Offshore
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โ Matt McGarry
My newsletter reached 25,000 subscribers.
Interesting finding about its growth:
The acquisition sources chart for the first 10,000 looks almost identical to the one for 25,000 subscribers.
Translation: Find winning levers, and pull them. https://t.co/wVPu0D5pXa
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My newsletter reached 25,000 subscribers.
Interesting finding about its growth:
The acquisition sources chart for the first 10,000 looks almost identical to the one for 25,000 subscribers.
Translation: Find winning levers, and pull them. https://t.co/wVPu0D5pXa
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Offshore
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โ Dimitry Nakhla | Babylon Capitalยฎ
A sober valuation analysis on $CRM ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 24.18x
โข1-Year Mean: 26.97x
โขNTM FCF Yield: 5.12%
โข1-Year Mean: 4.40%
As you can see, $CRM appears to be trading below fair value
Going forward, investors can expect to receive ~12% MORE in earnings per share & ~16% MORE in FCF per share๐ง ***
Before we get into valuation, letโs take a look at why $CRM is a good business
BALANCE SHEETโ
โขCash & Equivalents: $12.64B
โขLong-Term Debt: $8.43B
$CRM has an excellent balance sheet, an A+ S&P Credit Rating & 352x FFO Interest Coverage Ratio
RETURN ON CAPITAL๐
โข2020: 1.2%
โข2021: 0.9%
โข2022: 0.8%
โข2023: 2.5%
โข2024: 8.2%
โขLTM: 10.0%
RETURN ON EQUITY๐
โข2020: 0.5%
โข2021: 10.8%
โข2022: 2.9%
โข2023: 0.4%
โข2024: 7.0%
โขLTM: 9.3%
$CRM return metrics are ok, although more recently trending in the right direction
REVENUESโ
โข2014: $4.07B
โข2024: $34.86B
โขCAGR: 23.95%
FREE CASH FLOWโ
โข2014: $576.36M
โข2024: $9.49B
โขCAGR: 32.34%
NORMALIZED EPSโ
โข2014: $0.35
โข2024: $8.22
โขCAGR: 37.11%
SHARE BUYBACKSโ
โข2014 Shares Outstanding: 597.61M
โขLTM Shares Outstanding: 980.00M
By increasing its shares outstanding ~64%, $CRM diluted its EPS by ~40% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 76.3%
โขLTM Operating Margins: 19.1%
โขLTM Net Income Margins: 15.4%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~12% MORE in EPS & ~16% MORE FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $CRM has to grow earnings at a 12.09% 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 more than the (12.09%) required growth rate:
2025E: $10.09 (22.8% YoY) *FY Jan
2026E: $11.13 (10.3% YoY)
2027E: $12.69 (14.0% YoY)
$CRM has an excellent track record of meeting analyst estimates ~2 years out, so letโs assume $CRM ends 2027 with $12.69 in EPS & see its CAGR potential assuming different multiples
26x P/E: $329.94๐ต โฆ ~12.4% CAGR
25x P/E: $317.25๐ต โฆ ~10.6% CAGR
24x P/E: $304.56๐ต โฆ ~8.8% CAGR
As you can see, weโd have to assume ~25x earnings for $CRM to have double digit CAGR potential (a multiple justified by its growth rate & moat)
Today at $252๐ต $CRM appears to be worthwhile consideration for investment especially when you assess the trajectory of the companyโs FCF & Net Income margins (steadily trending higher with further room to expand)
To ensure some margin of safety, if thereโs further weakness, it could be wise to piece into the position, for example:
Initiating ~50% of the position at ~$252๐ต & adding a second tranche at ~$210๐ต or at ~20x NTM earnings
#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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A sober valuation analysis on $CRM ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 24.18x
โข1-Year Mean: 26.97x
โขNTM FCF Yield: 5.12%
โข1-Year Mean: 4.40%
As you can see, $CRM appears to be trading below fair value
Going forward, investors can expect to receive ~12% MORE in earnings per share & ~16% MORE in FCF per share๐ง ***
Before we get into valuation, letโs take a look at why $CRM is a good business
BALANCE SHEETโ
โขCash & Equivalents: $12.64B
โขLong-Term Debt: $8.43B
$CRM has an excellent balance sheet, an A+ S&P Credit Rating & 352x FFO Interest Coverage Ratio
RETURN ON CAPITAL๐
โข2020: 1.2%
โข2021: 0.9%
โข2022: 0.8%
โข2023: 2.5%
โข2024: 8.2%
โขLTM: 10.0%
RETURN ON EQUITY๐
โข2020: 0.5%
โข2021: 10.8%
โข2022: 2.9%
โข2023: 0.4%
โข2024: 7.0%
โขLTM: 9.3%
$CRM return metrics are ok, although more recently trending in the right direction
REVENUESโ
โข2014: $4.07B
โข2024: $34.86B
โขCAGR: 23.95%
FREE CASH FLOWโ
โข2014: $576.36M
โข2024: $9.49B
โขCAGR: 32.34%
NORMALIZED EPSโ
โข2014: $0.35
โข2024: $8.22
โขCAGR: 37.11%
SHARE BUYBACKSโ
โข2014 Shares Outstanding: 597.61M
โขLTM Shares Outstanding: 980.00M
By increasing its shares outstanding ~64%, $CRM diluted its EPS by ~40% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 76.3%
โขLTM Operating Margins: 19.1%
โขLTM Net Income Margins: 15.4%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~12% MORE in EPS & ~16% MORE FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $CRM has to grow earnings at a 12.09% 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 more than the (12.09%) required growth rate:
