MA Stock Study (6-28-26)

I recently did a stock study on Mastercard Inc. (MA, $499.02).

M* writes:

     > Mastercard is the second-largest payment processor in the
     > world, having processed close to $11 trillion in volume
     > during 2025. Mastercard operates in over 200 countries
     > and processes transactions in over 150 currencies.

Over the past 10 years, this large-size company grows sales and earnings at annualized rates of 12.4% and 18.3%. Lines are up, mostly straight, and parallel except for sales+EPS decline in ’20. Value Line (VL) gives an Earnings Predictability score of 90. Shares outstanding decrease 17.7% (2.1%/year).

Over the past 10 years, PTPM leads peer and industry averages while ranging from 48.2% in ’18 to 57.6% in ’19 with a last-5-year mean of 54.5%. ROE leads peer and industry averages while increasing from 64.1% to 186% (’25) with a last-5-year mean of 162.0% (shareholder equity consistently positive with 3.5% CAGR). Debt-to-capital is greater than peer averages but less than the industry while increasing from 47.8% to 71.1% (’25) with a last-5-year mean of 69.8%.

Quick ratio is 0.56 and interest coverage 27.7 per M* who assigns “Wide” Economic Moat, gives an “Standard” rating for Capital Allocation, and an A grade for Financial Health (per BI website). VL gives an A+ grade for Financial Strength.

Four references lead Google AI to state:

     > Mastercard’s debt level is generally not concerning, despite
     > appearing high on paper. While the company carries around
     > $18.96 billion in total debt—resulting in a high debt-to-equity
     > ratio—its robust cash generation, massive scale, and exceptional
     > interest coverage make the obligation highly manageable.

With regard to sales growth:

• YF gives YOY ACE 13.0% and 12.5% for ’26 and ’27 (based on 36 analysts).
• Zacks gives YOY ACE 12.8% and 12.5% for ’26 and ’27 (12 analysts).
• VL projects 9.7% per year from ’25-’30.
• CFRA projects 13.5% YOY and 12.8% per year for ’26 and ’25-’27, respectively.
• M* gives a 2-year ACE of 19.1% while projecting 13.4% per year from ’25-’30 in Equity Report.

My 9.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 17.6% and 17.1% per year for ’25-’27 and ’25-’28, respectively (based on 40 analysts).
• Nasdaq.com gives ACE 15.0% and 14.1% per year for ’26-’28 and ’26-’29 [17 / 6 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year CAGR of 16.2%.
• Finviz gives 5-year annualized ACE of 15.8% (12).
• Argus projects 5-year CAGR of 20.0%.
• LSEG has LTG at 15.5%.
• YF gives YOY ACE 15.5% and 15.8% for ’26 and ’27, respectively (37).
• Zacks gives YOY ACE 15.2% and 15.5% for ’26 and ’27 along with 5-year annualized growth of 16.4% (16).
• VL projects 11.2% per year from ’25-’30.
• CFRA projects 18.2% YOY and 16.3% per year for ’26 and ’25-’27 along with 3-year CAGR of 16.0%.
• M* gives long-term ACE of 16.6% and projects 16.1% in Equity Report.

My 11.0% forecast is below the long-term-estimate range (mean of eight: 15.9%). Initial value is ’25 EPS of $16.52/share rather than 2026 Q3 EPS of $17.28 (TTM).

My Forecast High P/E is 35.0. Over the past decade, high P/E ranges from 29.5 in ’16 to 45.8 in ’21 (excluding 57.7 in ’20) with last-5-year mean of 39.3 and a last-5-year-mean average P/E of 34.6. I am near bottom of the range (only ’16 is less).

My Forecast Low P/E is 22.0. Over the past decade, low P/E increases from 21.3 to 28.2 (’25) with a last-5-year mean of 29.9. I am forecasting near bottom of the range (only ’16 is less).

My Low Stock Price Forecast (LSPF) of $363.40 is default based on initial value from above: 27.2% less than previous close and 21.8% less than the 52-week low.

Over the past 10 years, payout ratio (PR) ranges from 16.6% in ’19 to 25.1% in ’20 with a last-5-year mean of 19.2%. My 16.0% forecast is at bottom of the range.

These inputs land MA in the BUY zone with a U/D ratio of 3.5. Total Annualized Return (TAR) is 14.8%.

PAR (using Forecast Average—not High—P/E) of 10.3% is less than I seek for 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 124 studies done in the past 90 days (my study and 42 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 13.0%, 14.1%, 35.0, 28.2, and 19.2%, respectively. I am lower (or equal) across the board. VL projects a future average P/E of 30.0 that is less than MS (31.6) and greater than mine (28.5).

MS high / low EPS are $32.97 / $16.42 versus my $27.84 / $16.52 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $28.90 ($34.19) is in the middle (greater than both).

MS LSPF of $416.50 implies a Forecast Low P/E of 25.4: less than the above-stated 28.2. MS LSPF is 10.1% less than the default $16.42/share * 28.2 = $463.04 resulting in more conservative zoning. MS LSPF is 14.6% greater than mine, though.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Supporting the MOS is MS TAR exceeding mine by 4.0% per year and my lower LSPF.

With regard to valuation, PEG is 1.6 and 2.4 per Zacks and my projected P/E: overvalued (M* has 1.3). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.84. “Quick and dirty” cash flow (including capex, which is debatable) has stock undervalued by 45%. M* (CFRA) reports stock undervalued (overvalued) by 9% (7%).

