⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A quality valuation analysis on $TMO 🧘🏽‍♂️

•NTM P/E Ratio: 22.83x
•5-Year Mean: 24.89x

•NTM FCF Yield: 3.89%
•5-Year Mean: 3.61%

As you can see, $TMO appears to be trading slightly below fair value

Going forward, investors can receive ~9% MORE in earnings per share & ~8% MORE in FCF per share 🧠***

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

BALANCE SHEET🆗
•Cash & Short-Term Inv: $5.57B
•Long-Term Debt: $29.06B

$TMO has a good balance sheet (acquisitions a big growth driver), a A- S&P Credit Rating & 6x FFO Interest Coverage

RETURN ON CAPITAL✅*
•2019: 8.3%
•2020: 13.4%
•2021: 12.8%
•2022: 10.3%
•2023: 8.7%
•2024: 9.6%

*lower ROIC due to acquisition strategy

RETURN ON EQUITY✅
•2019: 12.9%
•2020: 19.9%
•2021: 20.5%
•2022: 16.4%
•2023: 13.1%
•2024: 13.1%

$TMO has strong return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2014: $16.89B
•2024: $42.88B
•CAGR: 9.76%

FREE CASH FLOW✅
•2014: $2.19B
•2024: $7.27B
•CAGR: 12.74%

NORMALIZED EPS✅
•2014: $6.96
•2024: $21.86
•CAGR: 12.12%

SHARE BUYBACKS🆗
•2014 Shares Outstanding: 402.30M
•LTM Shares Outstanding: 384.25M

MARGINS✅
•LTM Gross Margins: 42.2%
•LTM Operating Margins: 18.1%
•LTM Net Income Margins: 14.8%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~9% MORE in EPS & ~8% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $TMO has to grow earnings at an 11.42% 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 less than the (11.42%) required growth rate:

2025E: $23.33 (6.7% YoY) *FY Dec
2026E: $25.82 (10.7% YoY)
2027E: $29.11 (12.7% YoY)

$TMO has an excellent track record of meeting analyst estimates ~2 years out, but let’s assume $TMO ends 2027 with $29.11 in EPS & see its CAGR potential assuming different multiples

26x P/E: $756.86💵 … ~13.2% CAGR

25x P/E: $727.75💵 … ~11.7% CAGR

24x P/E: $698.64💵 … ~10.2% CAGR

23x P/E: $669.53💵 … ~8.5% CAGR

As you can see, $TMO appears to have attractive return potential IF we assume >25x earnings and decent return potential at 24x

Also, $TMO maintains strong support ~20x earnings (roughly 12.4% below today’s price)

$TMO is an excellent business with a wide moat & will benefit from future ongoing sector demand (AI tailwinds in scientific research), especially their next-gen sequencing machines & chromatography machines

Those buying $TMO today at $532💵 are buying it for a good price, with some margin of safety

I consider $TMO a strong purchase at $500💵 (6% below today’s price) where I can reasonably expect ~11% to ~12% CAGR while assuming a 23x - 24x end multiple, ensuring a comfortable margin of safety

#stocks #investing
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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, 𝐛𝐮�[...]

� 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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⁠Stock Analysis Compilation
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Thesis: Edgewise Therapeutics, Inc. is developing innovative drugs for muscle disorders, including sevasetment for Becker’s and Duchenne muscular dystrophies, and EDG-7500 for hypertrophic cardiomyopathy, showing promising early efficacy and potential market impact.

(Extract from their Q4 letter)
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⁠Finding Compounders
Reinvestment and ROIC are the compliments of new value creation https://t.co/KTknJBjfMp
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$BRK Berkshire's stock portfolio end of 2024. https://t.co/QF1EeuJSO1
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⁠Quiver Quantitative
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A director of $JBHT has just reported purchasing $10M of the company's stock, increasing his ownership stake by 110%.

This is the first insider purchase we have seen him report in over 4 years.
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⁠Quiver Quantitative
RT @InsiderRadar: $JBLU stock is up 13% so far today, and now up over 22% since this insider purchase from two weeks ago https://t.co/tU0h8kt0kb

🚨BREAKING: New Insider Purchase

A director of $JBLU has just reported purchasing $614K of the company's stock, increasing his ownership stake by 608%.

This is the first insider purchase we have seen at the company in over 3 years. - Insider Radar
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⁠Hidden Value Gems
RT @HiddenValueGems: Stock screens can occasionally bring up some interesting ideas. Here is what I got with the following parameters:

1⃣ Sales 10Y CAGR > 5%
2⃣ EPS 5Y CAGR>10%
3⃣ ROE>20%
4⃣ ROA>5%
5⃣ PE<20

scroll below for some extra charts 🧵👇

1/3 https://t.co/ldwvgdrclt
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🚨BREAKING: New Insider Purchase

A director of $ARDX, a biotech company, has just reported purchasing $1M of the company's stock.

This is the 3rd insider purchase we have seen him report in the last two months, each for $1M. - Insider Radar
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