Offshore
Video
Value Spotlight (Andrew Sather)
Calculate ROIC on an EVEN MORE Complex Balance Sheet (Tutorial):
$NEE https://t.co/XePgfAuky3
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Calculate ROIC on an EVEN MORE Complex Balance Sheet (Tutorial):
$NEE https://t.co/XePgfAuky3
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Offshore
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Stock Analysis Compilation
Baron Capital on Texas Instruments Incorporated $TXN US
Thesis: Texas Instruments is strategically positioned to emerge stronger from the cyclical downturn, leveraging its expanded U.S. manufacturing capacity and leadership in key markets
(Extract from their Q2 letter) https://t.co/CtEhd98FTf
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Baron Capital on Texas Instruments Incorporated $TXN US
Thesis: Texas Instruments is strategically positioned to emerge stronger from the cyclical downturn, leveraging its expanded U.S. manufacturing capacity and leadership in key markets
(Extract from their Q2 letter) https://t.co/CtEhd98FTf
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Offshore
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Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $AVGO 🧘🏽♂️
•NTM P/E Ratio: 25.06x
•5-Year Mean: 17.22x
•NTM FCF Yield: 4.19%
•5-Year Mean: 7.00%
As you can see, $AVGO appears to be trading above fair value
Going forward, investors can receive ~31% LESS in earnings per share & ~40% LESS in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $AVGO is a good business
BALANCE SHEET🆗
•Cash & Short-Term Inv: $9.95B
•Long-Term Debt: $66.80B
$AVGO has an ok balance sheet, a BBB S&P Credit Rating & 5.57x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: 7.4%
•2020: 6.6%
•2021: 13.3%
•2022: 22.8%
•2023: 25.9%
•LTM: 10.9%
RETURN ON EQUITY🆗➡️✅
•2019: 10.6%
•2020: 12.1%
•2021: 27.6%
•2022: 48.2%
•2023: 60.3%
•LTM: 12.5%
$AVGO now has stronger return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2013: $2.52B
•2023: $35.82B
•CAGR: 30.39%
FREE CASH FLOW✅
•2013: $0.49B
•2023: $17.63B
•CAGR: 43.08%
NORMALIZED EPS✅
•2013: $0.29
•2023: $4.23
•CAGR: 30.73%
SHARE BUYBACKS❌
•2013 Shares Outstanding: 2.52B
•LTM Shares Outstanding: 4.64B
$AVGO increased its shares outstanding ~84%, however strong revenue & earnings growth more than made up for the share dilution
MARGINS✅
•LTM Gross Margins: 74.7%
•LTM Operating Margins: 31.6%
•LTM Net Income Margins: 11.7%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~31% LESS in EPS & ~40% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $AVGO has to grow earnings at a 12.53% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be more than the (12.53%) required growth rate:
2024E: $4.85 (14.8% YoY) *FY Oct
2025E: $6.17 (27.3% YoY)
2026E: $7.26 (17.7% YoY)
$AVGO has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $AVGO ends FY 2026 with $7.26 in EPS & see its CAGR potential assuming different multiples
27x P/E: $196.02💵 … ~15.3% CAGR
25x P/E: $181.50💵 … ~11.3% CAGR
23x P/E: $166.98💵 … ~7.2% CAGR
21x P/E: $152.46💵 … ~2.8% CAGR
As you can see, $AVGO appears to have attractive return potential if we assume >25x earnings (a multiple well below its 5-year & 10-year mean, HOWEVER a multiple more than justified by its expected growth rate and wide-moat)
It’s important not to knock $AVGO for its current multiple given the attractive growth rates, so while $AVGO may appear to be trading above fair value, it is actually trading somewhere near fair value today
Although I wouldn’t want to rely on an elevated multiple, that has a recently added premium, when making certain assumptions … especially because $AVGO traded for much lower multiples despite historically aggressive growth rates
Today at $148💵 $AVGO appears to be trading near value
I’d be more interested in $AVGO closer to $125💵 where I can reasonably expect ~11.0% CAGR, assuming a 21x multiple
#stocks #investing
___
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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A sober valuation analysis on $AVGO 🧘🏽♂️
•NTM P/E Ratio: 25.06x
•5-Year Mean: 17.22x
•NTM FCF Yield: 4.19%
•5-Year Mean: 7.00%
As you can see, $AVGO appears to be trading above fair value
Going forward, investors can receive ~31% LESS in earnings per share & ~40% LESS in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $AVGO is a good business
BALANCE SHEET🆗
•Cash & Short-Term Inv: $9.95B
•Long-Term Debt: $66.80B
$AVGO has an ok balance sheet, a BBB S&P Credit Rating & 5.57x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: 7.4%
•2020: 6.6%
•2021: 13.3%
•2022: 22.8%
•2023: 25.9%
•LTM: 10.9%
RETURN ON EQUITY🆗➡️✅
•2019: 10.6%
•2020: 12.1%
•2021: 27.6%
•2022: 48.2%
•2023: 60.3%
•LTM: 12.5%
$AVGO now has stronger return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2013: $2.52B
•2023: $35.82B
•CAGR: 30.39%
