Gainify
INTERESTING FACT: $NVDA = $4.24T Market Cap

The next 14 largest semiconductor giants combined = $4.23T

$NVDA = $AVGO + $TSM + $ASML + $AMD + $TXN + $QCOM + $ARM + $MU + $AMAT + $LRCX + $ADI + $KLAC + $INTC + $NXPI

NVIDIA alone is now worth more than the rest of the industry’s top 14 put together.
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Aadit Sheth
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Aadit Sheth
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Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $INTU 🧘🏽‍♂️

•NTM P/E Ratio: 28.78x
•10-Year Mean: 33.53x

•NTM FCF Yield: 3.72%
•10-Year Mean: 3.67%

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 & about the same 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: $4.55B
•Long-Term Debt: $5.97B

$INTU has a strong balance sheet, an A- S&P Credit Rating & 25x FFO Interest Coverage

RETURN ON CAPITAL✅
•2020: 25.2%
•2021: 19.7%
•2022: 10.7%
•2023: 13.1%
•2024: 15.4%
•2025: 18.8%

RETURN ON EQUITY✅
•2020: 41.2%
•2021: 27.5%
•2022: 15.7%
•2023: 14.1%
•2024: 16.6%
•2025: 20.3%

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

REVENUES✅
•2015: $4.19B
•2025: $18.83B
•CAGR: 16.21%

FREE CASH FLOW✅
•2015: $1.45B
•2025: $6.08B
•CAGR: 15.41%

NORMALIZED EPS✅
•2015: $2.59
•2025: $20.15
•CAGR: 22.77%

PAID DIVIDENDS✅
•2015: $1.00
•2025: $4.16
•CAGR: 15.32%

SHARE BUYBACKS🆗
•2015 Shares Outstanding: 286M
•LTM Shares Outstanding: 283M

MARGINS✅
•LTM Gross Margins: 80.4%
•LTM Operating Margins: 26.2%
•LTM Net Income Margins: 20.5%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~16% MORE in EPS & about the same in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $INTU has to grow earnings at a 14.39% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2026 - 2028 EPS growth over the next few years to be just about the (14.39%) required growth rate:

2026E: $23.18 (15.0% YoY) *FY Jul
2027E: $26.43 (14.0% YoY)
2028E: $30.35 (14.8% YoY)

$INTU has a great track record of meeting analyst estimates ~2 years out, but let’s assume $INTU ends 2028 with $30.35 in EPS & see its CAGR potential assuming different multiples:

32x P/E: $971.20💵 … ~14.4% CAGR

31x P/E: $940.85💵 … ~13.2% CAGR

30x P/E: $910.50💵 … ~11.9% CAGR

29x P/E: $880.15💵 … ~10.6% CAGR

28x P/E: $849.80💵 … ~9.3% 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 consideration today at $667💵

I consider $INTU a strong purchase with a substantial margin of safety closer to $610💵, or ~26.35x NTM earnings (~8.5% below todays price)

Given today’s estimates, at $610💵 I can reasonably expect ~11% CAGR while assuming an attractive & fairly conservative 27x multiple
___

𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 ⻑[...]

3;𝐰𝐞𝐞𝐭.

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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ToffCap
Out with TMM #68, our weekly overview of actionable event-driven and special sits 🔥🔥

This week:

- SOTP unlocks with catalysts
- an Amer Sports 2.0?
- transformational deals not yet recognized in the price
- a low p/e company growing rapidly with a ton of cash on the b/s and an upcoming spin of a sub which makes it all more fascinating
- potentially juicy tender offers
- some very speculative pico-caps where a lot is going on
- ... and much more.

As always @ToffCap. Enjoy!
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