Dimitry Nakhla | Babylon Capital®
Lam Research $LRCX Q1 2026 Report 🗓️

✅ REV: $5.32B (+2% YoY)
✅ EPS: $1.26 (+45% YoY)

⬆️ Forward Guidance https://t.co/zjsghsZ3kI

10. Lam Research $LRCX (Wed PM)

🗓️ REV Est: $5.23B (+25%)
🗓️ EPS Est: $1.22 (+42%)

💵 NTM P/E: 31x
💵 NTM FCF Yield: 3.16%

Services represent ~38% of $LRCX total revenue https://t.co/S4HFeFiAWg - Dimitry Nakhla | Babylon Capital®
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App Economy Insights
$TSLA Tesla Q3 FY25:

• Revenue +12% Y/Y to $28.1B ($1.4B beat).
• Gross margin 18% (-2pp Y/Y).
• Operating margin 6% (-5pp Y/Y).
• Capex -36% Y/Y to $2.2B.
• Free cash flow +46% Y/Y to $4.0B.
• Non-GAAP EPS $0.50 ($0.06 miss). https://t.co/Uur9uYLc25
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A sober valuation analysis on $MEDP 🧘🏽‍♂️

•NTM P/E Ratio: 25.91x
•5-Year Mean: 30.16x

•NTM FCF Yield: 4.46%
•5-Year Mean: 3.98%

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

Going forward, investors can receive ~16% MORE in earnings per share & ~12% MORE in FCF per share 🧠***

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

BALANCE SHEET✅
•Cash & Short-Term Inv: $510.89M
•Long-Term Debt: $0

$MEDP has a great balance sheet & 3.51x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2019: 16.0%
•2020: 17.6%
•2021: 18.0%
•2022: 46.8%
•2023: 46.4%
•LTM: 41.5%

RETURN ON EQUITY✅
•2019: 15.3%
•2020: 19.0%
•2021: 20.7%
•2022: 36.6%
•2023: 59.8%
•LTM: 58.9%

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

REVENUES✅
•2018: $0.70B
•2023: $1.89B
•CAGR: 21.97%

FREE CASH FLOW✅
•2018: $140.56M
•2023: $502.80M
•CAGR: 29.0%

NORMALIZED EPS✅
•2018: $2.81
•2023: $8.92
•CAGR: 25.98%

SHARE BUYBACKS✅
•2018 Shares Outstanding: 36.91M
•LTM Shares Outstanding: 31.93M

By reducing its shares outstanding 13.5%, $MEDP increased its EPS by 15.6% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 66.9%
•LTM Operating Margins: 18.8%
•LTM Net Income Margins: 16.7%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~16% MORE in EPS & ~12% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $MEDP has to grow earnings at a 12.96% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be slightly less than (12.96%) required growth rate:

2024E: $11.81 (32.4% YoY) *FY Dec
2025E: $13.16 (11.4% YoY)
2026E: $15.01 (14.0% YoY)

$MEDP has a great track record of meeting analyst estimates ~2 years out, so let’s assume $MEDP ends 2026 with $15.01 in EPS & see its CAGR potential assuming different multiples

30x P/E: $450.30💵 … ~15.3% CAGR

29x P/E: $435.29💵 … ~13.6% CAGR

28x P/E: $420.28💵 … ~11.9% CAGR

27x P/E: $405.27💵 … ~10.1% CAGR

As you can see, $MEDP appears to have attractive return potential if we assume >27 earnings, a valuation that may not necessarily be justified by its reduced growth rate & still may be subject to some multiple compression

Yet, today at $326💵 $MEDP appears to be a decent consideration for investment

I’d consider $MEDP a great buy with a margin of safety closer to $290💵(~23.50x NTM EPS), or roughly 9.3% below today’s share price

This is where I can reasonably expect ~12% CAGR assuming a more conservative 25x 2026 earnings estimates

#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, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: Here’s the thesis I shared with another great investor here on X a few months ago — and to answer your question, it has to do with $MEDP book-to-bill ratio, along with the strong beat on revenue

“MEDP is starting to pique my interest a bit

A nice way to catch future growth in biotech space (future CRO growth expected to compound >10% through 2029) without relying on a blockbuster drug or long biotech cycles since MEDP offers picks & shovels by supporting R&D process regardless of trial outcomes

