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Stock Analysis Compilation
TAMIM Fund on F5 Inc $FFIV US
Thesis: F5’s unique, versatile security solutions and strong capital return strategy position it well for sustainable growth and shareholder value in a rapidly evolving IT landscape
(Extract from their Q3 letter) https://t.co/Mme1MLbgaK
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TAMIM Fund on F5 Inc $FFIV US
Thesis: F5’s unique, versatile security solutions and strong capital return strategy position it well for sustainable growth and shareholder value in a rapidly evolving IT landscape
(Extract from their Q3 letter) https://t.co/Mme1MLbgaK
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Offshore
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Quiver Quantitative
Look at this graph.
We published this report on politicians' purchase of DT Midstream stock back in June.
$DTM has now risen 76% since the trade was made. https://t.co/VlmQ0OUb4Z
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Look at this graph.
We published this report on politicians' purchase of DT Midstream stock back in June.
$DTM has now risen 76% since the trade was made. https://t.co/VlmQ0OUb4Z
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Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $PYPL 🧘🏽♂️
•NTM P/E Ratio: 18.47x
•All-Time Mean: 29.55x
•NTM FCF Yield: 7.42%
•All-Time Mean: 5.07%
As you can see, $PYPL appears to be trading below fair value
Going forward, investors can receive ~53% MORE in earnings per share & ~46% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $PYPL is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $11.92B
•Long-Term Debt: $9.98B
$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 16.6%
RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.2%
$PYPL has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $15.45B
•2023: $29.77B
•CAGR: 14.01%
FREE CASH FLOW❌*
•2018: $4.66B
•2023: $4.22B
•Decrease: (9.44%)
*LTM FCF is $7.05B 📈
*Also, FCF in 2017 was $1.86B, so FCF rose ~150% in 2018 start date (“normalizing” the decline above)
NORMALIZED EPS✅
•2018: $2.42
•2023: $5.10
•CAGR: 16.07%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 1.20B
•LTM Shares Outstanding: 1.06B
By reducing its shares outstanding by 11.6%, $PYPL increased its EPS by 13.1% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 40.1%
•LTM Operating Margins: 17.7%
•LTM Net Income Margins: 14.1%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~53% MORE in EPS & ~46% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 9.29% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be greater than the (9.29%) required growth rate:
2024E: $4.57 (-10.3% YoY) *FY Dec
2025E: $4.89 (6.9% YoY)
2026E: $5.43 (11.1% YoY)
2027E: $6.37 (17.3% YoY)
$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2027 with $6.37 in EPS & see its CAGR potential assuming different multiples
21x P/E: $133.77💵 … ~14.3% CAGR
20x P/E: $127.40💵 … ~12.5% CAGR
19x P/E: $121.03💵 … ~10.6% CAGR
18x P/E: $114.66💵 … ~8.7% CAGR
As you can see, $PYPL appears to have attractive return potential if we assume >19x earnings & aggressive return potential if we assume >20x earnings
The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption
Everyone wanted $PYPL when it traded 50x earnings, not many wanted it when it traded for 12x earnings ☯️
There’s STILL negative sentiment around $PYPL and this sentiment is already being changed as management continues to make good progress
Today at $88.50💵 $PYPL still appears to be a good consideration for investment (albeit, with some turnaround / competitive risks & a smaller margin of safety)
#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 $PYPL 🧘🏽♂️
•NTM P/E Ratio: 18.47x
•All-Time Mean: 29.55x
•NTM FCF Yield: 7.42%
•All-Time Mean: 5.07%
As you can see, $PYPL appears to be trading below fair value
Going forward, investors can receive ~53% MORE in earnings per share & ~46% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $PYPL is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $11.92B
•Long-Term Debt: $9.98B
$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 16.6%
RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.2%
$PYPL has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $15.45B
•2023: $29.77B
•CAGR: 14.01%
FREE CASH FLOW❌*
•2018: $4.66B
•2023: $4.22B
•Decrease: (9.44%)
*LTM FCF is $7.05B 📈
*Also, FCF in 2017 was $1.86B, so FCF rose ~150% in 2018 start date (“normalizing” the decline above)
NORMALIZED EPS✅
•2018: $2.42
•2023: $5.10
•CAGR: 16.07%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 1.20B
•LTM Shares Outstanding: 1.06B
By reducing its shares outstanding by 11.6%, $PYPL increased its EPS by 13.1% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 40.1%
•LTM Operating Margins: 17.7%
•LTM Net Income Margins: 14.1%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~53% MORE in EPS & ~46% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 9.29% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be greater than the (9.29%) required growth rate:
2024E: $4.57 (-10.3% YoY) *FY Dec
2025E: $4.89 (6.9% YoY)
2026E: $5.43 (11.1% YoY)
2027E: $6.37 (17.3% YoY)
$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2027 with $6.37 in EPS & see its CAGR potential assuming different multiples
21x P/E: $133.77💵 … ~14.3% CAGR
20x P/E: $127.40💵 … ~12.5% CAGR
19x P/E: $121.03💵 … ~10.6% CAGR
18x P/E: $114.66💵 … ~8.7% CAGR
As you can see, $PYPL appears to have attractive return potential if we assume >19x earnings & aggressive return potential if we assume >20x earnings
The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption
Everyone wanted $PYPL when it traded 50x earnings, not many wanted it when it traded for 12x earnings ☯️
There’s STILL negative sentiment around $PYPL and this sentiment is already being changed as management continues to make good progress
Today at $88.50💵 $PYPL still appears to be a good consideration for investment (albeit, with some turnaround / competitive risks & a smaller margin of safety)
#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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Quiver Quantitative
JUST IN: Representative Marjorie Taylor Greene has disclosed a purchase of AbbVie stock, $ABBV.
