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CRM Stock Study (11-6-25)

Posted by on February 28, 2025 at 07:47 | Last modified: November 6, 2025 12:19

I recently did a stock study on Salesforce Inc. (CRM, $252.68).

M* writes:

     > Salesforce provides enterprise cloud computing solutions. The
     > company offers customer relationship management technology
     > that brings companies and customers together. Its Customer
     > 360 platform helps the group deliver a single source of
     > truth, connecting customer data across systems, apps, and
     > devices to help companies sell, service, market, and conduct
     > commerce. It also offers Service Cloud for customer support,
     > Marketing Cloud for digital marketing campaigns, Commerce
     > Cloud as an e-commerce engine, the Salesforce Platform,
     > which allows enterprises to build applications, and other
     > solutions, such as MuleSoft for data integration.

Since 2017, the large-size company has grown sales and earnings at annualized rates of 21.7% and 41.6%, respectively (references to year from Value Line and BI website incremented by one to align with FY ending Jan 31). Lines are mostly up, jagged (EPS), and parallel with sizeable EPS declines in ’17, ’19, ’21, and ’22 [I rejected the stock three years ago based on visual inspection]. Five- (10-) year EPS R^2 is 0.04 (0.39) and Value Line (VL) gives an Earnings Predictability score of 30.

Since 2017, PTPM trails peer averages but leads the industry while increasing from 0.3% to 19.6% (’25) with a last-5-year mean of 10.8%. ROE lags peer and industry averages despite increasing from 2.7% to 10.5% (’25) with a last-5-year mean of 6.1%. Debt-to-Capital is lower than peer and industry averages while falling from 26.5% to 15.7% (’25) with a last-5-year mean of 17.0%.

Quick Ratio is 0.9 per M* who assigns “Wide” Economic Moat, gives “Standard” rating for Capital Allocation, and a B grade for Financial Health (per BI website). VL gives an A grade for Financial Strength and reports Interest Coverage over 25.

With regard to sales growth:

My 7.0% per year forecast is below the range.

With regard to EPS growth:

My 12.0% per year forecast is below the long-term estimate range [mean of seven: 14.6%]. Initial value is ’25 EPS of $6.36/share (up 51.4% YOY) rather than 2026 Q2 $6.88 (annualized).

My Forecast High P/E is 35.0. Since 2016, high P/E ranges from 58.0 in ’25 to 1243 in ’20 with triple digits four times and quadruple digits two. I consider all these NMF and am forecasting below the range (and current P/E of 36.7).

My Forecast Low P/E is 26.0. Since 2016, low P/E ranges from 26.3 in ’21 to 919 in ’20 with triple digits five times. Again, I consider these NMF and am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $165.40 is default based on initial value given above. That is 34.5% less than the previous closing price and 27.0% less than the 52-week low.

Dividends are new in 2025 with Payout Ratio (PR) of 25.2%. I am forecasting on the conservative side at 20.0%.

These inputs land CRM in the HOLD zone with a U/D ratio of 1.6. Total Annualized Return (TAR) is 9.8%.

PAR (using Forecast Average—not High—P/E) of 6.9% is less than I seek in a large-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 138 studies done in the past 90 days (my study along with 53 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 8.0%, 12.2%, 45.0, 30.9, and 25.2%. I am lower across the board. VL has no future average annual P/E available, which echoes my NMF discussion above.

MS high / low EPS are $12.02 / $6.76 versus my $11.21 / $6.36 (per share). My high EPS is less due to a lower growth rate and initial value. VL just undercuts me at $11.15.

MS LSPF of $200.00 implies a Forecast Low P/E of 29.6 versus the above-stated 30.9. MS LSPF is 4.3% less than the default $6.76/share * 30.9 = $208.88 resulting in more conservative zoning. MS LSPF is 20.9% greater than mine, however.

MOS is robust in this study because my inputs are near or below historical/analyst/MS averages/ranges. Consistent with this is MS TAR (17.0%) exceeding mine by 7.2% per year. My LSPF is also much more conservative.

With regard to valuation, PEG is 1.6 and 2.7 per Zacks and my projected P/E: slightly overvalued (1.7 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.76 with all 3- and 4-digit P/Es excluded (would otherwise appear much cheaper).

Per U/D, CRM is a BUY under $221/share. BI TAR criterion is met [392.4 / ((14.27 / 100 ) +1 ) ^ 5] ~ $201 with a forecast high price ~$392.

A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).

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RMD Stock Study (11-5-25)

Posted by on February 24, 2025 at 06:24 | Last modified: November 6, 2025 07:01

I recently did a stock study on ResMed Inc. (RMD, $246.40). Previous studies are here and here.

