⁠Investing visuals
$AMD Q1 Earnings 🚨

• Revenue $7.4B vs $7.2B Est.
• EPS $0.96 vs. $0.93 Est.
• Data center revenue $3.7B vs $3.52B Est.

Q2 Outlook: $7.10B-$7.70 vs $7.24B Est.
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⁠Wall St Engine
INDIA 🇮🇳 GOVT: "OUR ACTIONS HAVE BEEN FOCUSED, MEASURED AND NON-ESCALATORY IN NATURE"

THE INDIAN ARMED FORCES LAUNCHED ‘OPERATION SINDOOR’, HITTING TERRORIST INFRASTRUCTURE IN PAKISTAN AND PAKISTAN-OCCUPIED JAMMU AND KASHMIR -STATEMENT

NO PAKISTANI MILITARY FACILITIES HAVE BEEN TARGETED-STATEMENT - Wall St Engine
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⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A quality valuation analysis on $ANET 🧘🏽‍♂️

•NTM P/E Ratio: 32.74x
•10-Year Mean: 31.71x

•NTM FCF Yield: 3.13%
•10-Year Mean: 3.42%

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

Going forward, investors can expect to receive ~3% LESS in earnings per share & ~8% LESS in FCF per share🧠***

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

BALANCE SHEET✅
•Cash & Equivalents: $8.30B
•Long-Term Debt: $0

$ANET has an excellent balance sheet

RETURN ON CAPITAL✅
•2019: 24.8%
•2020: 19.3%
•2021: 22.1%
•2022: 30.9%
•2023: 31.0%
•2024: 29.3%

RETURN ON EQUITY✅
•2019: 34.1%
•2020: 20.4%
•2021: 23.0%
•2022: 30.5%
•2023: 34.5%
•2024: 33.1%

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

REVENUES✅
•2019: $2.41B
•2024: $7.00B
•CAGR: 23.77%

FREE CASH FLOW✅
•2019: $0.95B
•2024: $3.68B
•CAGR: 31.10%

NORMALIZED EPS✅
•2019: $0.61
•2024: $2.27
•CAGR: 30.05%

SHARE BUYBACKS🆗
•2019 Shares Outstanding: 1.29B
•LTM Shares Outstanding: 1.28B

MARGINS✅
•LTM Gross Margins: 64.1%
•LTM Operating Margins: 42.0%
•LTM Net Income Margins: 40.7%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~3% LESS in EPS & ~8% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $ANET has to grow earnings at a 16.37% 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 (16.37%) required growth rate:

2025E: $2.49 (9.9% YoY) *FY Dec
2026E: $2.96 (18.7% YoY)
2027E: $3.61 (22.0% YoY)

$ANET has a great track record of meeting analyst estimates ~2 years out, but let’s assume $ANET ends 2027 with $3.61 in EPS & see its CAGR potential assuming different multiples

32x P/E: $115.52💵 … ~14.2% CAGR

30x P/E: $108.30💵 … ~11.6% CAGR

29x P/E: $101.08💵 … ~8.8% CAGR

28x P/E: $93.86💵 … ~6.0% CAGR

As you can see, we’d have to assume >30x multiple for $ANET to have attractive return potential

At 29x earnings $ANET has decent CAGR potential

However, we must be aware of the risk that if data center demand cools, we could see downward revisions in already aggressive growth estimates that could lead to a 10% - 15% multiple contraction

While $ANET is an excellent business, it may not have the same level of predictability as other quality compounders, so we should require a greater margin of safety

If I want to own $ANET, I’d likely consider buying in tranches, 1/3 at $80, 1/3 at $70 & 1/3 at $60
___

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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⁠Wall St Engine
$CPNG | Coupang Q1'25 Earnings Highlights

🔹 Revenue: $7.90B (Est: $8.06B) 🔴
🔹 Gross Profit: $2.30B (Gross Margin: 29.3%)
🔹 Adj EBITDA: $382M (Est: $373.7M) 🟢
🔹 Net Income: $114M (Est: $87.6M) 🟢
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⁠Wall St Engine
$LCID | Lucid Q1'25 Earnings Highlights

🔹 Revenue: $235M (Est: $246.0M) 🔴
🔹 EPS: ($0.20) (Est: -$0.23) 🟢
🔹 Net Loss: $366.2M (Est: -$719.2M) 🟢
🔹 Operating Loss: $691.9M (Est: -$683.7M) 🔴

Operational Metrics
🔹 Vehicles Produced: 2,212 (excludes 600+ units in transit to KSA)
🔹 Vehicles Delivered: 3,109 (+58% YoY)
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⁠Wall St Engine
LUCID $LCID MIGHT START PRODUCTION OF MIDSIZE VEHICLE IN SAUDI ARABIA INSTEAD OF US GIVEN TARIFF IMPACT; PLANS NOT FINAL - INTERIM CEO
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⁠Wall St Engine
INDIA 🇮🇳 SAYS CARRIED OUT STRIKE AT TERRORIST CAMPS IN PAKISTAN
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⁠Dimitry Nakhla | Babylon Capital®
Pepsi’s $PEP FCF | Dividends Paid🥤

2017: $7.06B | $4.47B (63%)
2018: $6.13B | $4.93B
2019: $5.42B | $5.30B
2020: $6.37B | $5.51B
2021: $6.99B | $5.82B
2022: $5.60B | $6.17B
2023: $7.92B | $6.68B
2024: $7.19B | $7.23B (101%)

Dividends as a % of FCF, not what you want to see 🔔
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⁠App Economy Insights
$AMD AMD Q1 FY25:

• Revenue +36% Y/Y to $7.4B ($320M beat).
• Gross margin 50% (+3pp Y/Y).
• Operating margin 11% (+10pp Y/Y).
• Non-GAAP EPS $0.96 ($0.03).
• Q2 rev. guidance ~$7.4B ($0.2B beat).

Dr. Lisa Su: "Our second quarter outlook highlights the strength of our differentiated product portfolio and consistent execution, positioning us well for strong growth in 2025."
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⁠Wall St Engine
Reports from Samaa TV say Pakistan has launched retaliatory strikes following India’s earlier action. Heavy artillery fire underway along the LoC in Poonch-Rajauri, Mendhar, and Bhimber Gali. Indian forces are reportedly responding. Situation developing.
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⁠Wall St Engine
RIVIAN $RIVN CFO SAYS WE HAVE ENOUGH CELLS IN THE U.S. FOR PRODUCTION THROUGH 2025 AND INTO EARLY 2026
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⁠Wall St Engine
TRUMP REACTS TO INDIA'S ATTACK ON PAKISTAN: IT’S A SHAME, WE JUST HEARD ABOUT INDIA STRIKES AGAINST PAKISTAN... I HOPE IT ENDS VERY QUICKLY
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⁠Wall St Engine
TRUMP: EARTH-SHATTERING AND POSITIVE ANNOUNCEMENT TO COME IN THE NEXT FEW DAYS
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⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: “There are 60,000 economists in the US, many of them employed full-time, trying to forecast recessions and interest rates. If they could do it successfully twice in a row, they’d all be millionaires by now. As far as I know, most of them are still gainfully employed, which ought to tell us something”

— Peter Lynch 🗣️
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