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Lion

Jul 15, 2021 • 8 tweets • 3 min read • Read on X

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After a few volatile days, it is a good time to assess where current valuation multiples stand and the estimates of revenue CAGR for the next few years.

This is the consolidated graph with all the companies. The next graphs are grouped by industry.

E-Commerce

EV/GP NTM and EV/EBITDA NTM (for profitable Cos)

$AMZN 9.1x / 23.6x
$BABA 9.2x / 17.5
$SE 37.6x / 152x
$MELI 23x / 202x
$JD 4.7x / 34x
$W 6.7x / 34x
$SHOP 70x / 499x
$CPNG 17x
$ETSY 13x / 33x
$PDD 10x
$OZON 9.6x
$BIGC 26x
$WISH 2.4x
$GLBE 116x

Fintech and Payments

$V 25x / 29x
$MA 31x / 35x
$PYPL 29x / 44x
$SQ 18x / 115x
$AFTPY 37x / 196x
$COIN 9.4x / 21x
$AFRM 90x
$SOFI 11x / 113x
$UPST 15x / 139x
$FUTU 16x
$LSPD 40x
$DLO 85x
$KPLT 6.7x / 53x

Social Media and Digital Ads

$FB 9.7x / 14.8x
$GOOGL 12.3x / 17.3x
$PINS 21x / 63x
$SNAP 44x / 191x
$TWTR 17x / 37x
$ROKU 36x / 248x
$TTD 37x / 84x
$MTCH 21x / 41x
$MGNI 13x / 29x
$PUBM 10x

Mega Cap

$AAPL 17x / 22x
$MSFT 17x / 23x
$GOOGL 12x / 17x
$AMZN 9.1x / 24x
$FB 9.7x / 15x
$TCEHY 16x / 20x
$BABA 9.2x / 17.5
$TSLA 49x / 61x
$NVDA 30x / 46x
$NFLX 20x / 37x

SAAS

$TWLO 43x / 276x
$DOCU 32x / 123x
$SPLK 11x
$WDAY 15x / 43x
$NET 63x
$FSLY 24x
$PD 13x
$ADBE 20x
$ZM 35x
$TEAM 34x
$SNOW 95x
$CRM 11x
$VEEV 33x
$CRWD 52x
$DDOG 42x
$OLO 35x
$NOW 23x
$OKTA 37x
$SMAR 20x
$MDB 38x
$NTNX 6x
$ESTC 22x

Real Estate / Healthcare / Gig Economy / Gaming / Other

$FVRR 29x / 226x
$UPWK 17x / 254x
$Z 10x / 45x
$ABNB 18x / 105x
$RDFN 13x / 115x
$PTON 17x / 136x
$TDOC 17x / 80x
$GDRX 15x / 44x
$LTCH 93x
$BZUN 3.3x / 15x
$EGLX 20x
$SKLZ 14x
$AMD 16x / 31x

Can't wait for Q2 earnings 🔥. Good luck!

What stands out the most to you?

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More from @Lion_Investor1

Lion

@Lion_Investor1

Sep 4, 2022

This Q2 2022 earnings season is coming to an end so it is a good time to assess where valuations stand and how analyst have changed their expected growth for each company.

First, let’s compare P/FCF LTM vs 3-yr Revenue Growth for all companies:

Next, we see the comparison based on a P/E NTM basis vs 3-yr Revenue Growth for all companies.

Comparing valuation multiples from different industries should not be used as an investment decision driver, but it is an interesting exercise to have an overall current view:

We divided these companies on groups with similar companies based on their size, industry or type of business. Here is the first one:

1. Mega Cap Tech P/FCF LTM

$AAPL 23.3x
$GOOGL 21.7x
$META 12x
$MSFT 29.3x
$NVDA 54.2x
$TSLA 122.1x

Read 21 tweets

Lion

@Lion_Investor1

May 7, 2022

Investing Holy Grail:
Earnings growth x multiple expansion x share buybacks.