FREE CASH FLOW✅
•2013: $0.49B
•2023: $17.63B
•CAGR: 43.08%
NORMALIZED EPS✅
•2013: $0.29
•2023: $4.23
•CAGR: 30.73%
SHARE BUYBACKS❌
•2013 Shares Outstanding: 2.52B
•LTM Shares Outstanding: 4.64B
$AVGO increased its shares outstanding ~84%, however strong revenue & earnings growth more than made up for the share dilution
MARGINS✅
•LTM Gross Margins: 74.7%
•LTM Operating Margins: 31.6%
•LTM Net Income Margins: 11.7%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~31% LESS in EPS & ~40% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $AVGO has to grow earnings at a 12.53% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be more than the (12.53%) required growth rate:
2024E: $4.85 (14.8% YoY) *FY Oct
2025E: $6.17 (27.3% YoY)
2026E: $7.26 (17.7% YoY)
$AVGO has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $AVGO ends FY 2026 with $7.26 in EPS & see its CAGR potential assuming different multiples
27x P/E: $196.02💵 … ~15.3% CAGR
25x P/E: $181.50💵 … ~11.3% CAGR
23x P/E: $166.98💵 … ~7.2% CAGR
21x P/E: $152.46💵 … ~2.8% CAGR
As you can see, $AVGO appears to have attractive return potential if we assume >25x earnings (a multiple well below its 5-year & 10-year mean, HOWEVER a multiple more than justified by its expected growth rate and wide-moat)
It’s important not to knock $AVGO for its current multiple given the attractive growth rates, so while $AVGO may appear to be trading above fair value, it is actually trading somewhere near fair value today
Although I wouldn’t want to rely on an elevated multiple, that has a recently added premium, when making certain assumptions … especially because $AVGO traded for much lower multiples despite historically aggressive growth rates
Today at $148💵 $AVGO appears to be trading near value
I’d be more interested in $AVGO closer to $125💵 where I can reasonably expect ~11.0% CAGR, assuming a 21x multiple
#stocks #investing
___
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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Offshore
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Librarian Capital
Rightmove $RMV: REA made offer, was rejected
Offer = 305p cash + 0.0381 new $REA share
"Non-binding & highly conditional"
With REA at A$202.48, worth 698p per share
RMV believes this was "wholly opportunistic & fundamentally undervalued"
Deadline for firm offer: 30-Sep https://t.co/3ecEjgqw9j
tweet
Rightmove $RMV: REA made offer, was rejected
Offer = 305p cash + 0.0381 new $REA share
"Non-binding & highly conditional"
With REA at A$202.48, worth 698p per share
RMV believes this was "wholly opportunistic & fundamentally undervalued"
Deadline for firm offer: 30-Sep https://t.co/3ecEjgqw9j
tweet
Offshore
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Quiver Quantitative
Trump Media stock has fallen 15% today.
It has now fallen 83% since Representative Marjorie Taylor Greene bought in.
Here are a few of her recent purchases.
Might be time for us to roll out a new inverse strategy: https://t.co/e62fK9VqVB
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Trump Media stock has fallen 15% today.
It has now fallen 83% since Representative Marjorie Taylor Greene bought in.
Here are a few of her recent purchases.
Might be time for us to roll out a new inverse strategy: https://t.co/e62fK9VqVB
tweet
Offshore
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Stock Analysis Compilation
Hedge funds' best ideas #9 is in your inbox 🔥
(link in bio)
Acatis / Ariel Investments / Artemis Funds / Artisan Partners / Baron Capital / Conestoga / Davis fund / Edgepoint / Heartland Advisors / Riverwater Partners / RS Investments / Sohra Peak / Tourlite AM https://t.co/egu7kU7j2P
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Hedge funds' best ideas #9 is in your inbox 🔥
(link in bio)
Acatis / Ariel Investments / Artemis Funds / Artisan Partners / Baron Capital / Conestoga / Davis fund / Edgepoint / Heartland Advisors / Riverwater Partners / RS Investments / Sohra Peak / Tourlite AM https://t.co/egu7kU7j2P
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Librarian Capital
Also stayed up and watched the debate last night
Correction: "Make stuff up but sound energetic and sure" is not a winning strategy if the stuff you made up just sounded obviously unhinged
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Also stayed up and watched the debate last night
Correction: "Make stuff up but sound energetic and sure" is not a winning strategy if the stuff you made up just sounded obviously unhinged
Watching the debate
In our industry, many clients don't understand the product, so make decisions on impression
If there're 2 candidates, A who did lots of prep & give substantial answers but sound tired, while B just make stuff up but sound energetic & sure, B will win
(sigh) tweet
twitter.com
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