M* writes:

     > ResMed is one of the largest respiratory care device companies
     > globally, primarily developing and supplying flow generators,
     > masks and accessories for the treatment of sleep apnea.
     > Increasing diagnosis of sleep apnea combined with ageing
     > populations and increasing prevalence of obesity is resulting
     > in a structurally growing market. The company earns roughly
     > two thirds of its revenue in the Americas and the balance
     > across other regions dominated by Europe, Japan and Australia.
     > Recent developments and acquisitions have focused on digital
     > health as ResMed is aiming to differentiate itself through
     > the provision of clinical data for use by the patient,
     > medical care advisor and payer in the out-of-hospital setting.

Over the past decade, the medium-size company has grown sales and earnings at annualized rates of 12.2% and 17.2%, respectively (FY ends Jun 30). Lines are mostly up, straight, and parallel except for EPS dips in ’17, ’18, and ’21. Ten-year EPS R^2 is 0.89 and Value Line (VL) gives an Earnings Predictability score of 90.

Over the past decade, PTPM leads peer and industry averages while increasing from 23.9% (’16) to 32.6% (’25) with a last-5-year mean of 28.0%. ROE also leads peer and industry averages while ranging from 15.1% in ’18 to 27.4% in ’20 with a last-5-year mean of 22.2%. Debt-to-Capital is lower than peer and industry averages while falling from 40.9% (’16) to 12.5% (’25) with a last-5-year mean of 19.7%.

Quick Ratio is 1.7 and Interest Coverage is N/A per M* who assigns “Narrow” Economic Moat, gives an “Exemplary” rating for Capital Allocation, and an A grade for Financial Health (per BI website). VL gives an A grade for Financial Strength.

With regard to sales growth:

My 5.0% per year forecast is below the range.

With regard to EPS growth:

My 6.0% per year forecast is below the long-term estimate range [mean of six: 12.2%]. Initial value is ’25 EPS of $9.51/share (up 37.4% YOY) rather than 2026 Q1 $9.77 (annualized).

My Forecast High P/E is 27.0. Over the past 10 years, high P/E ranges from 25.8 (’16) to 56.9 (’22; 76.5 upside outlier in ’21 excluded) with a last-5-year mean of 39.5 and a last-5-year-mean average P/E of 33.2 (’21 low P/E also excluded). I am near bottom of the range (only ’16 is less).

My Forecast Low P/E is 19.0. Over the past 10 years, low P/E ranges from 19.1 in ’24 to 35.7 in ’22 (51.1 upside outlier in ’21 excluded) with a last-5-year mean of 26.9. My forecast is below the range.

My Low Stock Price Forecast (LSPF) of $180.70 is default based on initial value given above. That is 26.7% less than the previous closing price and 9.6% less than the 52-week low.

Over the past 10 years, Payout Ratio (PR) decreases from 48.2% (’16) to 22.3% (’25) with a last-5-year mean of 31.8%. I am forecasting below the range at 22.0%.

These inputs land RMD in the HOLD zone with a U/D ratio of 1.5. Total Annualized Return (TAR) is 7.7%.

PAR (using Forecast Average—not High—P/E) of 4.5% is less than I seek in a medium-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 151 studies done in the past 90 days (my study along with 60 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 7.9%, 11.0%, 31.0, 22.0, and 31.8%. I am lower across the board. VL’s future average annual P/E of 28.0 is greater than MS (26.5) and greater than mine (23.0).

MS high / low EPS are $16.02 / $9.38 versus my $12.73 / $9.51 (per share). My high EPS is less due to a lower growth rate. At $12.30, VL high EPS is less than both (first time I can recall seeing that).

MS LSPF of $199.70 implies a Forecast Low P/E of 24.0 vs. the above-stated 22.0. MS LSPF is 3.2% less than the default $9.38/share * 22.0 = $206.36 resulting in more conservative zoning. MS LSPF remains 10.5% greater than mine, however.

MOS is moderate in this study because my inputs are below most analyst/MS estimates. In support is MS TAR (14.5%) exceeding mine by 6.8% per year. In opposition is VL who I usually find to be more bullish.† VL has an 18-month target price of $241 in contrast to CFRA with a 12-month target price of $300.

With regard to valuation, PEG is 1.7 and 4.0 per Zacks and my projected P/E(much lower growth rate): somewhat overvalued (1.6 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.76.

Per U/D, RMD is a BUY under $221/share. BI TAR criterion is met [343.7 / ((14.07 / 100 ) +1 ) ^ 5] ~ $178 with a forecast high price ~$344.

