Compounding Lab

Everyone models Philip Morris as a cigarette trader, but the real product isn’t tobacco anymore - it’s nicotine. Here is my $PM valuation model. Key assumptions: 1. Explicit 5Y/5Y growth @ 6%/4% 2. Long-term growth in perpetuity @ 2% 3. Stable EBITDA margin - no expansion 4. WACC @ 6.1% 5. An EBITDA exit multiple of 16.2 6. Tax rate 22% 7. The input that drives reinvestment is the most recent Sales to Capital ratio = 0.9 Follow my Substack for regular actionable investing frameworks, incl. a more detailed DCFs.

$A2A.MI 10Y ROIC, Average 6% 🚫 10Y Revenue, CAGR 11% ✔️ FCFE 3Y Average, per share 0.04 EUR FCF 3Y yield 2% None Moat 🚫 Market Price 2.4 EUR Fair value 2.6 EUR Shares UNDERVALUED Discount (-)/Premium (+) -9% ✔️

@YodaStockInvest Big progress Yoda. Keep it up!

I started this X account in May last year. Since then, I’ve already grown to 14K followers. Comparison is the thief of joy: sometimes even I feel like I’m not growing fast enough! Nonsense. Wanted to take a moment to thank all of you! Seriously, it’s insane how so many people from all around the world interact with the content of me, a random 22 year old from The Netherlands. I appreciate you all❤️ Just getting started!

$SONY 10Y ROIC, Average 4% 🚫 10Y Revenue, CAGR 5% 🚫 FCFE 3Y Average, per share $2 FCF 3Y yield 8% Wide Moat ✔️ Market Price $20 Fair value $28 Shares UNDERVALUED Discount (-)/Premium (+) -27% ✔️

$DOCU 10Y ROIC, Average -5% 🚫 10Y Revenue, CAGR 29% ✔️ FCFE 3Y Average, per share $5 FCF 3Y yield 10% None Moat 🚫 Market Price $47 Fair value $63 Shares UNDERVALUED Discount (-)/Premium (+) -25% ✔️

@MAXALEXHARDY @olegkrasawin Это бандитизм, не коммунизм.

@olegkrasawin Это и есть коммунизм. Куда шли, туда и пришли.

Может кто-то объяснит, как так получилось, что мы почти сто лет шли к коммунизму, а пришли к этой бесстыжей, вороватой роже?

@sashakmett1991 @grok Новиков действительно говорил это?

Очередной символ русской культуры с душком параши, задается вечным уже вопросом - А нас за что? Должно быть недоволен возвращением войны в родные ебеня. Вот не нравятся ему гробы под домом. Не вдохновляют на создание новых приблатненных частушек с вертухайским припевом.

$MDB 10Y ROIC, Average -21% 🚫 10Y Revenue, CAGR 44% ✔️ FCFE 3Y Average, per share $3 FCF 3Y yield 1% None Moat 🚫 Market Price $261 Fair value $327 Shares UNDERVALUED Discount (-)/Premium (+) -20% ✔️

@fiscal_ai Maybe a slightly higher, but not super higher.

30% annual revenue growth for 2 decades. Current EV/EBIT: 7.5x Does lululemon deserve a higher multiple? $LULU

10Y ROIC, Average 6% 🚫 10Y Revenue, CAGR 7% ✔️ FCFE 3Y Average, per share 289 GBP FCF 3Y yield 7% Wide Moat ✔️ Market Price 4,311 GBP Fair value 4,245 GBP Shares FAIRLY VALUED Discount (-)/Premium (+) 2% ⏸

$RL 10Y ROIC, Average 7% 🚫 10Y Revenue, CAGR -1% 🚫 FCFE 3Y Average, per share $11.0 FCF 3Y yield 3% Narrow Moat ☑ Market Price $330 Fair value $406 Shares UNDERVALUED Discount (-)/Premium (+) -19% ☑

@Ashton_1nvests The problem here is not revenue, it's margins.

