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Mads
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AT&T Is Red-Hot Again. CEO John Stankey Says It’s Just the Beginning. https://t.co/GphxEZV9MB tweet
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Hidden Value Gems
Solventum $SOLV was a classic spin-off case from Greenblatt's You Can be a Stock Market Genius book - spun-off from 3M, sold off 50%, got bought by the 'smart' people like Baupost, Davis, Gayner, Peltz.
"Shameless cloning"n a year with probably more upside. A note to myself: don't ignore 13Fs!
"shameless cloning"
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Solventum $SOLV was a classic spin-off case from Greenblatt's You Can be a Stock Market Genius book - spun-off from 3M, sold off 50%, got bought by the 'smart' people like Baupost, Davis, Gayner, Peltz.
"Shameless cloning"n a year with probably more upside. A note to myself: don't ignore 13Fs!
"shameless cloning"
tweet
Offshore
Photo
Hidden Value Gems
Solventum $SOLV was a classic spin-off case from Greenblatt's You Can be a Stock Market Genius book - spun-off from 3M, sold off 50%, got bought by the 'smart' people like Baupost, Davis, Gayner, Peltz.
Up +50% in less than a year with probably more upside. A note to myself: don't ignore 13Fs!
"Shameless cloning"
tweet
Solventum $SOLV was a classic spin-off case from Greenblatt's You Can be a Stock Market Genius book - spun-off from 3M, sold off 50%, got bought by the 'smart' people like Baupost, Davis, Gayner, Peltz.
Up +50% in less than a year with probably more upside. A note to myself: don't ignore 13Fs!
"Shameless cloning"
tweet
Offshore
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: Yesterday I stated:
“Given its quality, moat, predictability, & growth rate, I am comfortable relying on 28x - 30x multiple, making $INTU a good purchase today at $560💵”
Today, $INTU opened +13%✅
As I suggested in the post attached below👇🏽
“While it’s certainly reasonable for $INTU to trade for 32x, I wouldn’t want to rely on that assumption as it doesn’t leave us with a substantial margin of safety
Yet, given its quality, moat, predictability, & growth rate, I am comfortable relying on 28x - 30x multiple, making $INTU a good purchase today at $560💵
I consider $INTU a strong purchase with a substantial margin of safety closer to $525💵, or ~27.60x NTM earnings (~7% below todays price)
Given today’s estimates, at $525💵 I can reasonably expect ~10% CAGR while assuming an attractive & conservative 26x multiple”
A quality valuation analysis on $INTU 🧘🏽♂️
•NTM P/E Ratio: 28.74x
•10-Year Mean: 33.55x
•NTM FCF Yield: 3.60%
•10-Year Mean: 3.68%
As you can see, $INTU appears to be trading somewhere below fair value & near fair value
Going forward, investors can receive ~16% MORE in earnings per share & ~2% LESS in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $INTU is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $3.36B
•Long-Term Debt: $5.63B
$INTU has a strong balance sheet, an A- S&P Credit Rating & 22x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 43.9%
•2020: 25.2%
•2021: 19.7%
•2022: 10.7%
•2023: 13.1%
•2024: 15.4%
RETURN ON EQUITY✅
•2019: 47.4%
•2020: 41.2%
•2021: 27.5%
•2022: 15.7%
•2023: 14.1%
•2024: 16.6%
$INTU has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2014: $4.24B
•2024: $16.29B
•CAGR: 14.40%
FREE CASH FLOW✅
•2014: $1.34B
•2024: $4.69B
•CAGR: 13.34%
NORMALIZED EPS✅
•2014: $3.49
•2024: $16.94
•CAGR: 17.11%
PAID DIVIDENDS✅
•2014: $0.76
•2024: $3.60
•CAGR: 16.82%
SHARE BUYBACKS🆗
•2014 Shares Outstanding: 291.00M
•LTM Shares Outstanding: 284.00M
By reducing its shares outstanding ~2.4%, $INTU increased its EPS by ~2.5% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 79.6%
•LTM Operating Margins: 23.1%
•LTM Net Income Margins: 17.6%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~16% MORE in EPS & ~2% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $INTU has to grow earnings at a 14.37% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be slightly less than the (14.37%) required growth rate:
2025E: $19.32 (14.1% YoY) *FY Jul
2026E: $22.13 (14.5% YoY)
2027E: $25.09 (13.4% YoY)
$INTU has a great track record of meeting analyst estimates ~2 years out, but let’s assume $INTU ends 2027 with $25.09 in EPS & see its CAGR potential assuming different multiples:
32x P/E: $802.88💵 … ~16.1% CAGR
31x P/E: $777.79💵 … ~14.6% CAGR
30x P/E: $752.70💵 … ~13.0% CAGR
29x P/E: $727.61💵 … ~11.5% CAGR
28x P/E: $702.52💵 … ~10.0% CAGR
While it’s certainly reasonable for $INTU to trade for 32x, I wouldn’t want to rely on that assumption as it doesn’t leave us with a substantial margin of safety
Yet, given its quality, moat, predictability, & growth rate, I am comfortable relying on 28x - 30x multiple, making $INTU a good purchase today at $560💵
I consider $INTU a strong purchase with a substantial margin of safety closer to $525💵, or ~27.60x NTM earnings (~7% below todays price)
Given today’s estimates, at $525💵 I can reasonably expect ~10% CAGR while assuming an attractive & conservative 26x multiple
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧[...]