Full disclaimer: I currently own shares of the stock.

A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).

† — Technically, VL is still slightly more bullish with a projected EPS growth rate of 6.5% versus
       my 6.0%. Its $12.30 EPS is based on four years compared to my $12.73 after five. Also,
       multiplying its future average annual P/E of 28.0 * $12.73/share = $344. This future average
       [P/E] price is the same as my future high [P/E] price. I don’t usually mind these details when
       assessing MOS because I prefer to have clear and obvious differentiation.

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ALGN Stock Study (11-5-25)

Posted by on February 20, 2025 at 06:55 | Last modified: November 5, 2025 07:25

I recently did a stock study on Align Technology Inc. (ALGN, $135.67). Previous studies are here, here, and here.

CFRA writes:

     > Align Technology, Inc. (ALGN) is a global medical device company
     > engaged in the design, manufacture, and marketing of Invisalign
     > clear aligners and iTero intraoral scanners and services for
     > orthodontics, and restorative and aesthetic dentistry. ALGN
     > also provides exocad computer-aided design and computer-aided
     > manufacturing (CAD/CAM) software for dental laboratories and
     > dental practitioners. ALGN’s products are intended primarily
     > for the treatment of malocclusion or the misalignment of teeth.

Over the past decade, the medium-size company has posted annualized growth of 19.0% and 12.1% for sales and EPS (excluding ’20 and ’21 throughout due to COVID-19: upside outliers that otherwise boost EPS growth rate to 14.7%), respectively. Lines are mostly up, parallel, and flattening with EPS dips in ’22 and ’24. Five- (10-) year EPS R^2 is 0.63 (0.70) and Value Line (VL) gives an Earnings Predictability score of 50.

Over the past decade, PTPM leads peer and industry averages despite trending down from 22.0% (’15) to 15.2% (’24) with a last-5-year mean of 15.9% (three data points). ROE leads peer and industry averages despite falling from 17.6% (’15) to 10.5% (’24) with a last-5-year mean of 13.3% (three data points). Debt-to-Capital is far below peer and industry averages as the company has no long-term debt per VL: last-5-year mean is 3.3%.

Quick Ratio is 1.0 with Interest Coverage N/A (consistent with no long-term debt) per M* who assigns “Narrow” Economic Moat, gives “Standard” rating for Capital Allocation, and C grade for Financial Health (per BI website). VL gives B++ grade for Financial Strength.

With regard to sales growth:

My 2.0% forecast is toward the lower end of the range.

With regard to EPS growth:

My 5.0% forecast is below the long-term-estimate range (mean of six: 10.1%). Initial value is 2025 Q3 EPS of $5.16/share (annualized) rather than ’24 EPS of $5.62.

My Forecast High P/E is 38.0. Over the last 10 years, high P/E ranges from 24.3 in ’20 (included for this calculation and excluding upside outlier of 143 in ’22 instead) to 94.1 in ’17 with a last-5-year mean of 51.7 and a last-5-year-mean average P/E of 42.9 (’20 and ’21 low P/Es excluded). Albeit above my comfort zone, I am less than all but ’20.

My Forecast Low P/E is 21.0. Over the last 10 years, low P/E ranges from 24.6 in ’16 (excluding 5.7 in ’20) to 38.3 in ’18 (excluding 51.0 in ’21) with a last-5-year average of 34.2. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $108.40 is default based on initial value given above. That is 20.1% less than previous close and 11.1% less than the 52-week low.

These inputs land ALGN in the BUY zone with a U/D ratio of 4.4. Total Annualized Return (TAR) is 14.5%.

PAR (using Forecast Average—not High—P/E) of 8.8% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 21 studies (too small for a robust comparison, really) done in the past 90 days (my study and 11 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 5.0%, 12.0%, 30.0, and 20.0, respectively. I am lower on growth rates. VL projects a future average annual P/E of 24.0 that is less than MS (25.0) and much less than mine (29.5).

MS high / low EPS are $10.45 / $5.93 versus my $7.17 / $5.16 (per share). My high EPS is less due mainly to a lower growth rate. VL’s high EPS of $14.50 soars above both (thereby offsetting the 29.5 from above).

MS LSPF of $108.30 implies a Forecast Low P/E of 18.3 versus the above-stated 20.0. MS LSPF is 8.7% less than the default $5.93/share x 20.0 = $118.60 resulting in more conservative zoning. MS LSPF is a dime (0.1%) less than mine.

