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Lion Profile picture
@Lion_Investor1
Dec 4, 2021 • 12 tweets • 4 min read • Read on X
Scrolly
Here are the updated valuations after the recent volatility and Q3 earnings. I am looking at the following metrics:
1. EV/GP NTM
2. EV/EBITDA NTM
3. EV/FCF LTM

This is the consolidated graph comparing EV/GP NTM vs estimates of 3-yr revenue growth:
Of the 82 companies analyzed, 62 have positive NTM EBITDA and 49 are FCF LTM profitable.

Here is the consolidated graph comparing EV/EBITDA NTM vs estimates of 3-yr revenue growth:
For Free Cash Flow, it is harder to have accurate estimates of future numbers.

So for this metric, I prefer to use the last twelve months (LTM).

The following is the consolidated graph comparing EV/FCF LTM vs estimates of 3-yr revenue growth:
By Industry:
E-Commerce
EV/GP NTM and EV/EBITDA NTM

$AMZN 8.1x / 23x
$SE 22.9x
$MELI 14.8x / 66x
$W 6.3x / 59x
$SHOP 57.2x / 220x
$CPNG 10.2x
$ETSY 16x / 41.5x
$OZON 5.1x
$BIGC 13.8x
$GLBE 73x /323x
Fintech and Payments
EV/GP NTM and EV/EBITDA NTM

$V 19x / 21x
$MA 23x / 25x
$PYPL 14x / 18x
$SQ 17x / 89x
$AFRM 83x
$SOFI 18x / 112x
$UPST 14x / 59x
$LSPD 17x
$DLO 46.8x / 70x
$MELI 15x / 66x
$COIN 12x / 18x
Social Media and Ad-tech
EV/GP NTM and EV/EBITDA NTM

$FB 7.6x / 12.4x
$GOOGL 11x / 15x
$PINS 9.2x / 24x
$SNAP 25x / 99x
$TWTR 8x / 21x
$ROKU 15x / 61x
$TTD 36x / 77x
$MTCH 15x / 31x
$MGNI 6.8x / 17x
$PUBM 9x / 19x
Mega Cap
EV/GP NTM and EV/EBITDA NTM

$AAPL 16.6x / 21.6x
$MSFT 17.2x / 23.6x
$GOOGL 11.1x / 15.4x
$AMZN 8.1x / 23.3x
$FB 7.6x / 12.4x
$TSLA 60.4x / 69.5x
$NVDA 37x / 60.6x
$NFLX 19.5x / 37.6x
SaaS
$ADBE 19x / 33x
$AMPL 40x
$CRM 11x / 29x
$CRWD 31x / 141x
$DCBO 16x
$DDOG 50x / 252x
$DOCN 21x / 52x
$DOCU 14x / 57x
$MDB 44x
$MNDY 32x
$NET 79x
$NTNX 5x
$OKTA 26x
$PLTR 23x / 67x
$SNOW 81x
$TWLO 22x / 152x
$U 39x
$VEEV 23x / 44x
$ZI 30x / 61x
$ZM 15x / 28x
$ZS 49x / 298x
Other
EV/GP NTM and EV/EBITDA NTM
$ABNB 18x / 55x
$AMD 19x / 31x
$CNSFW 17x / 21.5x
$EVVTY 14x / 20x
$FVRR 14x / 131x
$GDRX 22x / 59x
$PTON 8x
$RBLX 27x / 73x
$RDFN 9x
$OPEN 11x / 157x
$TDOC 9x / 46x
$UPWK 10x / 182x
$XPEL 16x / 30x$Z 6.6x / 126x
Some of the biggest multiple contractions since 23/oct (last post):
$MELI 23x to 15x
$SE 37x to 23x
$DLO 79x to 47x
$LSPD 45x to 17x
$CRWD 49x to 31x
$ASAN 67x to 33x
$MNDY 55x to 32x
$DLO is one of the quickest contractions in multiples I have seen this year.

In just a few months, it went from 116x EV/GP NTM in August, 79x in October and now 47x.

It is the result of a combination of high growth in fundamentals and a 52% drawdown in price from ATH.
Valuation is just one of many metrics to take into account when investing, but it is useful sometimes to spot opportunities and potential risks.

Particularly now that we are ending the FED's covid QE program.

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More from @Lion_Investor1

Lion Profile picture
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 Profile picture
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 Profile picture
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. Image
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.

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 Profile picture
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 Profile picture
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 Profile picture
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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