$DPZ last 10 years:
1. P/E 20 to 30 (1.5x)
2. Earnings: $105M to $510M (4.9x)
3. Bought back 40% of their shares (1.6x)

Total return: 1.5 x 4.9 x 1.6 = 11.8x
CAGR return: 29%

Other examples?

$ODFL

Past 10 years:
1. P/E 19 to 29 (1.53x)
2. $140M to $1034M (7.4x)
3. Bought back 10.4% of shares (1.13x)

Total return: 1.53 x 7.4 x 1.13 = 12.8x
CAGR return: 30%

$AAPL

Past 10 years:
1. P/E 17 to 26 (1.53x)
2. $25.9B to $94.7B (3.65x)
3. Bought back 37% of shares (1.59x)

Total return: 1.53 x 3.65 x 1.59 = 8.8x
CAGR return: 25%

Read 8 tweets

Lion

@Lion_Investor1

May 1, 2022

Valuations continue to decrease for high quality companies with high ROIC, that have delivered high CAGR returns over the years.

This is the comparison of the current NTM P/E versus the average 2010-2019 NTM P/E for these companies.

Below we can see where they were at the time and the evolution over the past month and a half.

At the time, 60% of companies where still over their historical multiples. Today, 47% are still over their historical multiples vs 53% below.

https://twitter.com/Investing_Lion/status/1505210412521902084?s=20&t=DGrZVdjm93YEJ9lvcEUHQA

During the 2010-2019 period, the US 10-yr yield Treasury Note was usually between 2% and 3%.

Currently, we are at 2.94%. Interest rates act like gravity for valuation multiples so if the 10-yr yield continue to climb, valuation should compress further.

Read 5 tweets

Lion

@Lion_Investor1

Apr 22, 2022

Bears are currently in control in the growth sector.

Fundamentals matter little on the short term when a sector is out of favor, especially after a bubble.

For long term investors, some profitable growth companies are becoming more attractive with a 3+ year investment horizon:

These companies are profitable and they are getting closer or reaching lower multiples than more mature and established non-tech companies.

Of course, WS estimates can vary with actual execution over time so an assessment of quality is key before investing. Not all will succeed

Over the short term, these companies are in a downtrend. So the expectation is that they will keep going lower, especially with inflation and the Fed's hikes and QT expectations.

Most hedge funds and traders are not adding here and will wait until a trend reversal.

Read 5 tweets

Lion

@Lion_Investor1

Mar 19, 2022

Winners keep on winning.

Here we evaluate 40 of the biggest winners in the market in the past decade.

They were able to compound between 14% and 67% CAGR for 5+ years and are currently valued on average at NTM 31x P/E and 40x FCF.

These are special companies, that have stood the test of time and delivered high returns to shareholders.

One of the main characteristics that most of these companies have in common is achieving high return on capital:

Most of these companies have achieved over 15% ROIC on average each year. And there are some that consistently sustain 20% ROIC, which is outstanding.

They belong to different industries:
Semis
Retail
E-Commerce
Railroads
SaaS
Railroads
Financials Markets
Industrials
Etc

Read 13 tweets

Lion

@Lion_Investor1

Mar 14, 2022

After Q4 earnings reports and recent volatility, we take a look at different valuation multiples of technology companies.

Many are profitable on a free cash flow basis, so first we compare EV/FCF LTM vs 3-yr Revenue Growth estimates:

Based on the business characteristics and financials, sometimes valuations between free cash flow multiples and EBITDA multiples vary widely.

In this chart, we compare EV/EBITDA NTM vs 3 year Revenue Growth estimates:

Finally, to be able to compare all companies - profitable and unprofitable - we use here EV/GP NTM vs 3-yr Revenue Growth estimates.

This may not be ideal in the current environment, but it is still a better approach than basic P/S multiples.

Read 11 tweets

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