Despite not forecasting the same degree of multiple contraction, I think MOS is solid in this study because my growth rate is below analyst/MS estimates. My forecast P/E is near/below historical ranges. In support is MS TAR (19.8%) exceeding mine by 5.3% per year.

With regard to valuation, PEG is 1.4 and 5.1 (low growth rate) per Zacks and my projected P/E, respectively: significantly overvalued (81 per M* is not consistent with the 15.6% growth rate from BI website). Relative Value [(current P/E) / 5-year-mean average P/E] is quite low at 0.62 and the “quick and dirty DCF” calculates the stock to be 55% undervalued.

Per U/D, ALGN is a BUY under $149/share. BI TAR criterion is met [272.5 / ((14.87 / 100 ) +1 ) ^ 5] ~ $136 with a forecast high price ~$272.

Full disclaimer: I currently own shares of ALGN.

A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).

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EW Stock Study (11-4-25)

Posted by on February 18, 2025 at 06:59 | Last modified: November 4, 2025 11:31

I recently did a stock study on Edwards Lifesciences Corp. (EW, $83.07). The previous study is here.

M* writes:

     > Spun off from Baxter International in 2000, Edwards Lifesciences
     > designs, manufactures, and markets a range of medical devices
     > and equipment for advanced stages of structural heart disease.
     > It has established itself as a leader across key products,
     > including surgical tissue heart valves, transcatheter aortic
     > valves, and transcatheter mitral and tricuspid technologies. The
     > firm derives about 60% of its total sales from outside the US.

Over the last decade, the medium-size company has grown sales and EPS at annualized rates of 9.7% and 15.7%. Lines are mostly up, straight, and parallel despite sales decline in ’24, EPS dips in ’20 and ’23, and flat EPS three years and counting. Five- (10-) year EPS R^2 are 0.45 (0.89) and Value Line (VL) gives an impressive Earnings Predictability score of 100.

Over the last decade, PTPM leads peer and industry averages while ranging from 20.5 in ’18 to 32.8% in ’22 with a last-5-year mean of 28.3%. ROE leads peer and industry averages despite falling from 20.0% (’15) to 14.4% (’24) with a last-5-year mean of 21.0%. To complete the trifecta, Debt-to-Capital is much lower than peer and industry averages while falling from 19.3% (’15) to 6.5% (’24) with a last-5-year mean of 10.1%.

Quick Ratio is 3.5 and Interest Coverage is NMF (interest income exceeds interest expense) per M* who assigns “Narrow” Economic Moat, rates the company “Exemplary” for Capital Allocation, and gives a Financial Health grade of A (per BI website). Value Line gives a B++ grade for Financial Strength.

With regard to sales growth:

My 5.0% per year forecast is toward bottom of the range.

With regard to EPS growth:

My 6.0% per year forecast is below the long-term-estimate range (mean of seven: 9.3%). Initial value is 2025 Q3 EPS of $2.28/share (annualized) rather than ’24 EPS of $2.34.

My Forecast High P/E is 35.0. Over the past 10 years, high P/E ranges from 37.1 in ’15 to 55.3 in ’21 (excluding 70.8 outlier in ’20) with a last-5-year mean of 47.9 and a last-5-year-mean average P/E (also excluding ’20 low P/E) of 37.9. I am below the range and at the upper end of my comfort zone.

My Forecast Low P/E is 25.0. Over the past 10 years, low P/E ranges from 25.2 in ’24 to 33.0 in ’21 (excluding 39.6 in ’20) with a last-5-year mean of 28.0. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $57.00 is default based on initial value given above. This is 31.4% less than the previous close and 12.2% less than the 52-week high.

These inputs land EW in the HOLD zone with a U/D ratio of 0.9. Total Annualized Return (TAR) is 5.2%.

PAR (using Forecast Average—not High—P/E) of 2.0% is less than the risk-free rate (T-bills). If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR but even that falls short of what I seek in a medium-size company.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 39 studies done in the past 90 days (my study and 16 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 7.7%, 8.3%, 35.0, and 25.0, respectively. I am lower on growth rates and equal on P/E range. VL projects a future average annual P/E of 32.0 that is greater than MS and mine (30.0).

MS high / low EPS are $3.56 / $2.39 versus my $3.05 / $2.28 (per share). My high EPS is less due to a lower growth rate. VL’s high EPS of $3.90 is greater than both.

MS LSPF of $59.80 is a virtual match with the default $2.39/share * 25.0 = $59.75 and 4.9% greater than mine.

MOS is robust because my inputs are near or below respective analyst/historical estimates/ranges and MS averages. Further substantiation is MS TAR 10.5% being 5.3%/year greater than mine.