$UNH just keeps executing. Revenue per share has gone from $194 to $491 in less than a decade. That’s consistent, compounding growth. Yet the stock is being treated like the business is broken… I don’t see it.

@FromValue Not much potential alpha i guess.

$MELI trades at an EV/Gross Profit of just 6.18, the lowest in at least a decade, probably longer. What's your excuse for not buying the stock now? 🤔

$LULU DCF valuation (revised) Key assumptions: 1.Explicit 5Y/5Y growth @ 5%/4% 2. Long-term growth in perpetuity @ 2.6% 3. Near-term margins are under pressure, but over a 5-10 year horizon analysts expect modest improvement, but not a return to peak levels. 4. WACC @ 8.2%. 5. An EBITDA exit multiple of 10.3 6. Tax rate 30% (historical average) 7.The input that drives reinvestment is the most recent Sales to Capital ratio = 1.7, linearly regressed to the Apparel average rate of 1.28 in year 10. Full model with a story, sensitivity and other details on my Substack (link in bio).

10Y ROIC, Average 12% ☑ 10Y Revenue, CAGR 8% ☑ FCFE 3Y Average, per share $2.6 FCF 3Y yield 1% Narrow Moat ☑ Market Price $310 Fair value $371 Shares UNDERVALUED Discount (-)/Premium (+) -16% ☑

5/ 🚨 Ethical and reporting issues One of the prompts I am doing when researching the stock is related to past or current ethical issues as this can impact valuation. Investors usually don’t appreciate any concerns with maintaining high ethical standards and therefore will discount the market price to demand a higher premium to remain invested in the stock. The following past concerns mainly related to external allegations were identified: 1) 2018 Bloomberg report (“The Big Hack”) Alleged that Chinese spy chips were implanted on Supermicro motherboards used by major tech firms and government agencies. SMCI, Apple, Amazon, and the U.S. government denied these claims, and follow-up investigations found no evidence supporting Bloomberg’s story. Though it raised questions about supply chain security, it was not an ethical issue within SMCI but rather an external cybersecurity allegation. 2) SEC filing delays(2017-2018) SMCI was late in filing financial statements due to an internal investigation into accounting practices, specifically revenue recognition. After Ernst & Young resigned, Super Micro hired new auditor, BDO, late last year. Its new auditor (BDO) appears to have cleared its books as accurate, despite the resignation of former auditor Ernst & Young last October. And while BDO did deliver an adverse opinion on Super Micro's accounting controls and procedures, it also verified Super Micro's revenue and profit for 2024, 2023, and 2022 as accurate. It's likely that Ernst & Young got nervous regarding Super Micro's substandard back office controls, and decided to quit rather than remain as auditor. However, quitting instead of reverifying financials, as BDO did, seems like a step too far. The company restated some financials, leading to NASDAQ delisting in 2018 (later relisted in early 2020). The independent review found no evidence of fraud or misconduct, but recommended leadership changes, including replacing the CFO, to remediate control weaknesses in accounting procedures. As of today, there is no indication that a new CFO has been appointed. On March 31 however, the company took a positive step with the appointment of Scott Angel to Super Micro's board of directors. Angel was a 37-year executive at Big 4 auditing firm Deloitte & Touche, where he specialized in risk and compliance issues, especially for technology firms.

10Y ROIC, Average 6% 🚫 10Y Revenue, CAGR 5% ☑ FCFE 3Y Average, per share $7.5 FCF 3Y yield 4% Wide Moat ☑ Market Price $189 Fair value $257 Shares UNDERVALUED Discount (-)/Premium (+) -26% ☑

@pepemoonboy Agreed Pepe. I am in auditing, but there will be still impact. Maybe not as much as accounting, but for sure there will be.

If you have a job, and it is your sole source of income. Do EVERYTHING in your power to keep it. The next 2 years have a good chance of being extremely turbulent for the job market due to AI disruption. We are at the point now where companies are learning how to leverage it and how to implement it securely. Get ready, the next few years will be wild.