Per U/D, MA is a BUY right now under $516/share. [974.4 / ((14.07 / 100 ) +1 ) ^ 5] ~ $504 meets the BetterInvesting® TAR criterion given a forecast high price ~$974.

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

CTAS Stock Study (6-26-26)

I recently did a stock study on Cintas Corp. (CTAS, $169.09).

M* writes:

     > Cintas has roots dating back to 1929, when the Farmer family cleaned
     > and resold dirty rags to manufacturing plants in Ohio. The firm has
     > expanded its business organically and through acquisitions, and today
     > Cintas acts as a one-stop outsourcing partner for businesses. Cintas
     > will design, manufacture, collect, and clean every employee uniform
     > for a small weekly sum, taking on the upfront capital expense itself.
     > At the same stop, Cintas can also replace soiled or depleted mats,
     > mops, trash liners, towels, first aid supplies, fire extinguishers, and
     > cleaning products. Businesses value an outsourcing partner like
     > Cintas as it simplifies operations and leaves noncore tasks with
     > high regulatory standards in the hands of professionals.

Over the past 10 years, this large-size company grows sales and earnings at annualized rates of 8.0% and 20.6% (FY ends May 2026). Lines are up, mostly straight, and parallel. Value Line (VL) gives an Earnings Predictability score of 100. Shares outstanding increase 6.7% (0.8%/year).

Over the past 10 years, PTPM leads peer and industry averages while increasing from 14.6% to 21.9% (’25) with a last-5-year mean of 19.8%. ROE is even with peer averages while leading the industry and increasing from 21.9% to 38.6% (’25) with a last-5-year mean of 35.0% (shareholder equity consistently positive with 10.9% CAGR). Debt-to-capital is less than peer and industry averages while falling from 41.4% to 36.2% (’25) with a last-5-year mean of 41.0%.

Quick ratio is 0.95 and interest coverage 24.2 per M* who assigns “Wide” Economic Moat, gives an “Exemplary” rating for Capital Allocation, and an A grade for Financial Health (per BI website). VL gives a A grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 8.5% and 7.5% for ’26 and ’27 (based on 17 analysts).
• Zacks gives YOY ACE 8.5% and 7.5% for ’26 and ’27 (9 analysts).
• VL projects 7.9% per year from ’25-’30.
• CFRA projects 9.5% YOY and 8.4% per year for ’26 and ’25-’27, respectively.
• M* gives a 2-year ACE of 9.3% while projecting 8.1% per year from ’25-’30 in Equity Report.

My 7.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 11.3% both YOY and per year for ’27 and ’26-’28, respectively (based on 22 analysts).
• Nasdaq.com gives ACE 11.0% and 10.9% per year for ’26-’28 and ’26-’29 (11 / 4 / 2 analysts for ’26 / ’28 / ’29).
• Seeking Alpha projects 4-year CAGR of 11.2%.
• Finviz gives 5-year annualized ACE of 11.2% (6).
• Argus projects 5-year CAGR of 12.0%.
• LSEG has LTG at 11.7%.
• YF gives YOY ACE 11.3% and 10.9% for ’26 and ’27, respectively (13).
• Zacks gives YOY ACE 11.1% and 10.8% for ’26 and ’27 along with 5-year annualized growth of 11.6% (11).
• VL projects 12.4% per year from ’25-’30.
• CFRA projects 12.3% YOY and 11.5% per year for ’26 and ’25-’27 along with 3-year CAGR of 11.0%.
• M* gives long-term ACE of 11.7% and projects 11.3% (lower of GAAP/adjusted) in Equity Report.

My 10.0% forecast is below the long-term-estimate range (mean of eight: 11.6%). Initial value is ’25 EPS of $4.40/share rather than 2026 Q3 EPS of $4.74 (TTM).

My Forecast High P/E is 35.0. Over the past decade, high P/E increases from 23.3 to 51.8 (’25) with last-5-year mean of 42.2 and a last-5-year-mean average P/E of 36.1. I am below the last five years.

My Forecast Low P/E is 26.0. Over the past decade, low P/E increases from 19.1 to 38.1 (’25) with a last-5-year mean of 30.0. I am [aggressively] forecasting the lowest since ’20.

My Low Stock Price Forecast (LSPF) of $114.40 is default based on initial value from above: 32.3% less than previous close and 29.0% less than the 52-week low.

Over the past 10 years, payout ratio (PR) increases from 25.7% to 35.5% (’25). My 23.0% forecast is at bottom of the range.

These inputs land CTAS in the HOLD zone with a U/D ratio of 1.4. Total Annualized Return (TAR) is 8.6%.

PAR (using Forecast Average—not High—P/E) of 5.8% is less than I seek for 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 85 studies done in the past 90 days (my study and 24 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 8.6%, 10.7%, 37.0, 28.0, and 37.3%, respectively. I am lower across the board. VL projects a future average P/E of 30.0 that is less than MS (32.5) and less than mine (30.5).

MS high / low EPS are $7.84 / $4.71 versus my $7.09 / $4.40 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $7.90 ($7.55) is greater than both (in the middle).

MS LSPF of $130.60 implies a Forecast Low P/E of 27.7: less than the above-stated 28.0. MS LSPF is 1.0% less than the default $4.71/share * 28.0 = $131.88 resulting in more conservative zoning. MS LSPF is 14.2% greater than mine, though.

MOS is moderate in the study because my inputs are near or below some historical/analyst/MS averages/ranges (forecast P/E range is the big exception). Supporting the MOS is MS TAR exceeding mine by 3.5% per year.

