⁠Stock Analysis Compilation
Merion Road Capital on United Bank of Alabama $UBAB US

Thesis: United Bank of Alabama is a strong investment due to its significant capital surplus, stock performance, and growth potential, projected to generate $7-$8 in normalized earnings.

(Extract from their Q4 letter) https://t.co/JCzvYFASWr
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⁠Dimitry Nakhla | Babylon Capital®
2 weeks ago, I set a $120💵 target stock price to accumulate $NVDA & shared my thoughts in one of my posts

Yesterday, it hit that mark 🎯

This morning, I highlighted $NVDA as a good investment consideration at $118💵, & it’s already surged +7% since https://t.co/pOQJSO5ecX

A quality valuation analysis on $NVDA 🧘🏽‍♂️

•NTM P/E Ratio: 30.14x
•5-Year Mean: 42.92x

•NTM FCF Yield: 3.01%
•5-Year Mean: 2.32%

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

Going forward, investors can receive ~42% MORE in earnings per share & ~29% 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: $10.92B
•2025E: $129.23B
•CAGR: 63.94%

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

“✅” as $NVDA is investing in its own growth, driving innovation, and expanding its market leadership. This strategic use of capital is generating higher returns for investors

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 ~42% MORE in EPS & ~29% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $NVDA has to grow earnings at a 15.07% 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 (15.07%) required growth rate:

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

2026E: $4.45 (50.6% YoY)
2027E: $5.61 (26.2% 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

30x P/E: $168.30💵 … ~19.1% CAGR

29x P/E: $162.69💵 … ~17.1% CAGR

28x P/E: $157.08💵 … ~15.0% CAGR

27x P/E: $151.47💵 … ~13.0% CAGR

26x P/E: $145.86💵 … ~10.9% CAGR

As you can see, $NVDA appears to have attractive return potential EVEN IF we assume >26x earnings, a multiple generally below its historical averages & a multiple that’s justified given the company’s growth rate & moat

$NVDA is a good consideration today at $118.58💵

Given its volatility, I’d likely strategically buy in tranches, enhancing margin of safety, while positioning myself to win-win regardless of short-term price action

E.g. purchase 1/3 at ~$118, 1/3 at ~$100, & 1/3 at ~$87

If the stock price goes 📉 I can accumulate more shares at an even more attractive valuation, if the stock price goes 📈 I’m in the green

#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 𝐬𝐩𝐞𝐜[...]

𝐢𝐟𝐢𝐜 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® tweet

⁠App Economy Insights
LVMH Louis Vuitton Moët Hennessy FY24.

$LVMUY Revenue -2% Y/Y to €84.7B.

🍷 Wines & Spirits -11% to €5.9B.
👜 Fashion & Leather goods -3% to €41.1B.
💅 Perfumes & Cosmetics +2% to €8.4B.
💍 Watches & Jewelry -3% to €10.6B.
🛍️ Selective retailers +2% to €18.3B. https://t.co/atX2zLxObP
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⁠Quiver Quantitative
We posted this report on a suspicious purchase of Perella Weinberg stock by a U.S. Congressman in April.

$PWP has now risen 89% since the trade. https://t.co/mgUlOqWEWf
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⁠Quiver Quantitative
RT @QuiverCongress: Senate Democrats just blocked the Illegitimate Court Counteraction Act.

Senator John Fetterman was the only Democrat to vote in favor of the bill. https://t.co/dja4sQLiZm
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⁠Hidden Value Gems
$BABA reporting tomorrow, wondering what’s the second most popular question will be 🤔 https://t.co/5h0YGdfBbe
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AkhenOsiris
Before your job is made redundant by AI, put your money in some stonks to generate an income

The ultimate negative end game of AI to me is a huge rise in unemployment. I don’t buy this whole we will create *new* jobs narrative. Every industry wants wider margins and lower overhead and AI/Machine Learning/Automation will only accelerate this phenomena. The mobility industry, the trucking industry, the medical industry , the drug discovery industry , financial analysis, legal industry. No one is immune. Will the underlying companies using AI make more money as adoption becomes wider ? absolutely. Will it be at the cost of people’s job and earned living ? also absolutely. There’s just no way being more productive while also expecting unemployment to stay stagnant. You used to be able to sell the dream of go to a good school , take out a loan and become the best version of yourself and make lots of money when you graduate but that’s a losing proposition for most people going forward imho.
AI will forever change everything I truly believe that but this will come at a societal cost which for now is being pushed aside to make room for the *productivity* gains. I’m afraid this is a short sided view. One thing is for sure , the gap between the haves and the have nots will become even wider. Ferrari bulls will win and Walmart longs will win , just be careful about all those companies in the middle with no clear addressable markets.
Rant done -  Q-Cap 
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