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Aristotle Core Equity on CrowdStrike Holdings $CRWD US

Thesis: CrowdStrike Holdings is well-positioned for substantial growth in the cloud cybersecurity market due to its innovative products, early-mover advantage, and strong customer retention in the face of increasing cyber threats.

(Extract from their Q4 letter)
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⁠Value Spotlight (Andrew Sather)
Palantir's insane ROIC (Tutorial)

$PLTR https://t.co/WBEcpfj3oA
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⁠Stock Analysis Compilation
Aristotle International Equity on Cameco $CCO CN

Thesis: Cameco is well-positioned to benefit from the robust demand for nuclear energy, supported by its tier-one assets, strategic contracts, and increasing production outlook.

(Extract from their Q4 letter) https://t.co/tYYVjFNv1Q
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⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: 10 months ago I shared my analysis on $MANH suggesting it was overvalued at $257💵

I suggested revisiting the stock at $179💵

Despite a strong run, $MANH just plummeted -23% post-Q4 earnings 📉

As I stated in my analysis:

“As you can see, we’d have to assume well above a 60x multiple in order for $MANH to have attractive return potential

While this could happen, this assumption leaves us with no margin of safety, especially considering that the multiple does not appear to be justified by the growth rate

In fact, in the last 10 years, $MANH multiple expanded by ~84% — implying that multiple expansion has contributed heavily to its returns

While $MANH is a quality business that I hope to own at some point, I don’t consider it anywhere near the buy zone today at $257.50💵

Instead, I’d start to get interested (*interested*) closer to 50x earnings or at $179💵 — 30% below today’s price”

#stocks #investing

A sober valuation analysis on $MANH 🧘🏽‍♂️

•NTM P/E Ratio: 70.66x
•5-Year Mean: 61.90x

•NTM FCF Yield: 1.63%
•5-Year Mean: 2.11%

As you can see, $MANH appears to be trading above fair value

Going forward, investors can receive ~12% LESS in earnings per share & ~23% LESS in FCF per share 🧠***

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

BALANCE SHEET✅
•Cash & Total Inv: $270.74M
•Long-Term Debt: $0

$MANH has a strong balance sheet

RETURN ON CAPITAL✅
•2018: 91.0%
•2019: 66.3%
•2020: 46.2%
•2021: 49.1%
•2022: 63.4%
•2023: 69.4%

RETURN ON EQUITY✅
•2018: 65.0%
•2019: 59.3%
•2020: 48.3%
•2021: 47.1%
•2022: 54.0%
•2023: 69.9%

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

REVENUES✅
•2013: $414.52M
•2023: $928.73M
•CAGR: 8.40%

FREE CASH FLOW✅
•2013: $84.65M
•2023: $241.49M
•CAGR: 11.05%

NORMALIZED EPS✅
•2013: $0.92
•2023: $3.74
•CAGR: 15.05%

SHARE BUYBACKS✅
•2014 Shares Outstanding: 75.84M
•LTM Shares Outstanding: 62.61M

By reducing its shares outstanding ~17.4%, $MANH increased its EPS by ~21.0% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 53.6%
•LTM Operating Margins: 22.6%
•LTM Net Income Margins: 19.0%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~12% LESS in EPS & ~23% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $MANH has to grow earnings at a 35.33% 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 (35.33%) required growth rate:

2024E: $3.77 (0.7% YoY) *FY Dec
2025E: $4.36 (15.9% YoY)
2026E: $5.08 (16.4% YoY)

$MANH has a solid track record of meeting analyst estimates ~2 years out, but let’s assume $MANH ends 2026 with $5.08 in EPS & see its CAGR potential assuming different multiples

60x P/E: $304.80💵 … ~6.1% CAGR

57x P/E: $289.56💵 … ~4.2% CAGR

54x P/E: $274.32💵 … ~2.2% CAGR

As you can see, we’d have to assume well above a 60x multiple in order for $MANH to have attractive return potential

While this could happen, this assumption leaves us with no margin of safety, especially considering that the multiple does not appear to be justified by the growth rate

In fact, in the last 10 years, $MANH multiple expanded by ~84% — implying that multiple expansion has contributed heavily to its returns

While $MANH is a quality business that I hope to own at some point, I don’t consider it anywhere near the buy zone today at $257.50💵

Instead, I’d start to get interested (*interested*) closer to 50x earnings or at $179💵 — 30% below today’s price

#stocks #investing
___

𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢[...]

𝐜𝐞. 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. - Dimitry Nakhla | Babylon Capital® tweet

⁠Dimitry Nakhla | Babylon Capital®
After properly assessing the company’s overvaluation, here’s a brief update on $MANH

Using 2027 EPS estimate of $5.85:

45x P/E: $263.25💵 … ~14.5% CAGR

40x P/E: $234.00💵 … ~7.9% CAGR

35x P/E: $204.75💵 … ~1.0% CAGR

I’d have to assume >40x given today’s estimates which leaves me with no margin of safety

While it is an excellent business, I’d likely get more interested in $MANH closer to $170💵 where I could reasonably expect double-digit CAGR while assuming a 35x multiple

10 months ago I shared my analysis on $MANH suggesting it was overvalued at $257💵

I suggested revisiting the stock at $179💵

Despite a strong run, $MANH just plummeted -23% post-Q4 earnings 📉

As I stated in my analysis:

“As you can see, we’d have to assume well above a 60x multiple in order for $MANH to have attractive return potential

While this could happen, this assumption leaves us with no margin of safety, especially considering that the multiple does not appear to be justified by the growth rate

In fact, in the last 10 years, $MANH multiple expanded by ~84% — implying that multiple expansion has contributed heavily to its returns

While $MANH is a quality business that I hope to own at some point, I don’t consider it anywhere near the buy zone today at $257.50💵

Instead, I’d start to get interested (*interested*) closer to 50x earnings or at $179💵 — 30% below today’s price”

#stocks #investing - Dimitry Nakhla | Babylon Capital®
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