⁠Dimitry Nakhla | Babylon Capital®
Bill Ackman with a new position in $AMZN

$AMZN compelling valuation, even at ~$200, offers a strong margin of safety, making it a great investment opportunity 📦

A quality valuation analysis on $AMZN 🧘🏽‍♂️

•NTM P/OCF Ratio: 13.55x
•5-Year Mean: 22.10x

•NTM FCF Yield: 2.60%
•5-Year Mean: 2.69%

As you can see, $AMZN appears to be slightly undervalued using P/OCF

Going forward, investors can expect to receive ~63% MORE in operating cash flow & ~3% LESS in FCF per share🧠***

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

BALANCE SHEET✅
•Cash & Equivalents: $101.20B
•Long-Term Debt: $59.72B

$AMZN has an excellent balance sheet, an AA S&P Credit Rating & 48x FFO Interest Coverage Ratio

RETURN ON CAPITAL🆗 / ✅
•2020: 11.6%
•2021: 8.9%
•2022: 4.2%
•2023: 10.1%
•2024: 15.5%

RETURN ON EQUITY✅
•2020: 27.4%
•2021: 28.8%
•2022: (1.9%)
•2023: 17.5%
•2024: 24.3%

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

REVENUES✅
•2019: $280.52B
•2024: $637.96B
•CAGR: 17.85%

FREE CASH FLOW✅
•2019: $21.65B
•2024: $38.22B
•CAGR: 12.03%

NORMALIZED EPS✅
•2019: $1.15
•2024: $5.53
•CAGR: 36.90%

SHARE BUYBACKS❌
•2019 Shares Outstanding: 10.08B
•LTM Shares Outstanding: 10.72B

MARGINS🆗➡️✅
•LTM Gross Margins: 48.9%
•LTM Operating Margins: 10.8%
•LTM Net Income Margins: 9.3%

*Important for $AMZN to continue expanding margins & increase profitability

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~63% MORE in OCF & ~3% LESS in FCF per share

We’re using P/OCF instead of P/E. Historical data reveals a stronger correlation between AMZN's share price and Operating Cash Flow (OCF)

Today, analysts anticipate aggressive OCF (per share) growth between 2025 - 2027:

2025E: $13.65 (26% YoY) *FY Dec
2026E: $16.77 (23% YoY)
2027E: $19.75 (18% YoY)

$AMZN has a decent track record of meeting analyst estimates ~2 years out, so let’s assume $AMZN ends 2027 with $19.75 in OCF per share & see its CAGR potential assuming different multiples (photos attached below also include these CAGR estimates):

16x P/OCF: $315.898💵 … ~21.7% CAGR

15x P/OCF: $296.23💵 … ~18.9% CAGR

14x P/OCF: $276.48💵 … ~15.9% CAGR

13x P/OCF: $256.73💵 … ~12.8% CAGR

12x P/OCF: $236.98💵 … ~9.6% CAGR

As you can see, $AMZN appears to have great double-digit CAGR potential if we assume ~13x P/OCF, a multiple less than what it’s trading for today (a multiple it hasn’t traded for since 2008/2009) & a multiple that’s justified given its growth rate

Also by assuming a substantial amount of multiple compression, we leave ourselves with some margin of safety

Also check out $AMZN FCF growth estimates 📈

2025E: $50.92B (33% YoY)
2026E: $74.87B (47% YoY)
2027E: $106.84B (42% YoY)

AWS & Amazon Ads will continue to drive growth & profitability. In $AMZN FY 2024:

☁️AWS revenue: $107.55B
📈Ads revenue: $56.21B

Combined, these segments generated $163.76B net revenue … with ~37% Operating Income Margin

Today at $185💵 $AMZN appears to be a strong consideration for investment

#stocks #investing

Data: TIKR
Graphs: FAST Graphs
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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 𝐧𝐞𝐞𝐝�[...]

� 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

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⁠Quiver Quantitative
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⁠Wall St Engine
S&P 500 Closing Bell Heatmap (May 22, 2025)

$SPY +0.04% 🟩
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$DJI unch ⬜
$IWM +0.02% 🟩

S&P 500 Opening Bell Heatmap (May 22, 2025)

$SPY flat ⬜
$QQQ +0.19% 🟩
$DJI -0.19% 🟥
$IWM -0.42% 🟥 - Wall St Engine
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⁠Wall St Engine
$WDAY | Workday Q1 Earnings Highlights

🔹 Revenue: $2.24B (Est. $2.218B) 🟢; +12.6% YoY
🔹 Adj EPS: $2.23 (Est. $2.01) 🟢; +28.2% YoY

FY Guidance (Reiterates):
🔹 Subscription Revenue: $8.8B; +14.0% YoY
🔹 Adj Operating Margin: 28.5%

Q2 Guidance:
🔹 Subscription Revenue: $2.16B; +13.5% YoY
🔹 Adjusted Operating Margin: 28.0%

Other Key Q1 Metrics:
🔹 Adj Operating Income: $677M (Est. $625.1M) 🟢
🔹 Subscription Revenue: $2.059B; +13.4% YoY
🔹 12-Month Subscription Revenue Backlog: $7.63B; +15.6% YoY
🔹 Total Subscription Revenue Backlog: $24.62B; +19.1% YoY

Cash Flow & Capital Return:
🔹 Operating Cash Flow: $457M (vs. $372M YoY)
🔹 Free Cash Flow: $421M (vs. $291M YoY)
🔹 Cash & Equivalents: $7.97B
🔹 Share Repurchase: 1.3M shares for $293M
🔹 New $1B Share Repurchase Program Announced

🔸 CEO Carl Eschenbach Commentary:
"Solid execution reflects the strength of our AI-driven platform as enterprises turn to Workday to manage people and finance with efficiency and agility."

