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โ Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: A sober valuation analysis on $META ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 23.17x
โข10-Year Mean: 26.61x
โขNTM FCF Yield: 3.77%
โข10-Year Mean: 3.30%
As you can see, $META appears to be slightly undervalued
Going forward, investors can expect to receive ~14% MORE in earnings per share & ~14% MORE in FCF per share๐ง ***
Before we get into valuation, letโs take a look at why $META is a quality business
BALANCE SHEETโ
โขCash & Equivalents: $58.12B
โขLong-Term Debt: $18.39B
$META has an excellent balance sheet, an AA- S&P Credit Rating & 147x FFO Interest Coverage Ratio
RETURN ON CAPITALโ
โข2019: 26.0%
โข2020: 23.5%
โข2021: 33.7%
โข2022: 22.0%
โข2023: 26.3%
โขLTM: 30.1%
RETURN ON EQUITYโ
โข2019: 20.0%
โข2020: 25.4%
โข2021: 31.1%
โข2022: 18.5%
โข2023: 28.0%
โขLTM: 33.4%
$META has great return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2018: $55.84B
โข2023: $134.90B
โขCAGR: 19.29%
FREE CASH FLOWโ
โข2018: $15.36B
โข2023: $43.85B
โขCAGR: 23.34%
NORMALIZED EPSโ
โข2018: $7.57
โข2023: $14.87
โขCAGR: 14.45%
SHARE BUYBACKSโ
โข2018 Shares Outstanding: 2.92B
โขLTM Shares Outstanding: 2.64B
By reducing its shares outstanding ~9.5%, $META increased its EPS by ~10.5% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 81.5%
โขLTM Operating Margins: 39.5%
โขLTM Net Income Margins: 32.1%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~14% MORE in EPS & ~14% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $META has to grow earnings at an 11.60% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be greater than the (11.60%) required growth rate:
2024E: $20.14 (35.4% YoY)
2025E: $23.05 (14.5% YoY)
2026E: $26.32 (14.2% YoY)
$META has a decent track record of meeting analyst estimates ~2 years out, so letโs assume $META ends 2026 with $26.32 in EPS & see its CAGR potential assuming different multiples
24x P/E: $631.68๐ต โฆ ~12.5% CAGR
23x P/E: $605.36๐ต โฆ ~10.5% CAGR
22x P/E: $579.04๐ต โฆ ~8.5% CAGR
As you can see, $META appears to have double-digit CAGR potential if we assume >23x earnings, a multiple slightly below what itโs trading for today and a multiple below what may be justified given its mid-teens earnings growth rate
I also believe that Mark Zuckerberg will continue to execute exceptionally well
Additionally, the increased investment in future growth and necessary AI development has the potential to drive better growth prospects, which could serve as a bullish catalyst for the next several years
Today at $476๐ต $META appears to be a good consideration for investment
$META appears to be an excellent deal closer to $450๐ต where it has ~11% CAGR potential assuming 2026E and a 22x multiple (an added layer of margin of safety)
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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RT @DimitryNakhla: A sober valuation analysis on $META ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 23.17x
โข10-Year Mean: 26.61x
โขNTM FCF Yield: 3.77%
โข10-Year Mean: 3.30%
As you can see, $META appears to be slightly undervalued
Going forward, investors can expect to receive ~14% MORE in earnings per share & ~14% MORE in FCF per share๐ง ***
Before we get into valuation, letโs take a look at why $META is a quality business
BALANCE SHEETโ
โขCash & Equivalents: $58.12B
โขLong-Term Debt: $18.39B
$META has an excellent balance sheet, an AA- S&P Credit Rating & 147x FFO Interest Coverage Ratio
RETURN ON CAPITALโ
โข2019: 26.0%
โข2020: 23.5%
โข2021: 33.7%
โข2022: 22.0%
โข2023: 26.3%
โขLTM: 30.1%
RETURN ON EQUITYโ
โข2019: 20.0%
โข2020: 25.4%
โข2021: 31.1%
โข2022: 18.5%
โข2023: 28.0%
โขLTM: 33.4%
$META has great return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2018: $55.84B
โข2023: $134.90B
โขCAGR: 19.29%
FREE CASH FLOWโ
โข2018: $15.36B
โข2023: $43.85B
โขCAGR: 23.34%
NORMALIZED EPSโ
โข2018: $7.57
โข2023: $14.87
โขCAGR: 14.45%
SHARE BUYBACKSโ
โข2018 Shares Outstanding: 2.92B
โขLTM Shares Outstanding: 2.64B
By reducing its shares outstanding ~9.5%, $META increased its EPS by ~10.5% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 81.5%
โขLTM Operating Margins: 39.5%
โขLTM Net Income Margins: 32.1%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~14% MORE in EPS & ~14% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $META has to grow earnings at an 11.60% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be greater than the (11.60%) required growth rate:
