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Lion

Aug 28, 2021 • 10 tweets • 7 min read • Read on X

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Now that most companies have reported earnings, 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:

In this other one, I included some companies that I had to exclude in the first graph:
$AFRM
$SNOW
$DLO
$GLBE

The next graphs are grouped by industry.

E-Commerce

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

$AMZN 8.4x / 20.6x
$BABA 6.5x / 12.6
$SE 36.4x
$MELI 24.4x / 123x
$JD 4x / 32x
$W 7.4x / 44x
$SHOP 66x / 266x
$CPNG 10.6x
$ETSY 14.1x / 36.64x
$PDD 9.1x
$OZON 8.1x
$BIGC 21.2x
$GLBE 116x

Fintech and Payments

$V 22.6x / 29x
$MA 26.2x / 28.9x
$PYPL 26.3x / 40x
$SQ 22x / 109x
$COIN 9.7x / 19.3x
$AFRM 117x
$SOFI 20.3x / 94x
$UPST 22.4x / 123x
$LSPD 44x
$DLO 116x

Social Media and Digital Ads

$FB 9.7x / 14.4x
$GOOGL 12.3x / 17.2x
$PINS 16.2x / 42.7x
$SNAP 43.8x / 150.7x
$TWTR 13.8x / 30x
$ROKU 28.6x / 124.9x
$TTD 26.9x / 79.2x
$MTCH 17x / 35x
$MGNI 13.4x / 29.2x
$PUBM 7.5x / 18.6x

Mega Cap

$AAPL 16x / 20.2x
$MSFT 16.8x / 23.7x
$GOOGL 12.3x / 17.2x
$AMZN 8.4x / 21.6x
$FB 9.7x / 14.6x
$TCEHY 13.4x / 17.4x
$BABA 6.5x / 12.6
$TSLA 50.5x / 55x
$NVDA 32.4x / 50.9x
$NFLX 20x / 37.3x

SAAS

$TWLO 37.6x / 268x
$DOCU 35.2x / 134x
$SPLK 12.7x
$WDAY 16.4x / 46x
$NET 67.8x
$FSLY 23.1x
$PD 13.5x
$ADBE 21.3x / 37.8x
$ZM 33.3x / 63
$TEAM 41.9x
$SNOW 98.4x
$CRM 12.4x / 33x
$VEEV 33x / 65x
$CRWD 52x / 317x
$DDOG 42x / 277x
$OLO 36x
$NOW 24x / 61x
$OKTA 40x
$MDB 44x

Real Estate / Healthcare / Gig Economy / Gaming / Other

$FVRR 23.7x / 241x
$UPWK 13.9x / 170x
$Z 6.9x / 44.6x
$ABNB 18.5x / 67x
$RDFN 12.1x
$PTON 14.4x / 101x
$TDOC 15.4x / 72x
$GDRX 17.2x / 50x
$EGLX 15.7x
$SKLZ 8x
$AMD 17.6x / 31.1x
$RBLX 22.2x / 71x
$XPEL 21.7x / 41.4x

Valuation and growth are just some of the variables to take into account. But once you know a company really well, it can help to add at better valuations over time.

I have a feeling this is going to be an interesting September/October period. Let's keep compounding! 🔥📈

@BackpackerFI

Sharing with some friends:
@BackpackerFI @Invesquotes @caleb_investTML @Couch_Investor @Innovestor_ @7Innovator @IrnestKaplan @InvestmentTalkk @EugeneNg_VCap @StockMarketNerd @Brian_Stoffel_ @NeuroStockDoc @Mayhem4Markets @borrowed_ideas @skaushi @Keith_Wasserman @Badpak

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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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