[1] Market Valuation: At P/EBIT of 151, Our Selection trading at a more expensive price compared to 23.7 for S&P 500
Market ValuationOur SelectionS&P 500vs S&P 500As of 11/29/2021 Price To Sales Ratio (P/S)6.33851094796181549CheaperPrice To OpInc Ratio (P/EBIT)15123.7More ExpensivePrice To Earnings Ratio (PE)58.924.9More Expensive
[2] Growth & Profits: Considering the valuation, the market appears to be undervaluing higher growth and demonstrated profit generation ability of S&P 500 - S&P 500: better revenue growth --> 0% last Q (qoq), 0% last Q (yoy), 0% LTM, and 0% annually in last 3 FY - In comparison, Our Selection: -4.3%, 31.7%, 55.2%, and 47.2% respectively, during the same periods - Similarly, S&P 500: greater profit generation promise --> 922,337,203,685,477,630% average margin, 0% average margin expansion, and 922,337,203,685,477,630% cash flow - The corresponding values for Our Selection stand at 7.7%, 0.6%, and 11.5%Note: Average margin is based on average of last Q, LTM, and last 3 FY, while margin change is based on last Q margin vs 3Y average
Growth & ProfitOur SelectionS&P 500vs S&P 500 As of 11/29/2021 Revenue GrowthLast Q Growth (QoQ)-2.3%0%Growing SlowerLast Q Growth (YoY)36.1%0%Growing SlowerLTM Growth55.1%0%Growing SlowerLast 3 Fiscal Year CAGR46.7%0%Growing Slower ProfitabilityLast Q OpInc Margin7.1%922,337,203,685,477,630%Less ProfitableLTM OpInc Margin9.4%922,337,203,685,477,630%Less ProfitableLast 3 Fiscal Year Average6.5%922,337,203,685,477,630%Less ProfitableLTM FCF Margin11.5%922,337,203,685,477,630%Lower Cash Flow %
[3] Financial Risk: Then, is the market is assigning more risk to S&P 500? Likely as there is apparent higher risk for S&P 500 vs Our Selection - Our Selection: better debt position, with debt as % of equity of 6% vs 20% for S&P 500 - Our Selection: more cash cushion, with cash as % of assets of 34.6% vs 11% for S&P 500
Financial RiskOur SelectionS&P 500vs S&P 500 As of 11/29/2021Debt as % of Equity6%20%Lower Debt LoadCash as % of Assets34.6%11%Better Cash Position
[4] Market Returns: What about market returns of Our Selection vs S&P 500? - Our Selection: higher average annualized return of 60.7% vs 18.5% for S&P 500 based on key market periods - These key market periods include, year-to-date, pre-covid to now, and 1, 2, and 3 years prior to covid
Precovid date is taken as end of Feb 2020
Notes:
[1] Q = quarter, LTM = last twelve months, FY = fiscal years, yoy = year-on-year, qoq = quarter-on-quarter
[2] Revenue growth decision is made by giving more weightage to long-term revenue growth (3-year average) and lesser weightage to quarterly growths
[3] Margin mentioned is average of last Q, LTM, and last 3 FY; margin increase is average of increase in last Q vs LTM and increase in last Q vs 3-FY average