With regard to valuation, PEG is 2.7 and 3.2 per Zacks and my projected P/E: overvalued (M* has 2.3). Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 1.0. M* reports stock fairly valued while CFRA reports 37% overvalued.

Per U/D, CTAS is a BUY under ~$148/share. Given a forecast high price ~$248, [248.2 / ((14.17 / 100 ) +1 ) ^ 5] ~ $128 would meet the BetterInvesting® TAR criterion.

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

XP Stock Study (6-24-26)

I recently did a stock study on XP, Inc. (XP, $15.72).

M* writes:

     > XP Inc is a Cayman Island-based technology-driven
     > financial services platform. It is a provider of low-fee
     > financial products and services in Brazil. The company
     > evaluates its business through a single segment such
     > as monitoring operations, making decisions on fund
     > allocation, and evaluating the performance. It generates
     > revenue through the Brokerage commission. Geographically,
     > the company derives maximum revenue from Brazil and
     > also has its presence in other countries.

Since public trading [as sponsored ADR] begins in 2019, this medium-size company grows sales and earnings at annualized rates of 8.0% and 20.6%. Lines are up, mostly straight, and parallel. Value Line (VL) gives an Earnings Predictability score of 90. Shares outstanding increase 3.9% (0.6%/year).

Since 2019, PTPM leads peer and industry averages while increasing from 42.9% to 68.4% (’25) with a last-5-year mean of 63.1%. ROE leads peer and industry averages despite falling from 52.1% to 20.9% (’25) with a last-5-year mean of 22.0% (shareholder equity consistently positive with 10.5% CAGR). Debt-to-capital is greater than peer averages and less than the industry while ranging from 66.2% in ’21 to 85.2% in ’24 with a last-5-year mean of 72.8%.

Quick ratio is 0.55 and interest coverage 11.0 per M* who gives an alarming D grade for Financial Health (per BI website). VL gives a B+ grade for Financial Strength and a debt ratio of 0.16, which is generally regarded as very safe (per Google AI).

With regard to sales growth:

• YF gives YOY ACE 10.9% and 13.4% for ’26 and ’27 (based on 9 analysts).
• Zacks gives YOY ACE 19.7% and 15.5% for ’26 and ’27 (2 analysts).
• VL projects 8.4% per year from ’25-’30.
• CFRA gives ACE 11.0% YOY and 12.2% per year for ’26 and ’25-’27, respectively (9).

My 8.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 14.6% YOY and 14.7% per year for ’27 and ’26-’28, respectively (based on 12 analysts).
• Nasdaq.com gives ACE 15.0% YOY and 12.9% per year for ’27 and ’26-’28 (3 / 3 / 2 analysts for ’26 / ’27 / ’28).
• Seeking Alpha projects 4-year CAGR of 15.6%.
• Finviz gives 5-year annualized ACE of 12.5% (1).
• YF gives YOY ACE 10.7% and 12.6% for ’26 and ’27, respectively (5).
• Zacks gives YOY ACE 18.9% and 14.9% for ’26 and ’27 along with 5-year annualized growth of 15.2% (3).
• VL projects 11.3% per year from ’25-’30.
• CFRA gives ACE 11.7% YOY and 12.2% per year for ’26 and ’25-’27 (5).

My 10.0% forecast is below the long-term-estimate range (mean of four: 13.6%). Initial value is ’25 EPS of $1.74/share rather than 2026 Q1 EPS of $1.83 (TTM).

My Forecast High P/E is 11.0. Since 2019, high P/E decreases from 75.7 in ’16 to 11.9 (’25) with last-5-year mean of 24.9 and a last-5-year-mean average P/E of 18.1. I am below the range.

My Forecast Low P/E is 6.0. Since 2019, low P/E ranges from 60.0 to 6.2 (’25) with a last-5-year mean of 11.3. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $10.40 is default based on initial value from above: 33.8% less than previous close and 29.7% less than the 52-week low.

Since dividend inception, payout ratio (PR) is 90.6% in ’23, 48.8% in ’24, and 10.1% in ’25. My conservative forecast is 5.0%.

These inputs land XP in the HOLD zone with a U/D ratio of 2.8. Total Annualized Return (TAR) is 14.9%.

PAR (using Forecast Average—not High—P/E) of 9.3% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on only three other studies done in the past 90 days (too small a sample for anything but anecdotal comparison), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 12.0%, 11.0%, 18.0, 8.1, and 36.6%, respectively. I am lower across the board. VL projects a future average P/E of 14.0 that is greater than MS (13.1) and much greater than mine (8.5).

MS high / low EPS are $3.08 / $1.70 versus my $2.80 / $1.74 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $3.00 is in the middle.

MS LSPF of $10.80 implies a Forecast Low P/E of 6.4: less than the above-stated 8.1. MS LSPF is 21.6% less than the default $1.70/share * 8.1 = $13.77 resulting in more conservative zoning. MS LSPF is still 3.9% greater than mine, though.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Also supporting this assessment is the lowest TAR of three MS studies exceeding mine by 5.0% per year.

With regard to valuation, PEG is 0.5 and 0.8 per Zacks/M* and my projected P/E: undervalued. Relative Value is quite low at 0.5 [(current P/E) / 5-year-mean average P/E]. M* reports stock at a 7% discount.

