Stock Market Nerd – Comp Sheets – Mature Growth EBIT Comp Sheet; Fast Growth Gross Profit Comp Sheet – July 06, 2024
Mature Growth EBIT Comp Sheet
Caveats:
- I love growth multiple framework and readily borrow it from Peter Lynch. He uses a “PEG ratio.” This means price divided by earnings per share divided by net income per share growth rates. I modify this approach to use multi-year profit growth, rather than one year. I also modify it by using EBIT and EBITDA growth multiples not just net income.
- Growth multiples (like in the right-most column below) aren’t perfect. They do a poor job rewarding the highest quality companies in the world with the most certain long term runways for profit growth. I don’t think this applies to Tesla at the top, as that firm’s high multiple is a byproduct of macro cycles. For Apple, I do think this applies. It has arguably the deepest competitive moat on the planet. It makes sense (I say as a non-shareholder) for investors to be willing to pay more for that growth. The probability of it being delivered is higher than for virtually any other firm. At the same time, other world-class companies like Visa and Netflix don’t get this same premium. Interesting to note.
- Companies like Tesla and Airbnb do not make any favorable non-GAAP adjustments to EBIT. This makes them look a tad more expensive on an apples-to-apples basis.
- I pushed the CAGR timeline one year into the future for Airbnb and Intuit due to abnormally easy Y/Y EBIT growth comps for 2024 (one-time GAAP charges for each).
- I pushed the CAGR timeline out one year into the future for PayPal due to accounting changes from 2023 to 2024. PayPal now includes stock comp expenses in EBIT, which means EBIT is technically sharply declining Y/Y because it didn’t count the expense in 2023.
- Fiscal years do not perfectly match calendar years. They’re close and that didn’t make a material difference here. Still worth noting.
- Nike was excluded because it will not deliver any profit growth over the next two years.
- I used the normal CAGR period for Starbucks. I was tempted to push that timeline out a year like for ABNB and INTU, but decided not to. Had I done this, the right-most column for Starbucks would have been roughly 1.60. It’s having a tough year, which greatly impacts profit growth and the growth multiple.
Definitions:
- NTM = Next 12 months
- FY = fiscal year
- YTD = year-to-date
- CAGR = compounded annual growth rate
Source: Brad Freeman – SEC Filings, Company Presentations, and Company Press Releases
Fast Growth Gross Profit Comp Sheet
No caveats needed.
Source: Brad Freeman – SEC Filings, Company Presentations, and Company Press Releases