The purchase was made on Wednesday.
The pharma stock has risen 5% since then. https://t.co/6dtz4mO5Jm
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JUST IN: Representative Marjorie Taylor Greene has disclosed a purchase of AbbVie stock, $ABBV.
The purchase was made on Wednesday.
The pharma stock has risen 5% since then. https://t.co/6dtz4mO5Jm
tweet
Quiver Quantitative
RT @InsiderRadar: All of these stocks are in the green this morning as well
$ARRY: +8.15%
$ENPH: +7.87%
$ONEW: +5.01%
$EL: +4.96%
$TRS: +0.93%
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RT @InsiderRadar: All of these stocks are in the green this morning as well
$ARRY: +8.15%
$ENPH: +7.87%
$ONEW: +5.01%
$EL: +4.96%
$TRS: +0.93%
We reported on 5 new significant insider purchases this week.
So far, each stock has beaten the market since our report:
$250K purchase of $TRS by CEO on 11/19. Since our report, the stock is up 5.5%.
$10M purchase of $EL by director on 11/19. Since our report, the stock is up 8.8%.
$100K purchase of $ARRY by CEO on 11/20. Since our report, the stock is up 5.5%.
$300K purchase of $ENPH by CEO on 11/20. Since our report, the stock is up 5.0%.
$450K purchase of $ONEW by CEO on 11/21. Since our report, the stock is up 6.0%. tweet
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Offshore
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Stock Analysis Compilation
TCW on Elevance Health $ELV US
Thesis: Elevance Health’s strong leadership, innovative services, and expansion opportunities in the healthcare market provide a solid foundation for growth and increased earnings
(Extract from their Q3 letter) https://t.co/APbDb0AXu2
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TCW on Elevance Health $ELV US
Thesis: Elevance Health’s strong leadership, innovative services, and expansion opportunities in the healthcare market provide a solid foundation for growth and increased earnings
(Extract from their Q3 letter) https://t.co/APbDb0AXu2
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Offshore
Video
Startup Archive
Peter Thiel on the type of company more startup founders should build
Thiel first emphasizes his belief that when starting a company, you should always ask:
“Can this company become a monopoly?”
He then lists three of the most common types of monopolies:
1. Super fast distribution on a very thin product (e.g. Twitter)
2. A technological advantage that is continually built upon with iterative improvement and compounds over time (e.g. SaaS software)
3. A truly brilliant breakthrough (e.g. Bitcoin)
But he argues that there’s a different monopoly category that’s continually overlooked:
“A different modality for innovation that we do very little of and we don’t even recognize as an important category is what I would describe as ‘Complex Coordination,’ where you take a lot of different pieces and the challenge is to coordinate them into something new.”
Thiel continues:
“This is the thing that’s maybe 180 degrees antithetical to the Lean Startup ethos. It’s complicated. You have to put all the pieces together in just the right way. I think this is on some level what really drove Apple as an innovative company in the last decade… What was new about the iPhone? There was no single component that was new. It was just that you put all of these things together in just the right way… and once you built it, it was actually super hard for people to replicate. You had an advantage for many years.”
He points to Tesla and SpaceX as more recent examples.
“There’s no component to the Tesla that’s actually that new. It’s just that you put all of the pieces together. You re-engineered the whole distributor network. It was this complex coordination that made it work. There’s like this lost art of accounting where you figure out how much things cost and add them all together. And Elon has discovered this lost art of accounting which no other people practice.”
Video source: @GA (2015)
tweet
Peter Thiel on the type of company more startup founders should build
Thiel first emphasizes his belief that when starting a company, you should always ask:
“Can this company become a monopoly?”
He then lists three of the most common types of monopolies:
1. Super fast distribution on a very thin product (e.g. Twitter)
2. A technological advantage that is continually built upon with iterative improvement and compounds over time (e.g. SaaS software)
3. A truly brilliant breakthrough (e.g. Bitcoin)
But he argues that there’s a different monopoly category that’s continually overlooked:
“A different modality for innovation that we do very little of and we don’t even recognize as an important category is what I would describe as ‘Complex Coordination,’ where you take a lot of different pieces and the challenge is to coordinate them into something new.”
Thiel continues:
“This is the thing that’s maybe 180 degrees antithetical to the Lean Startup ethos. It’s complicated. You have to put all the pieces together in just the right way. I think this is on some level what really drove Apple as an innovative company in the last decade… What was new about the iPhone? There was no single component that was new. It was just that you put all of these things together in just the right way… and once you built it, it was actually super hard for people to replicate. You had an advantage for many years.”
He points to Tesla and SpaceX as more recent examples.
“There’s no component to the Tesla that’s actually that new. It’s just that you put all of the pieces together. You re-engineered the whole distributor network. It was this complex coordination that made it work. There’s like this lost art of accounting where you figure out how much things cost and add them all together. And Elon has discovered this lost art of accounting which no other people practice.”
Video source: @GA (2015)
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Offshore
Photo
Stock Analysis Compilation
Miller Value on Gannett $GCI US
Thesis: Gannett’s digital transformation, legal upside potential, and deep undervaluation offer a compelling opportunity for substantial re-rating and market cap growth.
(Extract from their Q3 letter) https://t.co/RLEXCaKsUQ
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Miller Value on Gannett $GCI US
Thesis: Gannett’s digital transformation, legal upside potential, and deep undervaluation offer a compelling opportunity for substantial re-rating and market cap growth.
(Extract from their Q3 letter) https://t.co/RLEXCaKsUQ
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