I hope more in the community study this stock so we can accrue a better understanding of some quirkiness including a D Financial Health grade (with such a low debt ratio?), a 1x cash flow multiplier [per VL, the lowest of three categories its covered stocks fall into is “Low Multiples (4x to 10x cash flow): Applied to slower-growth, highly capital-intensive, or mature businesses.” XP is not capital-intensive; it operates an asset-light, technology-driven business model. It has been around for 25 years but functions as a modernized, high-growth fintech], and MarketWatch’s 2025 stated EPS that is only 18% of 2026.

Per U/D, XP is a BUY under $15.50/share. Given a forecast high price ~$31, [30.8 / ((14.37 / 100 ) +1 ) ^ 5] ~ $15.70 would meet the BetterInvesting® TAR criterion.

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

ROL Stock Study (6-22-26)

I recently did a stock study on Rollins, Inc. (ROL, $44.96).

M* writes:

     > Rollins is a global leader in route-based pest control services,
     > with operations primarily in the United States and across North,
     > Central, and South America, Europe, the Middle East, Africa,
     > and Australia. Its portfolio of pest-control brands includes the
     > prominent Orkin brand, a market leader in the US and Canada,
     > with near-national coverage. It also has a portfolio of other
     > brands, which it uses to reach customers through alternative
     > sales channels. Residential pest and termite prevention
     > accounts for the majority of Rollins’ services, reflecting its
     > ongoing focus on the US and Canadian markets.

Over the past decade, this medium-size company grows sales and earnings at annualized rates of 10.4% and 14.6%. Lines are mostly up, straight, and parallel except for a YOY EPS decline in ’19. Value Line (VL) gives an Earnings Predictability score of 90. Shares outstanding decrease 1.4% (0.2%/year).

Over the past decade, PTPM leads peer and industry averages while ranging from 13.0% in ’19 to 19.6% in ’21 with a last-5-year mean of 18.8%. ROE leads peer and industry averages while ranging from 25.1% in ’19 to 39.0% in ’23 with a last-5-year mean of 34.2% (shareholder equity consistently positive with 10.3% CAGR). Debt-to-capital is less than peer and industry averages despite increasing from zero to 43.0% (’25) with a last-5-year mean of 34.1%.

Quick ratio is 0.47 and interest coverage 23.1 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 a B++ grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 9.7% and 8.8% for ’26 and ’27 (based on 16 analysts).
• Zacks gives YOY ACE 10.1% and 9.2% for ’26 and ’27 (6 analysts).
• VL projects 6.3% per year from ’25-’30.
• CFRA projects 9.5% YOY and 9.0% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 8.9% per year and projects 8.8% in its Equity Report.

My 6.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 11.5% and 11.0% per year for ’25-’27 and ’25-’28, respectively (based on 21 analysts).
• Nasdaq.com gives ACE 11.1% and 10.7% per year for ’26-’28 and ’26-’29 [8 / 2 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year CAGR of 12.5%.
• Finviz gives 5-year annualized ACE of 11.8% (7).
• Argus projects 5-year CAGR of 11.0%.
• LSEG has LTG at 13.1%.
• YF gives YOY ACE 11.2% and 12.0% for ’26 and ’27, respectively (17).
• Zacks gives YOY ACE 10.7% and 12.1% for ’26 and ’27 along with 5-year annualized growth of 13.1% (8).
• VL projects 8.7% per year from ’25-’30.
• CFRA projects 12.5% YOY and 12.6% per year for ’26 and ’25-’27 along with 3-year CAGR of 10.0%.
• M* gives long-term ACE of 11.1%/year and projects 11.0% from ’25-’30 in Equity Report.

My 8.0% forecast is below the long-term-estimate range (mean of eight: 11.5%). Initial value is ’25 EPS of $1.09/share.

My Forecast High P/E is 50.0. Over the past 10 years, high P/E ranges from 44.5 in ’16 to 81.1 in ’20 with last-5-year mean of 55.6 and a last-5-year-mean average P/E of 48.0. I am near bottom of the range (only ’16 is less).

My Forecast Low P/E is 30.0. Over the past 10 years, low P/E ranges from 30.8 in ’16 to 50.6 in ’19 with a last-5-year mean of 40.4. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $32.70 is default based on initial value from above: 27.3% less than previous close and 26.4% less than the 52-week low.

Over the past 10 years, Payout Ratio (PR) ranges from 57.3% in ’22 to 75.7% in ’19 with a last-5-year mean of 60.7%. I am forecasting below the range at 57.0%.

These inputs land ROL in the HOLD zone with a U/D ratio of 2.9. Total Annualized Return (TAR) is 13.4%.

PAR (using Forecast Average—not High—P/E) of 8.7% is less than I seek for 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 start by comparing my inputs with those of Member Sentiment (MS). Based on 64 studies done in the past 90 days (29 outliers including my study excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 8.8%, 10.6%, 52.1, 39.8, and 59.9%, respectively. I am lower across the board. VL projects a future average P/E of 45.0 that is less than MS (46.0) and greater than mine (40.0).

MS high / low EPS are $1.81 / $1.08 versus my $1.60 / $1.09 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $1.70 ($1.84) is in the middle (greater than both).

MS LSPF of $42.10 implies a Forecast Low P/E of 39.0: less than the above-stated 39.8. MS LSPF is 2.1% less than the default $1.08/share * 39.8 = $42.98 resulting in more conservative zoning. MS LSPF is 28.8% greater than mine, though.

MOS is robust in the study because my inputs are near or below most historical/analyst/MS averages/ranges. MS TAR exceeding mine by 1.1% per year (per BI website†) and my substantially lower LSPF support the assessment.