With regard to valuation, PEG is 3.7 and 5.7 per Zacks and my projected P/E, respectively: both extremely rich (2.9 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 0.96. On another hand, the “quick and dirty DCF” has the stock undervalued by 24% and CFRA has a fair value for the stock near $160 (~92% higher).

Per U/D, EW is a BUY under $69/share. BI TAR criterion is met [106.8 / ((14.87 / 100 ) +1 ) ^ 5] = $53.40 with a forecast high price ~$107 (no dividend).

A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).

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COST Stock Study (11-1-25)

Posted by on February 14, 2025 at 07:39 | Last modified: November 3, 2025 08:05

I recently did a stock study on Costco Wholesale Corp. (COST, $911.45).

M* writes:

     > Founded in 1983, Costco Wholesale now operates a global chain of
     > membership-based warehouse clubs, delivering high-quality goods
     > and services at consistently low prices. As of its most recent
     > fiscal year, Costco operated approximately 910 warehouses,
     > serving more than 80 million members across its three geographic
     > segments: Costco US (approximately 73% of total revenue),
     > Costco Canada (13%), and Costco International (14%).Costco’s
     > core value proposition—-quality products at unbeatable prices—-has
     > yielded consistently strong member renewal rates (93% in the US
     > and Canada and nearly 90% internationally). About 55% of Costco’s
     > fiscal 2025 revenue came from its grocery offerings, and another
     > 25% from general merchandise.

Over the past decade, the mega-size ( > $50B annual revenue) company has grown sales and EPS at annualized rates of 10.4% and 15.1%, respectively (fiscal year ends Aug 31). Lines are up, straight, and parallel with no exceptions [unless one breaks out the magnifying glass, perhaps]. Value Line (VL) gives an Earnings Predictability score of 100.

Over the past decade, PTPM trails peer and industry averages despite increasing from 3.0% (’16) to 3.9% (’25) with a last-5-year mean of 3.6%. ROE leads peer and industry averages while increasing from 20.3% (’16) to 29.8% (’25) with a last-5-year mean of 29.9%. Debt-to-Capital is less than peer and industry averages while decreasing from 29.9% (’16) to 21.9% (’25) with a last-5-year mean of 28.2%.

Quick Ratio is only 0.5 but Interest Coverage is 71 per M* who assigns “Wide” Economic Moat, gives “Exemplary” rating for Capital Allocation, and an A grade for Financial Health (per BI website). VL gives an A+ grade for Financial Strength.

Wow.

With regard to sales growth:

My 6.0% forecast is below the range.

With regard to EPS growth:

My 7.0% forecast is below the long-term-estimate range (mean of seven: 9.5%). Initial value is ’25 EPS of $18.21/share.

My Forecast High P/E is 36.0. Over last 10 years, high P/E rises from 31.8 (’16) to 59.2 (’25) for a last-5-year mean of 48.5 and a last-5-year-mean average P/E of 41.3. I am toward lower end of the range [’16, ’17 (30.1), and ’18 (32.9) are lower].

My Forecast Low P/E is 27.0. Over the last 10 years, low P/E rises from 25.9 (’16) to 47.6 (’21) with a last-5-year mean of 34.0. I am forecasting the lowest value since 2019.

My Low Stock Price Forecast (LSPF) is $635.00. Default ($491.70) based on initial value given above seems unreasonably low at 46.1% (43.3%) less than the previous close (52-week low). My [arbitrary] selection is 30.3% (26.8%) less, respectively.

Over the past decade, Payout Ratio (PR) decreases from 31.9% in ’16 to 27.0% in ’25 with a last-5-year mean of 26.5%. I am forecasting below the range at 25.0%.

These inputs land COST in the SELL zone with a U/D ratio of 0. Total Annualized Return (TAR) is 0.9%.

PAR (using Forecast Average—not High—P/E) of NEGATIVE 1.7% is unthinkable for an investment candidate. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead but even that is far below the risk-free rate (T-bills).

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 322 studies (my study and 114 other outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 7.2%, 8.8%, 45.2, 30.5, and 27.1%, respectively. I am lower across the board. VL’s projected average annual P/E of 45.0 is greater than MS (37.9) and much greater than mine (31.5).

MS high / low EPS are $27.47 / $17.52 versus my $25.54 / $18.21 (per share). My high EPS is less due to a lower growth rate. VL’s high EPS is in the middle at $26.00.

