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

•NTM P/E Ratio: 22.41x
•5-Year Mean: 25.26x

•NTM FCF Yield: 3.04%
•5-Year Mean: 3.39%

As you can see, $META appears to be trading near fair value

Going forward, investors can expect to receive ~12% MORE in earnings per share & ~10% LESS in FCF per share🧠***

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

BALANCE SHEET✅
•Cash & Equivalents: $77.82B
•Long-Term Debt: $28.83B

$META has an excellent balance sheet, an AA- S&P Credit Rating & 127x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2020: 23.5%
•2021: 33.7%
•2022: 22.0%
•2023: 25.7%
•2024: 29.4%

RETURN ON EQUITY✅
•2020: 25.4%
•2021: 31.1%
•2022: 18.5%
•2023: 28.0%
•2024: 37.1%

$META has great return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2019: $70.70B
•2024: $164.50B
•CAGR: 18.39%

FREE CASH FLOW✅
•2019: $21.21B
•2024: $54.07B
•CAGR: 20.58%

NORMALIZED EPS✅
•2019: $8.56
•2024: $23.86
•CAGR: 22.75%

SHARE BUYBACKS✅
•2019 Shares Outstanding: 2.88B
•LTM Shares Outstanding: 2.61B

By reducing its shares outstanding ~9%, $META increased its EPS by ~10% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 81.7%
•LTM Operating Margins: 41.5%
•LTM Net Income Margins: 37.9%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~12% MORE in EPS & ~10% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $META has to grow earnings at an 11.22% 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 greater than the (11.22%) required growth rate:

2025E: $24.75 (3.7% YoY) *FY Dec
2026E: $28.36 (14.6% YoY)
2027E: $32.96 (16.2% YoY)

$META has a decent track record of meeting analyst estimates ~2 years out, so let’s assume $META ends 2027 with $32.96 in EPS & see its CAGR potential assuming different multiples

24x P/E: $791.04💵 … ~15.7% CAGR

23x P/E: $758.08💵 … ~13.9% CAGR

22x P/E: $725.12💵 … ~12.0% CAGR

21x P/E: $692.16💵 … ~10.1% CAGR

20x P/E: $659.20💵 … ~8.1% CAGR

As you can see, $META appears to have double-digit CAGR potential if we assume >22x earnings, a multiple below its 5-year average (25.26x) and a multiple that’s justified given its growth rate, balance sheet, visionary CEO & investments in AI & LLMs

As I’ve mentioned before: “… the increased investment in future growth and necessary Al development, which has the potential to lead to better growth prospects, should be viewed with a bullish tone rather than a bearish one” — (which can lead to a sustainable re-rating over the next few years)

Today at $540💵 $META appears to be slightly undervalued, those buying today have a small margin of safety and will not need to rely on margin expansion

I consider $META a great buy ~$500💵, offering ~11% CAGR assuming a conservative 20x 2027 EPS est

#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 𝐢[...]

𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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⁠App Economy Insights
$AMZN Amazon's quarter:

☁️ AI drives triple-digit growth.
🚢 Tariffs and politics stir the pot.
🛰️ Kuiper launches but hits margins.

Let's visualize the numbers. 👇
https://t.co/LhzMvLKzbx
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⁠Wall St Engine
🇨🇦 CARNEY, TRUMP SET TO MEET AT WHITE HOUSE ON TUESDAY
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⁠Investing visuals
I’ve decided to make more content public, previously only available to X-subs.

I don’t want to gate anything that could help followers make better investing decisions.

If you’d like to support my work, feel free to become a sub, that’s why most others have joined so far: https://t.co/gscnB9Aa3P
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⁠Wall St Engine
S&P 500 Opening Bell Heatmap (May 02, 2025)

$SPY +1.05% 🟩
$QQQ +0.93% 🟩
$DJI +1.04% 🟩
$IWM +1.24% 🟩
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⁠Wall St Engine
OPEC+ BRING FORWARDS CALL TO DISCUSS JUNE OUTPUT PLANS TO MAY 3RD FROM MAY 5TH
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⁠Wall St Engine
FACTORY ORDERS 4.3%, EST. 4.5%
FACTORY ORDERS EX TRANS -0.2%, EST. 0.3%
US DURABLE GOODS REVISED ACTUAL 9.2%, EST 9.2%
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⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: Less than 2 months ago I highlighted that $BKNG stock “finally reached my $4,300 price target”

Since then, $BKNG has surged +19%✅

You can find the original valuation analysis in the post attached below👇🏽 https://t.co/xNeY3JwcYt

$BKNG stock finally reached my $4,300 price target & bounced +4% 💸

While this is nice in the short-term, I’d much prefer $BKNG to trade in my accumulation range a bit longer so I can continue adding to the position

As I stated a couple months ago:

“I’d consider $BKNG a great purchase closer to $4300 (~18.50x multiple) roughly 7% below today’s share price or closer to 21x NTM estimates