With regard to valuation, PEG is 2.8 and 4.8 per Zacks and my projected P/E: quite overvalued (M* has 3.4 for ’25). Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 0.9. “Quick and Dirty” free cash flow method has stock undervalued by 41% (factoring in capex, which is debatable). M* reports stock at an 11% discount.

Per U/D, ROL is a BUY under $44/share. Given a forecast high price $80, [80.0 / ((13.77 / 100 ) +1 ) ^ 5] ~ $42 would meet the BetterInvesting® TAR criterion.

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

† — I think this is wrong. Google AI reports CAGR difference (excluding dividend) is 3.6%.

PCTY Stock Study (6-17-26)

I recently did a stock study on Paylocity Holding Corp. (PCTY, $104.31). The previous study is here.

M* writes:

     > Paylocity is a cloud-based human capital management provider
     > offering payroll, compliance, and human resources management
     > solutions. With the addition of expense and IT management
     > modules, Paylocity unifies back-office operations spanning HR,
     > finance, and IT on a single platform and bills customers
     > on a subscription basis. The firm’s customer base skews
     > toward the midmarket and is primarily based in the US.

Since 2018 (’16-’17 excluded from full analysis due to EPS of d$0.08/share and $0.12/share that would artificially inflate historical growth rate), this medium-size company grows sales and earnings at annualized rates of 24.0% and 29.0% (FY ends Jun 30). Lines are up, mostly straight, and parallel. Value Line (VL) gives an Earnings Predictability score of 80. Shares outstanding increase 3.1% (0.4%/year).

Since 2018, PTPM leads peer averages but lags the industry despite increasing from 4.4% to 19.4% (’25) with a last-5-year mean of 14.3%. ROE leads peer and industry averages while ranging from 15.1% in ’21 to 18.4% in ’25 with a last-5-year mean of 17.1% (shareholder equity consistently positive with 29.6% CAGR). Debt-to-capital is much lower than peer and industry averages with a last-5-year mean of 10.5%.

Quick ratio is only 0.1 and interest coverage N/A per M* who gives “Exemplary” rating for Capital Allocation but only a C grade for Financial Health (per BI website). VL gives an A grade (no debt due) for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 10.2% and 7.6% for ’26 and ’27 (based on 19 analysts).
• Zacks gives YOY ACE 10.2% and 7.5% for ’26 and ’27 (7 analysts).
• VL projects 8.1% per year from ’25-’30.
• CFRA gives ACE 10.2% YOY and 8.9% per year for ’26 and ’25-’27, respectively (19).
• M* gives 2-year ACE of 10.0% per year and projects 8.7% in its Equity Report.

My 7.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 11.3% and 10.9% per year for ’25-’27 and ’25-’28, respectively (based on 22 analysts).
• Nasdaq.com gives YOY ACE 8.8% and 7.5% per year for ’27 and ’26-’28 [6 / 6 / 1 analyst(s) for ’26 / ’27 / ’28].
• Finviz gives 5-year annualized ACE of 10.1% (7).
• LSEG has LTG at 12.7%.
• YF gives YOY ACE 12.7% and 7.6% for ’26 and ’27, respectively (19).
• Zacks gives YOY ACE 12.6% and 6.4% for ’26 and ’27, respectively (6).
• VL projects 18.1% per year from ’25-’30.
• CFRA gives ACE 116% YOY for ’26 (puzzling) but 7.7% YOY for ’27 (19).
• M* gives long-term ACE of 14.4%/year and projects 9.8% (GAAP; adjusted is 14.4%) from ’25-’30 in Equity Report.

My 9.0% forecast is below the long-term-estimate range (mean of five: 13.0%). Initial value is ’25 EPS of $4.02/share rather than 2026 Q3 EPS of $4.69 (TTM).

My Forecast High P/E is 35.0. Since 2018, high P/E ranges from 55.7 in ’25 to 131 in ’20 (excluding high triple digits in ’21 and ’22) with last-5-year mean of 76.8 and a last-5-year-mean average P/E of 60.5. I am well below the range.

My Forecast Low P/E is 20.0. Since 2018, low P/E ranges from 32.5 in ’25 to 64.3 in ’23 (excluding mid-to-upper 90s in ’21 and ’22) with a last-5-year mean of 44.3. I am forecasting well below the range.

My Low Stock Price Forecast (LSPF) of $80.40 is default based on initial value from above: 22.9% less than previous close and 13.5% less than the 52-week low.

These inputs land PCTY in the BUY zone with a U/D ratio of 4.7. Total Annualized Return (TAR) is 15.7%.

PAR (using Forecast Average—not High—P/E) of 10.3% is less than I seek for 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 start by comparing my inputs with those of Member Sentiment (MS). Based on only 13 studies (too small for anything but anecdotal comparison) done in the past 90 days (my study and six outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 9.5%, 12.9%, 31.0, and 21.9, respectively. I am lower on growth rates. VL projects a future average P/E of 27.0 that is greater than MS (26.5) and less than mine (27.5).

MS high / low EPS are $8.33 / $4.25 versus my $6.19 / $4.02 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $9.25 ($7.87) soars above (is in the middle of) both.

MS LSPF of $89.10 implies a Forecast Low P/E of 21.0: less than the above-stated 21.9. MS LSPF is 4.3% less than the default $4.25/share * 21.9 = $93.08 resulting in more conservative zoning. MS LSPF is 10.8% greater than mine, though.

