There are multiple ways to consider valuation. Here's one approach I find helpful.
This table compares free cash flow growth to share price growth (last 5 years).
$Technology One, Ltd.(THNOF)$ and $NEMETSCHEK SE(NEMKY)$ have seen their FCF grow faster than their share price - suggesting that the market may have overlooked their growth.
$NVIDIA Corp(NVDA)$ and $ASML Holding NV(ASML)$ have seen share price overtake FCF, suggesting that the market is pricing in higher future growth than historic growth.
It’s due to their buy back programme. If they sold the shares they previously bought, then they would have a huge cash position.
Instead they’ve used their cash to shrink their equity. Look at their interest expense as a percent of their operating profit. Their debt is affordable and clearly not a problem.
https://twitter.com/long_equity/status/1781801853145034796
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