This is where I can reasonably expect ~10.50% CAGR assuming a more conservative 20x 2027 earnings estimates, ensuring a substantial margin of safety & leaving room for potential multiple expansion” - Dimitry Nakhla | Babylon Capital®
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⁠Wall St Engine
Trump's fiscal year 2026 budget would increase defense spending by 13%; Trump's budget would increase Homeland Security Spending by 65% - Punchbowl.
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⁠Wall St Engine
HERE’S WHAT ANALYSTS HAVE TO SAY AFTER $AAPL Q2 EARNINGS:

Jefferies (Underperform, PT: $170.62)
"Apple reported 5%/5%/8% rev/NP/EPS growth for 2QFY25, in line with cons and above JEFe. Mgt indicated limited pull in for the Mar Q, but guided only LSD-MSD rev growth and US$900m tariff impact in the next Q. [...] Product GM is already under pressure, down 0.7ppt YoY. We believe tariff impact will expand over time to create more earnings downside. D/G to Underperform."

Rosenblatt (Neutral, PT: $217)
"The F2Q25 quarter just reported highlights a company with amazing supply chain skill, and better demand for iPhones than many had feared. Still, for this stock to really work there needs to be an AI driven sharp acceleration in iPhone sales. And as time has gone on the argument for that seems to be fading. We're left with a well-run company, with OK-muted growth, a need for an exciting new product to reinvigorate growth trading at a premium multiple, in a choppy tariff and regulatory environment."

DA Davidson (Buy, PT: $250)
"We reiterate our BUY rating and raise our price target from $230 to $250 on AAPL following solid 2Q25 earnings that were largely underscored by accelerating iPhone growth despite weaker than expected sales in Greater China. [...] Additionally, this quarter, AAPL's board of directors authorized a share buyback program of $100B."

Morgan Stanley (Overweight, PT: $235)
"Mgmt's underlying commentary was better than expected, including (1) double digit Y/Y growth in iPhone upgraders, (2) China revenue flat Y/Y in CC, (3) Apple had the top 2 selling smartphones in Urban China, and (4) no demand or channel pull-forward in the March quarter, and none assumed in June quarter guidance. [...] SE Asia production diversification is working. [...] Mgmt wasn't able to provide any segment-level guidance for the June Q (not even Services) [...] and didn’t provide an updated timeline for the new Siri introduction."

BofA Securities (Buy, PT: $240)
"Apple intends to comply with the court order but also intends to appeal. [...] We size the potential impact from the [App Store] ruling to the company below. Maintain Buy on earnings resiliency and gross margin upside with optionality to address new markets over time."

Loop Capital (Hold, PT: $215)
"We are reducing our PT to $215 from $230 and updating our AAPL estimates given fresh iPhone build updates [...] While we remain Hold rated, we note below that ironically there is a world where AAPL’s actions provide a much-needed bridge into the iPhone 17 launch (and iPhone 18), which demand and investor 'enthusiasm' willing the stock could find support tariffs notwithstanding."

Barclays (Underweight, PT: $173)
"We are lowering Sep-Q and FY26 unit estimates for iPhones due to demand slowdown, potentially price hikes and Siri delay, pushing out AI Intelligence adoption. [...] We are also taking down C2H25 unit estimates for wearables and AirPods as they are more economically sensitive."

Raymond James (Outperform, PT: $230)
"We believe Apple has enough manufacturing capacity outside China to address about half of U.S. iPhone demand [...] Our model assumes 15% blended tariff rate on all imports [...] We expect the stock to remain volatile in the near term on tariff news flow but view any pullback as an opportunity to add to positions."

JPMorgan (Overweight, PT: $245)
"We are positive on AAPL shares [...] expect modest pull-forward in demand, partly driven by consumer upgrades and partly by channel inventory fill ahead of potential price raises [...] While understandably there are already expectations for pull-forwards to challenge calendar 2H 2025 demand, we think [...] we still see a path to our $245 price target."

Citi (Buy, PT: $240)
"Apple posted a 3c beat on the Mar-Q on better iPhone sa[...]

les +2% Y/Y, in-line services +12% Y/Y, and in-line 47.1% GM. Greater China sales stabilized -2% Y/Y (flat ex-FX) improving from -11% Y/Y in the Dec-Q led by iPhones stimulated by China subsidies. Jun-Q guide of LSD-MSD Y/Y total sales growth vs Street ~4% on lower 46% GM% due to $900M tariff cost impact implies EPS ~4c below Street. The company raised dividend by 4% and authorized an additional $100Bn share repurchase program. We adjust our FY25/26/27 EPS -7c/-5c/-11c due to tariffs and lower TP to $240 on consistent 28x P/E on revised FY27 EPS of $8.60. Net-net, Apple’s fundamentals remain intact, and the company delivered decent results/guide in a tough tariff environment. Maintain Buy on valuation as stock screens defensive on P/FCF and ROIC vs Mag 7."
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