MOS is robust in the study because my inputs are near or below most historical/analyst/MS averages/ranges. MS TAR exceeding mine by 7.0% (I’d consider this too high given a larger sample size) supports the assessment.

With regard to valuation, PEG is 1.3 and 2.3 per M* (’25) and my projected P/E: fairly valued. Relative Value is dirt cheap at 0.4 [(current P/E) / 5-year-mean average P/E]. “Quick and Dirty” free cash flow method has stock undervalued by 64% (factoring in capex, which is debatable). M* reports stock at a 22% discount.

Per U/D, PCTY is a BUY right now under $114/share. Given a forecast high price ~$216, BetterInvesting® TAR criterion is met [216.7 / ((14.87 / 100 ) +1 ) ^ 5] ~ $108 (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).

NBIX Stock Study (6-16-26)

I recently did a stock study on Neurocrine Biosciences, Inc. (NBIX, $159.51).

M* writes:

     > Neurocrine Biosciences Inc is a biopharmaceutical firm focused on
     > the research, development, and commercialization of treatments
     > for neurological, psychiatric, endocrine, and immunological
     > disorders. Its portfolio includes therapies for conditions such
     > as tardive dyskinesia, chorea associated with Huntington’s disease,
     > classic congenital adrenal hyperplasia due to 21-hydroxylase
     > deficiency, and treatments for endometriosis and uterine fibroids.
     > The company also maintains a pipeline of drug candidates in
     > various stages of clinical and preclinical development across its
     > therapeutic areas, including small molecules, peptides, proteins,
     > antibodies, conjugates, and gene therapies. It derives revenue
     > from the sale of its pharmaceutical products.

Since 2018 (’16-’17 excluded from entire analysis due to negative EPS), this medium-size company grows sales and earnings 27.6% and 44.7% per year. Lines are mostly up, straight, and narrowing except for YOY EPS decline in ’21 [after spike in ’20 from “massive one-time accounting tax benefit (a valuation allowance release),” per Google AI]. Eight-year EPS R^2 is 0.64 but Value Line (VL) gives an Earnings Predictability score of only 35. Shares outstanding increase 7.4% (1.0%/year).

Since 2018, PTPM leads industry averages but trails peers despite increasing from 4.8% to 24.7% (’25) with a last-5-year mean of 17.2%. ROE is comparable with peer and industry averages while increasing from 4.5% to 15.6% with a last-5-year mean of 11.2% (shareholder equity consistently positive with 31.4% CAGR). Debt-to-capital is less than peer and industry averages while falling from 44.7% to 11.3% (’25) with a last-5-year mean of 16.0%.

Quick ratio is 2.5 and interest coverage N/A (no debt per VL) per M* who assigns “Wide” [quantitative] Economic Moat and an A grade for Financial Health (per BI website). VL gives a B++ grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 31.7% and 19.6% for ’26 and ’27 (based on 19 analysts).
• Zacks gives YOY ACE 29.5% and 15.3% for ’26 and ’27 (9 analysts).
• VL projects 11.8% per year from ’25-’30.
• CFRA projects 29.2% YOY and 25.7% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 22.2% per year.

My 11.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 37.5% and 33.3% per year for ’25-’27 and ’25-’28, respectively (based on 32 analysts).
• Nasdaq.com gives YOY ACE 31.6% and 11.1% per year for ’27 and ’26-’28 (6 / 7 / 3 analysts for ’26 / ’27 / ’28).
• Seeking Alpha projects 4-year CAGR of 42.7%.
• Finviz gives 5-year annualized ACE of 36.7% (6).
• YF gives YOY ACE 60.6% and 23.7% for ’26 and ’27, respectively (11).
• Zacks gives YOY ACE 43.1% and 11.8% for ’26 and ’27 along with 5-year CAGR of 18.6% (7).
• VL projects 18.4% per year from ’25-’30.
• CFRA projects 39.9% YOY and 30.7% per year for ’26 and ’25-’27 along with 3-year CAGR of 8.0%.
• M* gives long-term ACE 50.0%.

My 15.0% forecast is below the long-term-estimate range (mean of five: 33.3%). Initial value is ’25 EPS of $4.67/share rather than 2026 Q1 EPS of $6.49 (TTM).

My Forecast High P/E is 32.0. Since 2018, high P/E decreases from triple digits to 34.3 (’25) with last-5-year mean of 69.8 and a last-5-year-mean average P/E of 56.8. I am below the range.

My Forecast Low P/E is 22.0. Over the past decade, low P/E decreases from triple digits to 18.0 (’25) with a last-5-year mean of 43.8. I am forecasting near bottom of the range [only ’20 (17.3) and ’25 are less].

My Low Stock Price Forecast (LSPF) of $102.70 is default based on initial value from above: 35.6% less than previous close and 15.9% less than the 52-week low.

These inputs land NBIX in the HOLD zone with a U/D ratio of 2.5. Total Annualized Return (TAR) is 13.5%.

PAR (using Forecast Average—not High—P/E) of 9.7% is less than I seek for 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 start by comparing my inputs with those of Member Sentiment (MS). Based on 148 studies done in the past 90 days (my study and 32 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 15.9%, 14.5%, 32.0, and 18.0, respectively. I am only lower on projected sales growth. VL projects a future average P/E of 15.0 that is less than MS (25.0) and much less than mine (27.0).

MS high / low EPS are $11.44 / $5.70 versus my $9.39 / $4.67 (per share). My high EPS is less due to a lower initial value. VL high EPS of $15.50 soars above both.