MS LSPF of $619.10 implies a Forecast Low P/E of 35.3: greater than the above-stated 30.5. MS LSPF is 15.9% greater than the default $17.52/share * 30.5 = $534.56 resulting in more aggressive zoning. MS is still 2.5% less than mine, however.

I think MOS is solid in this study because my inputs are near or below analyst/MS estimates and historical ranges [my P/E range may even be unreasonably low]. Also consistent is MS TAR (6.8%) exceeding mine by 5.9%/year.

With regard to valuation, PEG is 3.3 and 6.7 per Zacks and my projected P/E, respectively: extremely overvalued (5.5 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 1.03.

For existing shareholders, I’m giving a HOLD rating because double-digit [historical] sales growth can drive stock price should that continue into the future.

Per U/D, COST is a BUY under $706/share. BI TAR criterion is met [919.4 / ((14.17 / 100 ) +1 ) ^ 5] ~ $474 with a forecast high price ~$919.

A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).

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PYPL Stock Study (10-31-25)

Posted by on February 11, 2025 at 06:50 | Last modified: October 31, 2025 09:15

I recently did a stock study on PayPal Holdings Inc. (PYPL) with a closing price of $67.93. Previous studies are here and here.

Value Line (VL) writes:

     > PayPal Holdings, Inc. operates a technology platform that
     > enables digital and mobile payments by consumers and merchants
     > throughout the world. It offers a wide range of payment
     > solutions under the brands: PayPal, PayPal Credit, Venmo, Xoom,
     > Paydiant, and Braintree. Has more than 430 million active
     > users. In 2024, approximately 26.3 billion transactions were
     > completed on its platform. From 2002 to July 2015, PayPal was
     > a wholly-owned subsidiary of eBay.

Over the past decade, the large-size company has grown sales and EPS at annualized rates of 15.4% and 16.6%, respectively. Lines are mostly up, straight, and parallel except for EPS dip in ’21 and larger decline in ’22. Five- (10-) year EPS R^2 is 0.04 (0.82) and VL gives an Earnings Predictability score of 50.

Over the past decade, PTPM trails peer and industry averages while ranging from 12.2% in ’22 to 23.6% in ’20 with a last-5-year mean of 17.4%. ROE trails peer and industry averages despite increasing from 9.3% in ’15 to 19.6% in ’24 with a last-5-year mean of 18.7%. Debt-to-Capital is less than peer and industry averages despite increasing from 0% in ’15 to 32.6% in ’24 with a last-5-year mean of 31.7%.

Quick Ratio is 1.3 and Interest Coverage is 15 per M* who assigns “Narrow” Economic Moat, gives “Standard” rating for Capital Allocation, but only a C grade for Financial Health (per BI website). VL gives an A grade for Financial Strength.

With regard to sales growth:

My 4.0% forecast is below the range.

With regard to EPS growth:

My 9.0% forecast is below the long-term-estimate range (mean of seven: 13.1%). Initial value is ’24 EPS of $3.99/share instead of 2025 Q3 $4.99 (annualized).

My Forecast High P/E is 22.0. Over the last 10 years, high P/E increases from 42.5 in ’15 to 93.8 in ’22 before falling to 23.5 in ’24 for a last-5-year mean of 59.5 and a last-5-year-mean average P/E of 43.0. I am below the range.

My Forecast Low P/E is 13.0. Over the last 10 years, low P/E ranges from 13.1 in ’23 to 50.9 in ’21 with a last-5-year mean of 26.6. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $51.90 is default based on initial value given above. This is 23.6% less than the previous close and 7.2% less than the 52-week low.

These inputs land PYPL in the BUY zone with a U/D ratio of 4.2. Total Annualized Return (TAR) is 14.7%.

PAR (using Forecast Average—not High—P/E) of 9.6% is less than I seek in a large-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 87 studies (my study and 26 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 5.0%, 10.0%, 22.5, and 13.5, respectively. I am lower across the board. VL’s projected average annual P/E of 16.0 [down from 25.0 on 5/3/2024] is less than MS (18.0) and less than mine (17.5).

MS high / low EPS are $7.37 / $4.56 versus my $6.14 / $3.99 (per share). My high EPS is less due to a lower growth rate and initial value. VL’s high EPS is in the middle at $7.00.

MS LSPF of $56.20 implies a Forecast Low P/E of 12.3: lower than the above-stated 13.5. MS LSPF is 8.7% less than the default $4.56/share * 13.5 = $61.56 resulting in more conservative zoning. MS is still 8.3% greater than mine, however.

I think MOS is solid in this study because my inputs are near or below analyst/MS estimates and historical ranges. Also consistent is MS TAR (17.6%) exceeding mine by 2.9%/year.

