4
https://x.com/i/lists/1669153613199835138?t=R0mCicxs7zfJE_yOAek4gQ&s=09
Librarian Capital
FT: "This year (John Lewis) posted its first full-year profit after 3 consecutive years of losses"
This is likely misleading as it includes exceptionals, including non-cash impairments on shop values
JL's PBT Before Exceptionals was positive in FY22-23 https://t.co/GoVH7rghlq
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Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $BABA 🧘🏽♂️
•NTM P/E Ratio: 12.59x
•5-Year Mean: 16.36x
•NTM FCF Yield: 8.43%
•5-Year Mean: 5.62%
As you can see, $BABA appears to be trading below fair value
Going forward, investors can receive ~30% MORE in earnings per share & ~50% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at $BABA quality characteristics
BALANCE SHEET✅
•Cash & Short-Term Inv: $61.77B
•Long-Term Debt: $24.50B
$BABA has a great balance sheet & 20x FFO Interest Coverage Ratio
RETURN ON CAPITAL🆗
•2020: 8.9%
•2021: 8.3%
•2022: 7.3%
•2023: 7.8%
•2024: 10.1%
•LTM: 9.9%
RETURN ON EQUITY🆗
•2020: 18.9%
•2021: 14.6%
•2022: 4.3%
•2023: 5.9%
•2024: 6.4%
•LTM: 5.7%
$BABA return metrics are lackluster, however it’s important to note that $BABA championed double-digit ROIC & ROE in prior years (2014-2018) & that the recent decline may be temporary
REVENUES✅
•2019: $56.15B
•2024: $130.35B
•CAGR: 18.34%
FREE CASH FLOW🆗
•2019: $17.21B
•2024: $20.84B
•CAGR: 3.90%
NORMALIZED EPS✅
•2019: $5.58
•2024: $8.60
•CAGR: 9.03%
SHARE BUYBACKS🆗➡️✅
•2019 Shares Outstanding: 2.62B
•LTM Shares Outstanding: 2.51B
By reducing its shares outstanding 4.2%, $BABA increased its EPS by 4.4% (assuming 0 growth)
MARGINS🆗
•LTM Gross Margins: 37.9%
•LTM Operating Margins: 14.0%
•LTM Net Income Margins: 7.3%
Margins have compressed substantially, a rebound in margin expansion would could be very bullish for $BABA shareholders
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~30% MORE in EPS & ~50% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $BABA has to grow earnings at a 6.30% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be more than (6.30%) required growth rate:
2024A: $8.60 (14.1% YoY) *FY Mar
2025E: $8.91 (0.5% YoY)
2026E: $9.90 (11.1% YoY)
$BABA has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $BABA ends 2026 with $9.90 in EPS & see its CAGR potential assuming different multiples
16x P/E: $158.40💵 … ~24.1% CAGR
15x P/E: $148.50💵 … ~18.9% CAGR
14x P/E: $138.60💵 … ~13.7% CAGR
13x P/E: $128.70💵 … ~8.3% CAGR
As you can see, $BABA appears to have attractive return potential if we assume >14x multiple, a valuation that may can be justified by its reduced growth rate & still has the potential to expand as China’s stimulus cycle just begins
Yet, it’s important to note the history of regulatory & political risks associated with $BABA as this creates a level of uncertainty & unpredictability
Today at $117💵 $BABA appears to be a great consideration for investment, albeit with risks that can justify leaving out of a portfolio of businesses
#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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Librarian Capital
"Winemaker Duckhorn Agrees to Be Taken Private in $1.95bn Deal" (WSJ)
"Butterfly Equity ... has offered to buy (it) for $11.10 a share, more than 2x its $5.40 closing share price last week"
$BF.B owns 21.4% of Duckhorn, after wine business sale in FY24; now worth ~$350m https://t.co/n1AmJj6tR0
Winemaker Duckhorn Agrees to Be Taken Private in $1.95 Billion Deal https://t.co/JkiCYqCZdn
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reased its EPS by ~7.9% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 51.4%
•LTM Operating Margins: 30.7%
•LTM Net Income Margins: 26.5%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~14% MORE in EPS
Using Benjamin Graham’s 2G rule of thumb, $ASML has to grow earnings at a 13.65% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be more than the (13.65%) required growth rate:
2024E: $20.87 (-5.3% YoY) *FY Dec
2025E: $33.07 (58.5% YoY)
2026E: $38.61 (16.7% YoY)
$ASML has a decent track record of meeting analyst estimates ~2 years out, but let’s assume $ASML ends 2026 with $38.61 in EPS & see its CAGR potential assuming different multiples
30x P/E: $1158.30💵 … ~21.0% CAGR
29x P/E: $1119.69💵 … ~19.3% CAGR
28x P/E: $1081.08💵 … ~17.6% CAGR
27x P/E: $1042.47💵 … ~15.8% CAGR
26x P/E: $1003.86💵 … ~14.0% CAGR
25x P/E: $965.25💵 … ~12.1% CAGR
As you can see, $ASML appears to have attractive return potential even if we assume greater or equal to 25x earnings (well below its 10-year mean & justified given its quality & growth rate)
However we should be aware that, while $ASML is a wide-moat business, we’ll be relying on fairly aggressive growth estimates in 2025 & these kinds of estimates should always be taken with caution
Today at $753💵 $ASML appears to be a great consideration for investment, although it will come with extreme volatility
Also, we have some margin of safety by relying on 25x (rather than 30x)
Given its volatility, however, it’s wise to piece into $ASML — this way, you enhance your margin of safety while also positioning yourself to “win-win” if the stock moves up or down in the short-term 💵
#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. "- Dimitry Nakhla | Babylon Capital®
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: Given the $SAVE bankruptcy discussions today, here’s a friendly reminder WHY Airlines are the WORST type of investment you can make 👇🏽
#stocks #investing
WHY YOU SHOULD AVOID INVESTING IN AIRLINES ⚠️
First, let’s take a look at the last 5-year returns of 4 major airlines:
1) $AAL -67% (American Airlines)
2) $UAL -32% (United Airlines)
3) $JBLU -63% (JetBlue)
4) $DAL -34% (Delta)
Why do airlines post such poor results for investors? It’s simple. On average, here are the economics of the sector:
COST OF CAPITAL: ~8%
RETURN ON CAPITAL (ROIC): ~4%
Would you want to own a business that pays $8 just to receive $4 in return?