MS LSPF of $109.40 implies a Forecast Low P/E of 19.2: greater than the above-stated 18.0. MS LSPF is 6.6% greater than the default $5.70/share * 18.0 = $102.60 resulting in more aggressive zoning. MS LSPF is also 6.5% greater than mine.

MOS is moderate in the study because my inputs are near or below most historical/analyst/MS averages/ranges. MS TAR exceeding mine by 4.1% per year is supportive of MOS; VL forecast P/E is an exception (along with VL’s forecast high price).

With regard to valuation, PEG is 0.9 and 1.4 per Zacks and my projected P/E: fairly valued (M* has 1.0 for ’25). Relative Value [(current P/E) / 5-year-mean average P/E] is dirt cheap at 0.43. “Quick and Dirty” free cash flow method has stock undervalued by 27% (debatably factoring in capex). M* reports stock at a 5% premium while CFRA has it 71.6% undervalued.

Per U/D, NBIX would be a BUY under $152/share. Given a forecast high price ~$301, BetterInvesting® TAR criterion would be met [300.5 / ((14.87 / 100 ) +1 ) ^ 5] ~ $150 (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).

IDXX Stock Study (6-15-26)

I recently did a stock study on IDEXX Laboratories Inc. (IDXX, $560.88).

M* writes:

     > Idexx Laboratories primarily develops, manufactures, and
     > distributes diagnostic products, equipment, and services for
     > pets and livestock. Its key product lines include single-use
     > canine and feline test kits that veterinarians can employ in
     > the office, benchtop chemistry and hematology analyzers for
     > test-panel analysis on-site, reference lab services, and tests
     > to detect and manage disease in livestock. The firm also
     > offers vet practice management software and consulting
     > services to animal hospitals. Idexx derives roughly 35%
     > of its revenue from outside the United States.

Over the past 10 years, this medium-size company has grown sales and earnings 10.5% and 20.1% per year, respectively. Lines are mostly up, straight, and parallel except for YOY EPS dip in ’22. Five-year EPS R^2 is 0.86 and Value Line (VL) gives an Earnings Predictability score of 85. Shares outstanding decrease 10.9% (1.3%/year).

Over the past 10 years, PTPM leads peer and industry averages while increasing from 18.1% to 30.8% (’25) with a last-5-year mean of 28.4%. Since 2019, ROE leads peer and industry averages despite falling from 206% to 66.8% (’25) with a last-5-year mean of 84.2% (shareholder equity negative from ’16-’18 with 44.3% CAGR since). Over the past 10 years, debt-to-capital is greater than peer and industry averages despite falling from 110% to 37.8% (’25) with a last-5-year mean of 49.7%.

Quick ratio is 0.7 and interest coverage 36.2 per M* who assigns “Wide” 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:

• YF gives YOY ACE 9.3% and 8.6% for ’26 and ’27, respectively (based on 14 analysts).
• Zacks gives YOY ACE 9.5% and 8.8% for ’26 and ’27 (6 analysts).
• VL projects 8.3% per year from ’25-’30.
• CFRA projects 9.5% YOY and 8.4% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 9.1% per year and projects 5-year CAGR of 8.1% in Equity Report.

My 8.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 13.2% per year for both ’25-’27 and ’25-’28 (based on 16 analysts).
• Nasdaq.com gives ACE 12.9% and 10.4% per year for ’26-’28 and ’26-’29 [7 / 5 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year CAGR of 12.4%.
• Finviz gives 5-year annualized ACE of 12.7% (6).
• LSEG has LTG at 12.7%.
• YF gives YOY ACE 11.8% and 12.9% for ’26 and ’27, respectively (14).
• Zacks gives YOY ACE 12.2% and 12.6% for ’26 and ’27 along with 5-year CAGR of 12.4% (7).
• VL projects 11.0% per year from ’25-’30.
• CFRA projects 12.4% YOY and 12.0% per year for ’26 and ’25-’27 along with 3-year CAGR of 9.0%.
• M* gives long-term ACE 10.6% and projects 5-year CAGR of 10.6% in Equity Report.

My 9.0% forecast is below the long-term-estimate range (mean of seven: 11.8%). Initial value is ’25 EPS of $13.08/share rather than 2026 Q1 EPS of $13.58 (TTM).

My Forecast High P/E is 48.0. Over the past decade, high P/E ranges from 49.9 in ’16 to 82.2 in ’21 with last-5-year mean of 66.7 and a last-5-year-mean average P/E of 51.2 (excluding ’21 low P/E upside outlier). I am below the range.

My Forecast Low P/E is 27.0. Over the past decade, low P/E ranges from 25.1 in ’20 to 52.9 in ’21 with a last-5-year mean (excluding ’21) of 35.6. I am forecasting near bottom of the range [only ’20 and ’16 (26.0) are less].

My Low Stock Price Forecast (LSPF) of $366.70 is default based on initial value from above: 37.0% less than previous close and 30.3% less than the 52-week low.

These inputs land IDXX in the HOLD zone with a U/D ratio of 2.0. Total Annualized Return (TAR) is 9.2%.

PAR (using Forecast Average—not High—P/E) of 6.1% is less than I seek for 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 start by comparing my inputs with those of Member Sentiment (MS). Based on only 23 studies 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 8.7%, 9.9%, 50.0, and 36.6, respectively. I am lower across the board. VL projects a future average P/E of 40.0 that is less than MS (43.3) and greater than mine (37.5).

MS high / low EPS are $21.32 / $12.88 versus my $20.13 / $13.08 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $22.00 ($21.63) is greater than both.