With regard to valuation, PEG is 1.0 and 1.4 per Zacks/M* and my projected P/E, respectively: fairly valued. Relative Value [(current P/E) / 5-year-mean average P/E] is fire-sale cheap at 0.32.

Per U/D, PYPL is a BUY under $72.70/share. BI TAR criterion is met [135.1 / ((14.87 / 100 ) +1 ) ^ 5] ~ $67.50 with a forecast high price ~$135 (dividend payment to be started soon).

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CPAY Stock Study (10-29-25)

Posted by on February 3, 2025 at 07:18 | Last modified: October 29, 2025 08:35

I recently did a stock study on Corpay, Inc. [CPAY (formerly FLT), $285.59]. Previous studies are here, here, and here.

Value Line writes:

     > Corpay, Inc. (formerly FLEETCOR) is a leading independent provider of
     > fuel cards, and payment products and services throughout North America,
     > Latin America, and Europe. Its corporate charge cards cater to
     > commercial fleets, major oil companies, petroleum marketers, and
     > government entities. The company owns and operates proprietary
     > closed-loop networks electronically connected to merchants, through
     > which it captures and reports customized information.

Over the past decade, the medium-size company has grown sales and earnings at annualized rates of 9.6% and 13.7%, respectively. Lines are mostly up, straight, and parallel except for a sales+EPS decline in ’20. Ten-year EPS R^2 is 0.85 and Value Line (VL) gives an Earnings Predictability score of 85.

Over the past decade, PTPM leads peer averages but trails the industry while ranging from 31.5% in ’15 to 45.0% in ’18 with a last-5-year mean of 36.7%. ROE leads peer averages and tracks even with the industry while increasing from 12.0% (’15) to 31.8% (’24) with a last-5-year mean of 30.3%. Debt-to-Capital is lower than peer and industry averages while trending higher from 50.9% (’15) to 71.9% (’24) with a last-5-year mean of 67.3%.

Quick Ratio is 0.67 and Interest Coverage is 4.8 per M* who assigns “Narrow” [quantitative] Economic Moat and gives a C grade for Financial Health (per BI website). VL gives a B+ grade for Financial Strength. CFRA writes: “We have a positive view of CPAY’s balance sheet, with a leverage ratio of 2.5x trailing 12-month EBITDA and total liquidity at $3.5B.”

With regard to sales growth:

I am forecasting below the range at 9.0% per year.

With regard to EPS growth:

My 10.0% per year forecast is below the long-term-estimate range [mean of six (tightly clustered within 0.5%): 13.2%]. Initial value is ’24 EPS of $13.97/share instead of 2025 Q2 $14.72 (annualized).

My Forecast High P/E is 21.0. Over the last 10 years, high P/E falls from 43.0 (’15) to 27.6 (’24) with a last-5-year mean of 28.1 and a last-5-year-mean average P/E of 22.6. I am below the range.

My Forecast Low P/E is 13.0. Over the last 10 years, low P/E falls from 34.9 (’15) to 17.7 (’24) with a last-5-year mean of 17.0. I am forecasting at bottom of the range.

My Low Stock Price Forecast (LSPF) is $200.00. Default ($181.60) based on initial value given above seems unreasonably low at 36.4% (32.5%) less than the previous close (52-week low). My [arbitrary] selection is 30.0% (25.7%) less, respectively.

These inputs land CPAY in the HOLD zone with a U/D ratio of 2.2. Total Annualized Return (TAR) is 10.6%.

PAR (using Forecast Average—not High—P/E) is less than I seek for a medium-size company at 6.0%. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 139 studies done in the past 90 days (my study and 34 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 10.2%, 12.0%, 24.3, and 16.3, respectively. I am lower across the board. VL projects a future average annual P/E of 15.0 that is less than MS (20.3) and less than mine (17.0).

MS high / low EPS are $25.89 / $14.39 vs. my $22.50 / $13.97 (per share). My high EPS is lower due to a lower growth rate. VL’s high EPS of $35.40 soars above both.

MS LSPF of $232.40 implies a Forecast Low P/E of 16.2 vs. the above-stated 16.3. MS LSPF is 0.9% less than the default $14.39/share * 16.3 = $234.56. MS LSPF is 16.2% greater than mine, however.

I think MOS is robust in this study because my inputs are near or below analyst/MS estimates and historical ranges. MS TAR (16.3%) is 5.7% per year greater than mine.

With regard to valuation, PEG is 1.0 and 1.8 per Zacks and my projected P/E, respectively: fairly valued (1.7 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is slightly low at 0.86.

