The Long Investor
2hrs later and the airspace is now clear between Iran and Israel

Very very slow reaction from airlines

Airliners should not have been anywhere near that region this weekend.

Traffic flowing north and south now of the region https://t.co/FvOywh0zA7

Emirates and Qatar airways did not get the memo to stay out of this airspace.

Both airlines are flying right through the conflict zone https://t.co/KbuM52rTKQ - The Long Investor
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iinvested
1Q'24 Fiduciary Management Inc. on $SCHW, $WEGRY

https://t.co/hOtos7cxjK

More fund letters here:
https://t.co/HhAAZQRRKy https://t.co/rxKoejr791
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A sober valuation analysis on $ZTS 🧘🏽‍♂️

•NTM P/E Ratio: 28.12x
•9-Year Mean: 31.18x

•NTM FCF Yield: 2.92%
•9-Year Mean: 3.27%

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

Going forward, investors can expect to receive ~11% MORE in earnings per share & ~10% LESS in FCF per share🧠***

Before we get into valuation, let’s take a look at why $ZTS is a quality business

BALANCE SHEET✅
•Cash & Equivalents: $2.04B
•Long-Term Debt: $6.59B

$ZTS has a good balance sheet, a BBB S&P Credit Rating & 9.85x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2018: 20.8%
•2019: 21.4%
•2020: 19.9%
•2021: 24.1%
•2022: 23.1%
•2023: 25.7%

RETURN ON EQUITY✅
•2018: 71.7%
•2019: 61.3%
•2020: 50.5%
•2021: 48.9%
•2022: 47.2%
•2023: 49.8%

$ZTS has solid return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2013: $4.56B
•2023: $8.54B
•CAGR: 6.47%

FREE CASH FLOW✅
•2013: $497.00M
•2023: $1.62B
•CAGR: 12.54%

NORMALIZED EPS✅
•2013: $1.42
•2023: $5.32
•CAGR: 14.12%

SHARE BUYBACKS✅
•2013 Shares Outstanding: 500.32M
•LTM Shares Outstanding: 462.27M

By reducing its shares outstanding ~7.6%, $ZTS increased its EPS by ~8.2% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 70.1%
•LTM Operating Margins: 36.0%
•LTM Net Income Margins: 27.4%

PAID DIVIDENDS✅
•2018: $0.50
•2023: $1.50
•CAGR: 24.57%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~11% MORE in EPS & ~10% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $ZTS has to grow earnings at a 14.06% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be less than the (14.06%) required growth rate:

2024E: $5.79 (8.8% YoY) *FY Dec
2025E: $6.46 (11.6% YoY)
2026E: $7.17 (11.0% YoY)

$ZTS has a good track record of meeting analyst estimates ~2 years out, so let’s assume $ZTS ends 2026 with $7.17 in EPS & see its CAGR potential assuming different multiples

32x P/E: $229.44💵 … ~17.7% CAGR

30x P/E: $215.10💵 … ~15.0% CAGR

28x P/E: $200.76💵 … ~12.2% CAGR

27x P/E: $193.59💵 … ~10.7% CAGR

26x P/E: $186.42💵 … ~9.2% CAGR

As you can see, at the current price of $150💵, $ZTS has attractive return potential even if we assume ~26x - ~27x earnings

This is more than reasonable given its growth rate, coupled with its wide moat & exemplary capital allocation

Moreover, this is well-below $ZTS historical average of ~31x (~15% below) & near the 25x level where $ZTS has bottomed during numerous corrections & bear markets (as you’ll see the lowest green line in the P/E chart)

$ZTS appears to be a worthwhile investment today at $150💵

#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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iinvested
Headwaters Capital has nice write up on $CLMB

You can read it here:
https://t.co/HhAAZQRRKy
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Clark Square Capital
Does anybody have any good primers on IT consulting? Or any recommended reading?

Thanks in advance! 🙏
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Giuliano
Fascinating data. First time I see this.

“The difference [in ROIC] between leading and lagging companies in the same industry is typically far greater than the variation across industries.”

🤔 https://t.co/mJqbybyQoW - Sidecar Investor
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Hidden Value Gems
A timely guide to investing during geopolitical conflicts by Joachim Klement.

“The most important rule for investors in a geopolitical crisis is not to panic. The evidence is extremely clear on one thing: the vast majority of geopolitical events do not matter for equity market performance over investment horizons of one month or longer.”

The link is in the next tweet. 👇🏼
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Hidden Value Gems
Potentially good news for $CTT.LS as the new Portuguese govt announced tax cuts for the middle class and businesses.

✅Corporate tax rate would drop from 21% to 15% in 3 years.

✅Personal income tax by 0.5-3% vs 2023.

✅Reduce taxes of corporate fleet.

✅Additional benefits for the young people (under 35).

The changes need to be approved by Parliament.
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The Long Investor
$BTC and $GOLD have both made new ATHS

$ETH and $SILVER are significantly lower than their ATHs

They are not in the same cycles right now

The lag is the opportunity.
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Antonio Linares
Some predictions:

1. $MSFT's AI Copilots will transform into an essential daily tool for everyone.
2. $PLTR will become the platform in which folks build companies on first.
3. $AMD is set to shake up $NVDA, leveraging a ten-year lead in chiplets that Nvidia will inevitably adopt.
4. $AMZN's cash flow is poised to hit unprecedented highs, fueled by a surge in operating leverage from recent capital investments.
5. $SPOT will emerge as the $GOOG of audio.
6. $TSLA will catalyze a new era of material abundance with its efficient manufacturing, cost-effective energy solutions, and scalable AI.
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The Long Investor
Some big hitters this week ahead

- Banks
- Airlines
- $UNH, $JNJ, $ASML, $NFLX, $IBKR https://t.co/GevJ28I2zf
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Antonio Linares
I’m seeing this everywhere.

@alc2022 As a programmer I can confirm that we could not live without github copilot anyomre. Once you have tried it there is no way back to stone age. - Dominik Filkus
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