they had talked about commoditization of LLMs at Re:Invent, don't have their own frontier model, many areas can be made more efficient with cheap AI, i.e. logistics, cost-to-serve, robotics) and the other hyperscalers as capex will go down.

With such enormous panic and massive gap down, everything gets punished to start. Sometimes these are so vicious, margin calls, using megas as ATM to support losses elsewhere, etc, rationality doesn't show up until a different day. We shall see.
tweet

AkhenOsiris
You guys ready for the "We don't spend that much on AI" defend PR releases? 🤣
tweet

AkhenOsiris
Not even a Mahomes reference? Seems like Dan is shook.

DeepSeek is a competitive LLM model for consumer use cases…launching broader AI infrastructure a whole other ballgame and nothing with DeepSeek makes us believe anything different. It’s about AGI for Big Tech and DeepSeek’s noise. Also no US tech using this tech. Buying oppy - Dan Ives
tweet

AkhenOsiris
You motherfuhqers were trying to avoid a black swan, well guess what...it was a blue whale
tweet

AkhenOsiris
@qcapital2020

Chaikin taking a bow 😂
tweet

AkhenOsiris
Stephanie Link out to lunch here on CNBC, yikes
tweet

AkhenOsiris
End up being a day trader on these days with violent moves
tweet