The company has been a strong compounder since IPO & strong FCF & EPS CAGR along with excellent return metrics

Main issue right now is that the company’s book to bill ratio fell substantially below 1.00x since they IPO’d and the question becomes:

Is this due to a sector slowdown coupled with cancellations & some competitions that will likely stay this way OR is it a short-term industry slowdown that will turn in the next year or so

If they can get this ratio back above 1.00x, indicating future deal values greater than current revenue, then it’s >$400 stock again

Huge buyback plan as well and they buyback aggressively during moments when their valuation is near the lowest end of their historical range (22x - 25x)

It’s an interesting one, with some uncertainty

Insiders (I believe CEO) still owns >15% of the company as well

Small to medium sized biotech companies don’t have enough funding to run their own trials

So they hire CRO’s (contract research organization) to conduct their trials (Phase I - IV) & also help them remain compliant with regulatory laws etc in whichever country the trials are being done

So they are essentially offering a service & taking advantage of future biotech growth / demand without necessarily relying on the results themselves

That’s why it’s such an interesting business .. the potential for continued margin expansion is also bullish and their buyback plans do not count towards the company’s guidance (as they state on their financial statements) so even if there’s a temporary slowdown (lower book to bill ratio) they may still be able to grow EPS a bit through share buybacks + continued margin expansion

The main issue is that their book to bill ratio dropped below 1.00x and is at its lowest since IPO

e.g. they get $500M in new quarterly bookings but report $400M in quarterly revenue so the ratio is 1.25x

The global CRO market is expected to be valued at approximately $85.88 billion & projected to grow at a compound annual growth rate (CAGR) of 8.27%, reaching $127B by 2030”
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Dimitry Nakhla | Babylon Capital®
RT @QualityInvest5: MASSIVE kudos to Dimitry for calling out $MEDP which is now up double since last year

This is not an irregular occurrence for his callouts

One of the best pages to follow on FinTwit if you already haven’t 😉👇 https://t.co/xsAQePjSvN

TWO days ago I suggested $MEDP becomes an interesting consideration at $330💵 (~9.5% below that day’s price)

Yesterday shares of $MEDP fell ~10%, reaching my target ✅

As I stated in the most recent analysis:

“As you can see, $MEDP appears to have attractive return potential if we assume >30x earnings, a valuation that may not be justified by its growth rate & one that’s subject to multiple compression if the growth rate slows (which is expected for 2025-2026 vs 2018-2023)

Today at $365.70💵 $MEDP appears to be a “hold”

I’d consider $MEDP closer to $330💵(~26.70x NTM EPS), or roughly 9.5% below today’s share price”
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Stay tuned for today’s updated valuation analysis on $MEDP 📝

#stocks #investing - Dimitry Nakhla | Babylon Capital®
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Clark Square Capital
One of the cheapest stocks I own is $BWMX -- Betterware de Mexico. BWMX is a direct sales company in Mexico (homewares, cosmetics) trading at 6x ’25 earnings and ~5x 2026 earnings.

After a long period of digestion, Betterware is back to growing its salesforce, which is likely to result in a re-rating. At 8-10x earnings, the stock could trade at $20-$25 vs ~$13 today. If no re-rating, you can still get paid through a mid-to-high-teens return through dividends (~10%) and debt paydown.

I am sharing my full write-up (no paywall) below.
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Yellowbrick Investing
$BWMX

One of the cheapest stocks I own is $BWMX -- Betterware de Mexico. BWMX is a direct sales company in Mexico (homewares, cosmetics) trading at 6x ’25 earnings and ~5x 2026 earnings.

After a long period of digestion, Betterware is back to growing its salesforce, which is likely to result in a re-rating. At 8-10x earnings, the stock could trade at $20-$25 vs ~$13 today. If no re-rating, you can still get paid through a mid-to-high-teens return through dividends (~10%) and debt paydown.

I am sharing my full write-up (no paywall) below. - Clark Square Capital
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Yellowbrick Investing
$RXO short

$RXO short thesis in 2-minutes. https://t.co/YIXsKtns3u - Keith Dalrymple
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