Of course not. Airlines BLEED MONEY EVERY DAY.
As Warren Buffett asserted in his 2007 Shareholder Letter $BRK.B $BRK.A:
“The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think AIRLINES ... The airline industry's demand for capital ever since that first flight has been insatiable.
Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it. And I, to my shame, participated in this foolishness when I had Berkshire buy U.S. Air preferred stock in 1989.”
#stocks #investing
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Startup Archive
WhatsApp founder Jan Koum explains why he charged $1 for the product to intentionally slow growth
Sam Altman recalls:
“I remember in 2011, people would say WhatsApp is never going to work because they charge a dollar and it’s a viral app and that’s just going to kill it right there.”
But Jan explains that charging $1 was a very intentional lever WhatsApp used to slow growth:
“I know it sounds very counterintuitive - why would you want to slow your growth? We wanted to slow our growth so we could better support our existing users. So we could build servers that don’t crash. So that we could build a product that doesn’t drop messages. So that we could answer their customer support emails.”
A lot of people told Jan and the WhatsApp team this was a bad strategy, but Jan compares it to what Facebook did in the early days: “They were doing colleges only, and they weren’t open to the entire world.”
WhatsApp wanted to do the same thing:
“We wanted to make sure that we have our existing users happy, and that when people sign up, they have a great experience, and that the app works, and it’s fast, and the servers are up and running all the time. And I think that worked for us because we were really able to focus on the product.”
Video source: @ycombinator (2014)
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Librarian Capital
Re-posting list of Fundsmith exits with proof of dates
Exited Diageo $DGE in Aug-24 after LAC over-stocking
Exited Estée Lauder $EL in Aug-23 after China blow-up
Exited Adobe $ADBE in Mar-23 after Figma deal
Exited PayPal $PYPL in Dec-22 after COVID bubble
(Thread) https://t.co/3u89oZMOlO
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Stock Analysis Compilation
Clearbridge on Criteo $CRTO US
Thesis: Criteo’s pivot to the retail media space positions it for strong growth, making it an undervalued opportunity in the digital advertising sector
(Extract from their Q2 letter) https://t.co/A16teliWvf
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Hidden Value Gems
“Corporate insiders have been reluctant to snap up shares of their companies. Of all US companies with a transaction by an officer or director in July, only 15.7% reported net buying of company shares. That was the lowest level in the past 10 years. The figure ticked up to 25.7% in August before falling to 21.9% in September, well below the 10-year average of 26.3%.”
via @WSJ
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Librarian Capital
Terry Smith to people who buy stocks for "income"
"When they pay you a dividend ... Do you think the money comes lowered through the clouds on a stick?
It comes from the company ... which they then can’t invest in the business. It’s the same effect as you selling some shares" https://t.co/EWOAECBru1
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Librarian Capital
RT @MichLKosinski: Well now here is an odd thing.
