5/8/24 - vrockstar - post market review here and running the #s. 1) this must be a HQ co bc the chart/ results seem to be quite consistent. cash generative, great, net cash, no need to raise etc. etc. good R&D budget, good zip code (clould aux). 2) nearly 30x PE is TOO expensive for 10% EPS growth implied and nearly 10x sales also (way) too rich for 10+% growth - just is what it is - the market is not paying this 3) and results were fine, but by no means a beat/ smash and many of the good results are getting dumped, so being down 10% here is lucky IMO...
so where does that put my interest? Well I could argue for $300 mm of FCF gen on a $6 bn ev of 5% yield as "already a buy in a multi-year context"... b/c i see opex flex improving FCF more than the market seems to be implying. The right multiple here is probably in the low 20s, just to be conservative let's say 22x on 5.25$/shr = $115/shr. this is a greedy target, i get it, esp for a co that does buybacks, and per the nice words from me above. so I get interested sub $125. otherwise I'm going to just have to let it go. i believe the way it gets here is we see a risk puke in tech and this sucks the smaller factors on higher beta affecting names like this. that's where you'd see a # like this. otherwise i sit on the sidelines and find another higher place to get involved in a different rates environment later in the year and perhaps a few more EPS prints in our belt.
so where does that put my interest? Well I could argue for $300 mm of FCF gen on a $6 bn ev of 5% yield as "already a buy in a multi-year context"... b/c i see opex flex improving FCF more than the market seems to be implying. The right multiple here is probably in the low 20s, just to be conservative let's say 22x on 5.25$/shr = $115/shr. this is a greedy target, i get it, esp for a co that does buybacks, and per the nice words from me above. so I get interested sub $125. otherwise I'm going to just have to let it go. i believe the way it gets here is we see a risk puke in tech and this sucks the smaller factors on higher beta affecting names like this. that's where you'd see a # like this. otherwise i sit on the sidelines and find another higher place to get involved in a different rates environment later in the year and perhaps a few more EPS prints in our belt.