🔸 CFO Zane Rowe Commentary:
"We’re reiterating our $8.8B subscription revenue target and raising our full-year margin outlook to 28.5%, driven by continued operational efficiency."
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⁠Wall St Engine
$INTU | Intuit Q3 Earnings Highlights

🔹 Revenue: $7.88B (Est. $7.56B) 🟢; +15% YoY
🔹 Adj EPS: $11.65 (Est. $10.96) 🟢; +18% YoY
🔹 Adj OI: $4.34B (Est. $4.10B) 🟢; +17% YoY

FY Guidance (Raised):
🔹 Revenue: $18.72B–$18.76B (Prev. $18.16B–$18.35B); +15% YoY
🔹 Adjusted EPS: $20.07–$20.12 (Prev. $19.16–$19.36) 🟢
🔹 Adjusted Operating Income: $7.54B–$7.56B (Est. $7.32B) 🟢

Q4 Guidance:
🔹 Revenue: $3.72B–$3.76B (Est. $3.53B) 🟢
🔹 Adjusted EPS: $2.63–$2.68 (Est. $2.59) 🟢
🔹 GAAP EPS: $0.84–$0.89
🔹 Online Ecosystem Revenue Growth: +21% YoY

Segment Performance:
🔹 Consumer Group Revenue: $4.0B; +11% YoY
🔹 Global Business Solutions Group Revenue: $2.8B; +19% YoY
🔹 Online Ecosystem Revenue: $2.1B; +20% YoY
🔹 Credit Karma Revenue: $579M; +31% YoY
🔹 ProTax Group Revenue: $278M; +9% YoY

Capital Allocation & Balance Sheet:
🔹 Share Repurchase: $754M in Q3
🔹 Dividend: $1.04/share (Payable July 18); +16% YoY
🔹 Cash & Investments: $6.2B
🔹 Total Debt: $6.4B

🔸 CEO Sasan Goodarzi Commentary:
“We're redefining what's possible with AI by becoming a one-stop shop of AI-agents and AI-enabled human experts, fueling success for both consumers and SMBs.”

🔸 CFO Sandeep Aujla Commentary:
“Our strength across the platform led us to raise full-year guidance across all company metrics for FY25.”
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⁠Dimitry Nakhla | Babylon Capital®
Intuit $INTU Reports a Strong Q3 🎯

✅ Rev: $7.75B vs $7.56B (est) | +15% YoY

✅ EPS: $11.65 vs $10.91 (est) | +18% YoY
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Revenue Breakdown 📊

Small Business: $2.8B, +19% YoY
Consumer Group: $4.0B, +11% YoY
Pro Tax: $278M, +9% YoY
Credit Karma: $579M, +31% YoY

Guidance ⬆️ https://t.co/TLN9ZUcAOZ

Intuit $INTU Q3 2025 Preview 🗓️

Rev est: $7.56B (+12.2% YoY)
EPS est: $10.91 (+10.4% YoY)
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In Q3 2024 👇🏽

💵Rev: $6.74B
💰EPS: $9.88

Revenue Breakdown 📊
Small Business: $2.4B (+18% YoY)
Consumer Group: $3.7B (+9% YoY)
Pro Tax: $254M (+3% YoY)
Credit Karma: $443M (+8% YoY) - Dimitry Nakhla | Babylon Capital®
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⁠Wall St Engine
$ROST | Ross Stores Q1 Earnings Highlights

🔹 Revenue: $4.98B (Est. $4.96B) 🟢; Flat YoY
🔹 Adj EPS: $1.47 (Est. $1.43) 🟢; +0.7% YoY
🔹 Net Income: $479.2M (Est. $470.1M) 🟢; -1.8% YoY
🔸 Wthdrew full-year sales and earnings guidance due to uncertainty from elevated China tariffs & macro volatility.

Q2 Guidance:
🔹 EPS: $1.40–$1.55 (Est. $1.64) 🔴
🔹 Comparable Sales: Flat to +3% (vs. +4% YoY in Q2 FY24)
🔸 Includes $0.11–$0.16 EPS impact from new China tariffs

Capital Returns:
🔹 Share Repurchase: 2.0M shares for $263M in Q1
🔹 FY25 Buyback Target: $1.05B (on track under $2.1B authorization)

CEO Jim Conroy Commentary:
🔸 “Monthly sales improved sharply through Q1, with earnings landing at the high end of expectations.”
🔸 “While we import little directly, over 50% of our merchandise originates from China. Elevated tariffs could pressure profitability.”
🔸 “Due to policy volatility, we are withdrawing full-year guidance and focusing on controllable execution amid macro uncertainty.”
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⁠Wall St Engine
$ADSK | Autodesk Q1 Earnings Highlights

🔹 Revenue: $1.63B (Est. $1.61B) 🟢
🔹 Adjusted EPS: $2.29 (Est. $2.15) 🟢

FY Guidance (Raised):
🔹 Revenue: $6.925B–$7.00B (Prev. $6.89B–$6.96B; Est. $6.926B) 🟢
🔹 Adj EPS: $9.50–$9.73 (Prev. $9.34–$9.67; Est. $9.52) 🟢

Q2 Guidance:
🔹 Revenue: $1.72B–$1.73B (Est. $1.70B) 🟢
🔹 Adjusted EPS: $2.44–$2.48 (Est. $2.34) 🟢
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