My 86-year-old, highly intelligent, sharp-as-a-tack father in law-- a former AP journalist, lifetime anti-racist, champion of democracy, and excellent tweeter of truth--
has been kicked off of Twitter (yes I call it that). https://t.co/oGCpakW1Jk
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Librarian Capital
Terry Smith on Fundsmith decision to exit Diageo (II interview, 19-Sep)
1. LATAM over-stocking "puzzled" them and sector peers
2. "General downturn in spirits consumptions" in US
3. "Might be in the early stages" of GLP-1 effect
4. New management "untested" & unproven
$DGE $DEO https://t.co/lEggT5dOPL
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Librarian Capital
"China demands schoolteachers hand in their passports" (FT)
"Interviews with more than a dozen Chinese public sector workers and notices ... in half a dozen cities show restrictions on international travel have been greatly expanded ... to include rank-and-file employees" https://t.co/f2AEekSppb
China demands schoolteachers hand in their passports https://t.co/CThKNNfCzT
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Stock Analysis Compilation
Broyhill AM on Fiserv $FISV US
Thesis: Fiserv’s scale, embedded distribution advantages, and high-growth potential from its Clover platform make it a leading fintech investment with strong growth runway
(Extract from their Q2 letter) https://t.co/v7iIgSFHkN
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Stock Analysis Compilation
TCW on Xylem $XYL US
Thesis: Xylem's leadership in water management, combined with its strategic acquisition of Evoqua, positions it well for long-term growth as global water challenges intensify
(Extract from their Q2 letter) https://t.co/kxb0jfkAef
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Investing visuals
An iconic business battle: Pepsi $PEP vs. CocaCola $KO 🥊 Who’s your pick?
❤️ Like for Pepsi $PEP
🔁 Retweet for CocaCola $KO
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Stock Analysis Compilation
TCW on Target Corporation $TGT US
Thesis: Target’s ongoing transformation into a leading omnichannel retailer, supported by new management and strategic partnerships, makes it an attractive investment for long-term growth.
(Extract from their Q2 letter) https://t.co/2nWyftGyK8
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Librarian Capital
RT @MattBinder: over the weekend X / Twitter took the @America handle from the original user who registered it
the handle now belongs to Elon Musk and his Super PAC set up to support Donald Trump
here's everything we know: https://t.co/ciIaAaPQQ5
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: In last month’s post I stated: “Today at $753💵 $ASML appears to be a great consideration for investment”
Since then, $ASML is up +10% ✅ … is $ASML STILL A BUY❓…👇🏽
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Today, analysts anticipate 2024 - 2026 EPS growth to be:
2024E: $20.68 (-5.7% YoY) *FY Dec
2025E: $32.04 (54.9% YoY)
2026E: $37.54 (17.2% YoY)
$ASML has a decent track record of meeting analyst estimates ~2 years out, but let’s assume $ASML ends 2026 with $37.54 in EPS & see its CAGR potential assuming different multiples
30x P/E: $1126.20💵 … ~15.2% CAGR
29x P/E: $1088.66💵 … ~13.5% CAGR
28x P/E: $1052.12💵 … ~11.7% CAGR
27x P/E: $1013.58💵 … ~10.0% CAGR
26x P/E: $976.04💵 … ~8.1% CAGR
As you can see, $ASML appears to have attractive return potential even if we assume greater or equal to 27x earnings (well below its 10-year mean & justified given its quality & growth rate)
However we should be aware that, while $ASML is a wide-moat business, we’ll be relying on fairly aggressive growth estimates in 2025 & these kinds of estimates should always be taken with caution
Today at $832.41💵 $ASML STILL appears to be a good consideration for investment, although it will come with extreme volatility
However, today we have less of a margin of safety given that we’ll need to rely on 27x (rather than 25x at last month’s $753💵 price)
Given its volatility, it’s always wise to piece into $ASML — this way, you enhance your margin of safety while also positioning yourself to “win-win” if the stock moves up or down in the short-term 💵
#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."
A sober valuation analysis on $ASML 🧘🏽♂️
•NTM P/E Ratio: 27.29x
•10-Year Mean: 31.11x
As you can see, $ASML appears to be trading below fair value
Going forward, investors can receive ~14% MORE in earnings per share 🧠***
Before we get into valuation, let’s take a look at why $ASML is an excellent business (*Financials in USD*)
BALANCE SHEET✅
•Cash & Short Term Inv: $5.38B
•Long-Term Debt: $4.94B
$ASML has a strong balance sheet & 34x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 17.5%
•2020: 21.6%
•2021: 43.8%
•2022: 48.0%
•2023: 48.7%
•LTM: 39.7%
RETURN ON EQUITY✅
•2019: 21.4%
•2020: 26.9%
•2021: 49.0%
•2022: 59.4%
•2023: 70.4%
•LTM: 48.6%
$ASML has excellent return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2013: $7.22B
•2023: $30.42B
•CAGR: 15.46%
FREE CASH FLOW*
• $ASML FCF is very sporadic due to heavy capital expenditures & isn’t necessarily the most reliable way to analyze the company’s value
NORMALIZED EPS✅
•2013: $3.17
•2023: $21.65
•CAGR: 21.18%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 424.90M
•LTM Shares Outstanding: 393.55M
By reducing its shares outstanding ~7.3%, $ASML inc[...]
Librarian Capital
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FT gave her fawning lunch done by self-described "good friend", so they likely think she will get it
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Happy Monday! Have a great week ahead!
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Librarian Capital
EU house prices & rents (2010-24Q2) *
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Rent growth accelerated slightly since 2022
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Investing visuals
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(Extract from their Q2 letter) https://t.co/0aI3VDjaSs
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