2024E: $20.14 (35.4% YoY)
2025E: $23.05 (14.5% YoY)
2026E: $26.32 (14.2% YoY)
$META has a decent track record of meeting analyst estimates ~2 years out, so letโs assume $META ends 2026 with $26.32 in EPS & see its CAGR potential assuming different multiples
24x P/E: $631.68๐ต โฆ ~12.5% CAGR
23x P/E: $605.36๐ต โฆ ~10.5% CAGR
22x P/E: $579.04๐ต โฆ ~8.5% CAGR
As you can see, $META appears to have double-digit CAGR potential if we assume >23x earnings, a multiple slightly below what itโs trading for today and a multiple below what may be justified given its mid-teens earnings growth rate
I also believe that Mark Zuckerberg will continue to execute exceptionally well
Additionally, the increased investment in future growth and necessary AI development has the potential to drive better growth prospects, which could serve as a bullish catalyst for the next several years
Today at $476๐ต $META appears to be a good consideration for investment
$META appears to be an excellent deal closer to $450๐ต where it has ~11% CAGR potential assuming 2026E and a 22x multiple (an added layer of margin of safety)
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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Offshore
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โ Librarian Capital
Altria $MO: US Vapor category still growing fast
"Through the first half of 2024, we estimate the category grew by approx. 40%, driven by illicit flavored disposable products ... now more than 60% of the category"
"Pod-based volumes declined by approx. 15%"
cc: $BATS $PM $IMB https://t.co/DdLKef93IH
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Altria $MO: US Vapor category still growing fast
"Through the first half of 2024, we estimate the category grew by approx. 40%, driven by illicit flavored disposable products ... now more than 60% of the category"
"Pod-based volumes declined by approx. 15%"
cc: $BATS $PM $IMB https://t.co/DdLKef93IH
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โ Brandon Beylo
Iโm not going to lie.
I didnโt think Iโd need to remind @AlderLaneEggs about our $CVNA deal.
But it might freaking happen.
Mark promised heโd cook me and @CliffordSosin a full-course dinner while wearing a dress.
AND
He said heโd buy me a Ford Shelby Mustang.
๐๐๐
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Iโm not going to lie.
I didnโt think Iโd need to remind @AlderLaneEggs about our $CVNA deal.
But it might freaking happen.
Mark promised heโd cook me and @CliffordSosin a full-course dinner while wearing a dress.
AND
He said heโd buy me a Ford Shelby Mustang.
๐๐๐
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Offshore
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โ Brandon Beylo
Funny how the Big Banks work their price targets.
Block $SQ has doubled Gross Profit AND turned profitable since 2021.
Yet Morgan Stanleyโs 2024 price target is ~80% lower than 2021.
I know they donโt ring bells at bottoms and all โฆ but.
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Funny how the Big Banks work their price targets.
Block $SQ has doubled Gross Profit AND turned profitable since 2021.
Yet Morgan Stanleyโs 2024 price target is ~80% lower than 2021.
I know they donโt ring bells at bottoms and all โฆ but.
$SQ - Morgan Stanley
2021 Price target : $245
2024 Price target : $55
2021 Gross Profit : $4.4B
2024 Gross Proft est : $8.8B
๐คทโโ๏ธ https://t.co/XIUtUI1mFD tweet
Offshore
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โ Hidden Value Gems
RT @HiddenValueGems: Someone is building a very wide moat here ๐๐ผ
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RT @HiddenValueGems: Someone is building a very wide moat here ๐๐ผ
How much luxury brands have spent on advertising from 2010 to 2023.
Not surprised that LVMH topped the list , but pretty surprised that Richemont came second . https://t.co/kfmbHYdy6i tweet
Offshore
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โ iinvested
2Q'24 Upslope Capital Management on $TDY, $DSFIY, $WIPKF
https://t.co/1hEfM5NzOW
More fund letters here:
https://t.co/WRGkdL2eBG https://t.co/dswO9ffbyJ
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2Q'24 Upslope Capital Management on $TDY, $DSFIY, $WIPKF
https://t.co/1hEfM5NzOW
More fund letters here:
https://t.co/WRGkdL2eBG https://t.co/dswO9ffbyJ
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