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Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $ASML 🧘🏽‍♂️

•NTM P/E Ratio: 29.88x
•10-Year Mean: 31.10x

•NTM FCF Yield: 2.90%
•10-Year Mean: 3.05%

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

Going forward, investors can receive ~4% MORE in earnings per share & ~5% LESS in FCF per share🧠***

Before we get into valuation, let’s take a look at why $ASML is an excellent business (*Financials in USD*)

BALANCE SHEET✅
•Cash & Short Term Inv: $8.49B
•Long-Term Debt: $4.33B

$ASML has a strong balance sheet & 68x FFO Interest Coverage

RETURN ON CAPITAL✅
•2021: 43.8%
•2022: 48.0%
•2023: 48.7%
•2024: 38.3%
•LTM: 51.8%

RETURN ON EQUITY✅
•2021: 49.0%
•2022: 59.4%
•2023: 70.4%
•2024: 47.4%
•LTM: 58.2%

$ASML has excellent return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2014: $7.09B
•2024: $29.28B
•CAGR: 15.23%

FREE CASH FLOW*
• $ASML FCF is very sporadic due to heavy capital expenditures & isn’t necessarily the most reliable way to analyze the company’s value
•2014: $1.23B
•2024: $9.43B
•CAGR: 22.59%

NORMALIZED EPS✅
•2014: $3.15
•2024: $20.03
•CAGR: 20.31%

SHARE BUYBACKS✅
•2018 Shares Outstanding: 426.40M
•LTM Shares Outstanding: 392.00M

By reducing its shares outstanding ~8.0%, $ASML increased its EPS by ~8.7% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 52.5%
•LTM Operating Margins: 34.8%
•LTM Net Income Margins: 29.3%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~4% MORE in EPS & 5% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $ASML has to grow earnings at a 14.94% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2028 EPS growth over the next few years to be more than the (14.94%) required growth rate:

2025E: $28.07 (22.0% YoY) *FY Dec

2026E: $29.84 (13.8% YoY)
2027E: $35.83 (21.3% YoY)
2028E: $40.00 (21.3% YoY)

$ASML has a decent track record of meeting analyst estimates ~2 years out so let’s assume $ASML ends 2028 with $40.00 in EPS & see its CAGR potential assuming different multiples:

31x P/E: $1240💵 … ~14.5% CAGR

30x P/E: $1200💵 … ~13.4% CAGR

29x P/E: $1160💵 … ~12.2% CAGR

28x P/E: $1120💵 … ~11.0% CAGR

27x P/E: $1080💵 … ~9.8% CAGR

As you can see, $ASML appears to have attractive return potential if we assume greater or equal to 29x EPS (below its 10-year mean, current multiple, & justified given its quality, moat & growth rate if we consider its 15.77% EPS CAGR Estimates 2026-2028)

Today at $813💵 $ASML appears to be a good consideration for investment, albeit with extreme volatility & a smaller margin of safety than when it traded for ~26x in May 2025 (when I considered it a “strong consideration for investment”)

#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 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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Umesh
Seedream 4.0 is one amazing model.

Prompt in ALT. https://t.co/P9u1w8M8HO

🚨 Seedream 4.0 now on @RunwareAI!

Talk about SOTA:

One model for image generation AND editing. Up to six reference images for precise control.

Industry first: consistent characters across a series, with up to 15 related images in a single request.

This took one prompt! - Runware
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Gainify
🚨 FIRST TIME EVER: $TTD now trades at P/E parity (24.8x) with the S&P 500.

From triple-digit multiples ➡️ down to the market average. https://t.co/OOnoWiLTpd
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Umesh
Letterforms!

Prompts in ALT.

Images generated on Ideogram. https://t.co/KAl4GZmuwO
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Yellowbrick Investing
Some stocks pitched by smart investors recently:
- $WIX (Base 44 acq growing fast)
- $KNF (building materials co; bet on multiple recovery -> 9x EV/EBITDA v 16x peers)
- $TOU.TO (Canada nat gas; multi-year lows despite largest NA reserves)
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Iqra Saifi
Veo-3 fast flow 🦓

"A hyper-realistic, dynamic action shot of an elderly woman with a joyous, wild expression, expertly riding a zebra across a sun-drenched savannah, seemingly in a race with another zebra.",     "mood": "Exhilarating, comedic, absurd, joyful, wild.",     "style": "Cinematic action-comedy, photorealistic CGI, 8K resolution, with the warm, high-contrast lighting of a National Geographic special shot during the golden hour."   },   "camera": {     "type": "Low-Angle, High-Speed Tracking Shot",     "lens": "40mm Anamorphic Prime Lens",     "aperture": "f/5.6",     "position": "Mounted on a low, fast-moving camera rig, tracking parallel to the racing zebras. The camera is positioned just a few feet off the ground, emphasizing the speed and the thundering hooves.",     "focus": {       "point_of_interest": "The woman's ecstatic face.",       "effect": "Shallow depth of field, keeping the woman and the zebra she's riding in sharp focus. The second zebra and the background are slightly soft, creating a sense of speed and immediacy."     },     "movement": "The camera moves at a high speed, matching the pace of the zebras. It experiences realistic, high-frequency vibrations and occasional bumps, adding to the raw energy of the chase."   },   "environment": {     "location": "A vast, open savannah in Africa during the dry season.",     "ground": "Dry, cracked earth with patches of golden, dry grass. A large, volumetric dust cloud is kicked up by the zebras' hooves.",     "sky": "Late afternoon sky, mostly clear with a few wispy, high-altitude clouds. The sun is low on the horizon.",     "atmosphere": "The air is filled with a thick, golden haze from the dust and the setting sun. High-resolution particle simulation for the swirling dust kicked up by the zebras is essential."   },   "lighting": {     "primary_source": {       "type": "Golden Hour Sun",       "position": "Low in the sky, positioned to the side and slightly behind the subjects.",       "color_temperature": "3800K (Deep, warm, golden-orange light)",       "intensity": "Strong, creating a dramatic rim light that highlights the woman's hair, the zebras' stripes, and makes the dust cloud glow intensely."     },     "fill_light": {       "type": "Skylight & Bounce from Ground",       "color": "Soft blue from the sky and warm, earthy tones from the savannah floor.",       "intensity": "Gently illuminates the shadows, ensuring rich detail is visible."     }   },   "main_subjects": {     "subjects": [       {         "type": "Character - The Rider",         "description": "An elderly woman, with a face full of laugh lines and an expression of pure, unadulterated joy and excitement. Her white hair is windswept.",         "attire": "A simple, practical, and slightly worn coat over dark trousers.",         "action": "She is leaning forward, gripping a simple rope rein, skillfully guiding her zebra. She is shouting or laughing with exhilaration."       },       {         "type": "Animal - The Mount",         "description": "A healthy, powerful zebra, galloping at full speed. Its muscles are tense and defined.",         "details": "Hyper-realistic hair/fur simulation for its mane and tail, which are flowing wildly in the wind. PBR materials for its hide show a fine layer of dust."       },       {         "type": "Animal - The Competitor",         "description": "Another zebra, running alongside. This one has a wild, almost panicked expression, with its mouth open as if calling out.",         "details": "Its head is turned towards the rider, adding to the comedic, competitive nature of the scene."       }     ]   },   "animation": {     "primary_animation": "Both zebras are in a full, powerful gallop, their hooves thundering against the dry earth. The animation captures the realistic, powerful gait of a running zebra.",     "secondary_animation": "The woman's coat and hair are whipped back by the extreme wind. The second zebra's mane and tail also flow wildly.",     "subtle_effects": "At 3.0s, th[...]