RT @DimitryNakhla: Yesterday I stated:
“Given its quality, moat, predictability, & growth rate, I am comfortable relying on 28x - 30x multiple, making $INTU a good purchase today at $560💵”
Today, $INTU opened +13%✅
As I suggested in the post attached below👇🏽
“While it’s certainly reasonable for $INTU to trade for 32x, I wouldn’t want to rely on that assumption as it doesn’t leave us with a substantial margin of safety
Yet, given its quality, moat, predictability, & growth rate, I am comfortable relying on 28x - 30x multiple, making $INTU a good purchase today at $560💵
I consider $INTU a strong purchase with a substantial margin of safety closer to $525💵, or ~27.60x NTM earnings (~7% below todays price)
Given today’s estimates, at $525💵 I can reasonably expect ~10% CAGR while assuming an attractive & conservative 26x multiple”
A quality valuation analysis on $INTU 🧘🏽♂️
•NTM P/E Ratio: 28.74x
•10-Year Mean: 33.55x
•NTM FCF Yield: 3.60%
•10-Year Mean: 3.68%
As you can see, $INTU appears to be trading somewhere below fair value & near fair value
Going forward, investors can receive ~16% MORE in earnings per share & ~2% LESS in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $INTU is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $3.36B
•Long-Term Debt: $5.63B
$INTU has a strong balance sheet, an A- S&P Credit Rating & 22x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 43.9%
•2020: 25.2%
•2021: 19.7%
•2022: 10.7%
•2023: 13.1%
•2024: 15.4%
RETURN ON EQUITY✅
•2019: 47.4%
•2020: 41.2%
•2021: 27.5%
•2022: 15.7%
•2023: 14.1%
•2024: 16.6%
$INTU has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2014: $4.24B
•2024: $16.29B
•CAGR: 14.40%
FREE CASH FLOW✅
•2014: $1.34B
•2024: $4.69B
•CAGR: 13.34%
NORMALIZED EPS✅
•2014: $3.49
•2024: $16.94
•CAGR: 17.11%
PAID DIVIDENDS✅
•2014: $0.76
•2024: $3.60
•CAGR: 16.82%
SHARE BUYBACKS🆗
•2014 Shares Outstanding: 291.00M
•LTM Shares Outstanding: 284.00M
By reducing its shares outstanding ~2.4%, $INTU increased its EPS by ~2.5% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 79.6%
•LTM Operating Margins: 23.1%
•LTM Net Income Margins: 17.6%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~16% MORE in EPS & ~2% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $INTU has to grow earnings at a 14.37% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be slightly less than the (14.37%) required growth rate:
2025E: $19.32 (14.1% YoY) *FY Jul
2026E: $22.13 (14.5% YoY)
2027E: $25.09 (13.4% YoY)
$INTU has a great track record of meeting analyst estimates ~2 years out, but let’s assume $INTU ends 2027 with $25.09 in EPS & see its CAGR potential assuming different multiples:
32x P/E: $802.88💵 … ~16.1% CAGR
31x P/E: $777.79💵 … ~14.6% CAGR
30x P/E: $752.70💵 … ~13.0% CAGR
29x P/E: $727.61💵 … ~11.5% CAGR
28x P/E: $702.52💵 … ~10.0% CAGR
While it’s certainly reasonable for $INTU to trade for 32x, I wouldn’t want to rely on that assumption as it doesn’t leave us with a substantial margin of safety
Yet, given its quality, moat, predictability, & growth rate, I am comfortable relying on 28x - 30x multiple, making $INTU a good purchase today at $560💵
I consider $INTU a strong purchase with a substantial margin of safety closer to $525💵, or ~27.60x NTM earnings (~7% below todays price)
Given today’s estimates, at $525💵 I can reasonably expect ~10% CAGR while assuming an attractive & conservative 26x multiple
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧[...]