2025E: $10.09 (22.8% YoY) *FY Jan
2026E: $11.13 (10.3% YoY)
2027E: $12.69 (14.0% YoY)
$CRM has an excellent track record of meeting analyst estimates ~2 years out, so letโs assume $CRM ends 2027 with $12.69 in EPS & see its CAGR potential assuming different multiples
26x P/E: $329.94๐ต โฆ ~12.4% CAGR
25x P/E: $317.25๐ต โฆ ~10.6% CAGR
24x P/E: $304.56๐ต โฆ ~8.8% CAGR
As you can see, weโd have to assume ~25x earnings for $CRM to have double digit CAGR potential (a multiple justified by its growth rate & moat)
Today at $252๐ต $CRM appears to be worthwhile consideration for investment especially when you assess the trajectory of the companyโs FCF & Net Income margins (steadily trending higher with further room to expand)
To ensure some margin of safety, if thereโs further weakness, it could be wise to piece into the position, for example:
Initiating ~50% of the position at ~$252๐ต & adding a second tranche at ~$210๐ต or at ~20x NTM earnings
#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 Bourbon Capital
Vaxcyte, Inc. $PCVX its up 31% premarket
Vaxcyteโs stock soars 31% after trial shows positive data for pneumococcal vaccine https://t.co/XZHcOC59jW
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Vaxcyte, Inc. $PCVX its up 31% premarket
Vaxcyteโs stock soars 31% after trial shows positive data for pneumococcal vaccine https://t.co/XZHcOC59jW
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Offshore
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โ Quality Stocks
๐บ๐ธ Fortinet $FTNT vs ๐บ๐ธ Palo Alto $PANW
๐ฅ A stock duel!
As promised, here are the results of the clash between these two cybersecurity giants! ๐
Fortinet takes the win, but it was a close fight. Both companies have their strengths and weaknesses.
Fortinet is more profitable and focused on shareholder returns, while Palo Alto is the market leader with faster growth. However, its stock-based compensations are notably high.
Which one do you prefer?
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๐บ๐ธ Fortinet $FTNT vs ๐บ๐ธ Palo Alto $PANW
๐ฅ A stock duel!
As promised, here are the results of the clash between these two cybersecurity giants! ๐
Fortinet takes the win, but it was a close fight. Both companies have their strengths and weaknesses.
Fortinet is more profitable and focused on shareholder returns, while Palo Alto is the market leader with faster growth. However, its stock-based compensations are notably high.
Which one do you prefer?
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โ Ahmad Jivraj
I find that some of the most powerful investments occur when a company offers both resilience AND optionality.
$AMZN is the perfect example, where their eCommerce business provided resilience, while AWS optionality.
This turned out to be a superb combination.
This represents a classic barbell strategy, but within a single company.
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I find that some of the most powerful investments occur when a company offers both resilience AND optionality.
$AMZN is the perfect example, where their eCommerce business provided resilience, while AWS optionality.
This turned out to be a superb combination.
This represents a classic barbell strategy, but within a single company.
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Offshore
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โ Stock Analysis Compilation
Brown Advisory on Autozone $AZO US
Thesis: AutoZoneโs strong market position in the growing used car parts market, combined with exceptional cash flow management and sustainability efforts, positions it for continued success
(Extract from their Q2 letter) https://t.co/2m5A8YqojR
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Brown Advisory on Autozone $AZO US
Thesis: AutoZoneโs strong market position in the growing used car parts market, combined with exceptional cash flow management and sustainability efforts, positions it for continued success
(Extract from their Q2 letter) https://t.co/2m5A8YqojR
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โ Bourbon Capital
Remember,
When a quality stock gets in trouble, people panic and sell. I've never understood why; it's your best chance to make money.This can present a buying opportunity as strong companies are likely to recover over the long term
$UNH crashed from $530 to $439, bad news, today is back to all-time high and close to $600
$GOOG is having a hard time right now, What do you think?
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Remember,
When a quality stock gets in trouble, people panic and sell. I've never understood why; it's your best chance to make money.This can present a buying opportunity as strong companies are likely to recover over the long term
$UNH crashed from $530 to $439, bad news, today is back to all-time high and close to $600
$GOOG is having a hard time right now, What do you think?
tweet