Per U/D, CPAY is a BUY under $268/share. BI TAR criterion is met [472.5 / ((14.87 / 100 ) +1 ) ^ 5] ~ $236 with a forecast high price ~$473 (no dividend).

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CTSH Stock Study (10-30-25)

Posted by on at 06:54 | Last modified: October 30, 2025 08:21

I recently studied Cognizant Technology Solns Corp. (CTSH, $71.69). Previous studies are here, here, here, and here.

M* writes:

     > Cognizant Technology Solutions is a multinational IT services provider
     > that offers a range of consulting and business process outsourcing
     > services. Originally founded in India, the company is headquartered in
     > the US and serves enterprise customers spanning the financial services,
     > healthcare, and resources industries. With most of its workforce
     > located in India, Cognizant leverages a global delivery model that
     > helps clients outsource their IT needs to offshore labor.

Over the past decade, this large-size company has grown sales and EPS at annualized rates of 5.3% and 7.0%. Lines are somewhat up, straight, and parallel with sales dips in ’20 and ’23 along with EPS rockiness from declines in ’16, ’17, ’19, ’20, and ’23. Five- (10-) year EPS R^2 is 0.62 (0.71) and Value Line (VL) gives an Earnings Predictability score of 95.

Over the past decade, PTPM leads peer and industry averages despite trending down from 17.4% (’15) to 14.9% (’24) with a last-5-year mean of 14.5%. ROE trails peer and industry averages, ranging from 12.2% in ’20 to 18.9% in ’18 with a last-5-year mean of 16.2%. Debt-to-Capital is much less than peer and industry averages while declining from 12.2% (’15) to 9.3% (’24) with a last-5-year mean of 11.1%.

Quick Ratio is 1.96 and Interest Coverage is 70 per M* who assigns “Narrow” Economic Moat, gives a “Standard” rating for Capital Allocation, and gives an A grade for Financial Health (per BI website). VL gives an A+ grade for Financial Strength.

With regard to sales growth:

My 4.0% per year forecast is below the range.

With regard to EPS growth:

My 6.0% forecast is below the long-term-estimate range (mean of seven: 9.2%). Initial value will be ’24 EPS of $4.51/share rather than 2025 Q2 EPS of $4.92 (annualized).

My Forecast High P/E is 18.0. Over the past 10 years, high P/E trends down from 26.3 (’15) to 18.3 (’24) with a last-5-year mean of 22.4 and a last-5-year-mean average P/E of 18.3. I am below the range.

My Forecast Low P/E is 12.0. Over the past 10 years, low P/E trends down from 19.1 (’15) to 14.1 (’24) with a last-5-year mean of 14.2. I am forecasting near bottom of the range [only ’22 is less (11.6)].

My Low Stock Price Forecast (LSPF) of $54.10 is default based on initial value given above. That is 24.5% less than the previous close and 17.0% less than the 52-week low.

Since a dividend is first issued in 2017, Payout Ratio (PR) ranges from 17.8% in ’17 to 34.2% in ’20 with a last-5-year mean of 26.3%. I am forecasting below the range at 17.0%.

These inputs land CTSH in the HOLD zone with a U/D ratio of 2.1. Total Annualized Return (TAR) is 9.6%.

PAR (using Forecast Average—not High—P/E) of 5.9% is less than I seek in a large-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 73 studies done in the past 90 days (my study and 30 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 5.3%, 7.4%, 19.9, 13.9, and 26.1%. I am lower across the board. VL projects a future average annual P/E of 17.0, which is greater than MS (16.9) and greater than mine (15.0).

MS high / low EPS are $6.89 / $4.62 versus my $6.04 / $4.51 (per share). My high EPS is less due to a lower growth rate. VL’s high EPS is greatest at $7.25.

MS LSPF of $56.50 implies a Forecast Low P/E of 12.2 versus the above-stated 13.9. MS LSPF is 12.0% less than the default $4.62/share * 13.9 = $64.22, which results in more conservative zoning. MS LSPF remains 4.4% greater than mine.

I think MOS is solid in the study because my inputs are near or below analyst/MS estimates and historical ranges. In support is MS TAR (16.0%) exceeding mine by 6.4% per year.

With regard to valuation, PEG is 1.4 and 2.3 per Zacks and my projected P/E, respectively: slightly overvalued (1.68 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is somewhat cheap at 0.80.

Per U/D, CTSH is a BUY under $67.80/share. BI TAR criterion is met [108.7 / ((13.97 / 100 ) +1 ) ^ 5] ~ $56.50 with a forecast high price ~$109.

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