NVIDIA and ASML have seen share price overtake FCF

Long_Equity
04-22

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.

ImageImage

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

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment（3）

  • Top
  • Latest
  • Taurus Pink
    ·04-22
    [得意] [得意] [得意]
    Reply
    Report
  • Gdman
    ·04-22
    Nothing happened
    Reply
    Report
  • BrianWashington
    ·04-22
    🙌
    Reply
    Report