MS LSPF of $442.60 implies a Forecast Low P/E of 34.4: less than the above-stated 36.6. MS LSPF is 6.1% less than the default $12.88/share * 36.6 = $471.41 resulting in more conservative zoning. MS LSPF is 25.3% greater than mine, though.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. MS TAR exceeding mine by 1.9% per year supports the assessment along with my substantially lower LSPF.

With regard to valuation, PEG is 3.1 and 4.2 per Zacks and my projected P/E: significantly overvalued (M* has 3.5). Relative Value [(current P/E) / 5-year-mean average P/E] is low at 0.81. “Quick and Dirty” free cash flow method has stock undervalued by 17% (factoring in capex, which is debatable) while M* reports the stock at a 19% premium (two stars).

Per U/D, IDXX would be a BUY under $506/share. Given a forecast high price ~$966, the BetterInvesting® TAR criterion would be met [966.2 / ((14.87 / 100 ) +1 ) ^ 5] ~ $483 (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).

RACE Stock Study (6-15-26)

Despite a poor showing at this year’s 24 Hours of Le Mans, I recently did a stock study on Ferrari N.V. (RACE, $354.91).

M* writes:

     > Ferrari designs, engineers, and manufactures some of the world’s
     > most expensive luxury cars. With supply carefully controlled to
     > be below demand and a brand steeped in decades of motor racing
     > history, a Ferrari is viewed as a status symbol. In 2025, the
     > company sold 13,640 vehicles at an average price over EUR 520,000
     > with more than 80% of its vehicles being sold to existing Ferrari
     > clients. Eighty-four percent of revenue is generated from the
     > sale of cars and spare parts and 10% from sponsorship, commercial,
     > and brand activities including racing and lifestyle activities.
     > In 2025, the Europe, Middle East, and Africa region accounted for
     > 49% of revenue, the Americas was 32%, mainland China, Hong
     > Kong, and Taiwan was 7%, and the rest of Asia was 12%.

Over the past 10 years, this medium-size company has grown sales and earnings 9.8% and 15.5% per year, respectively. Lines are mostly up, straight, and parallel except for YOY EPS decline in ’19 and sales+EPS decline in ’20. Ten-year EPS R^2 is 0.89 and Value Line (VL) gives an Earnings Predictability score of 80. Shares outstanding decrease 19.8% (2.4%/year).

Over the past 10 years, PTPM leads peer and industry averages while increasing from 18.3% to 28.9% (’25) with a last-5-year mean of 26.3%. ROE leads peer and industry averages despite falling from 237% [sic] to 40.4% (’25) with a last-5-year mean of 42.1% (shareholder equity consistently positive with an eye-popping 30.8% CAGR). Debt-to-Capital is less than industry averages but greater than peers while falling from 85.0% to 42.5% (’25) with a last-5-year mean of 48.5%.

Quick ratio is 2.1 and interest coverage 55 per M* who assigns “Wide” Economic Moat and gives an “Exemplary” rating for Capital Allocation. VL gives an A grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 5.9% and 7.5% for ’26 and ’27, respectively (based on 22 analysts).
• Zacks gives YOY ACE 9.6% and 7.0% for ’26 and ’27 (3 analysts).
• VL projects 4.6% per year from ’25-’30.
• CFRA projects 7.5% YOY and 6.5% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 9.3% per year and projects 5-year CAGR of 6.4% in Equity Report.

My 4.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 8.6% and 8.5% per year for ’25-’27 and ’25-’28, respectively (based on 27 analysts).
• Nasdaq.com gives YOY ACE 7.9% and 5.8% per year for ’26-’28 and ’26-’29 [3 / 3 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year CAGR of 9.3%.
• Finviz gives 5-year annualized ACE of 8.0% (2).
• LSEG has LTG at 12.0%.
• YF gives YOY ACE 8.4% and 10.4% for ’26 and ’27, respectively (11).
• Zacks gives YOY ACE 11.7% and 9.6% for ’26 and ’27 along with 5-year CAGR of 9.3% (4).
• VL projects 6.2% per year from ’25-’30.
• CFRA projects 8.3% YOY and per year for ’26 and ’25-’27 along with 3-year CAGR of 7.0%.
• M* gives long-term ACE 8.0% and projects 5-year CAGR of 8.0% in Equity Report.

My 6.0% forecast is below the long-term-estimate range (mean of seven: 8.7%). Initial value is ’25 EPS of $10.10/share rather than 2026 Q1 EPS of $10.41 (TTM).

My Forecast High P/E is 40.0. Over the past decade, high P/E increases from 25.2 to 51.4 (’25) with last-5-year mean of 51.8 and a last-5-year-mean average P/E of 42.5. I am in lower half of the range [’16, ’18 (30.7), and ’17 (37.8) are less].

My Forecast Low P/E is 26.0. Over the past decade, low P/E increases from 13.6 to 35.3 (’25) with a last-5-year mean of 33.2. I am forecasting the lowest since ’19 (23.3).

My Low Stock Price Forecast (LSPF) of $262.60 is default based on initial value from above: 26.0% less than previous close and 16.0% less than the 52-week low.

Over the last decade, Payout Ratio (PR) increases from 21.8% to 33.3% (’25) with a last-5-year mean of 26.9%. I am forecasting below the range at 17.0%.

These inputs land RACE in the HOLD zone with a U/D ratio of 2.0. Total Annualized Return (TAR) is 9.2%.

PAR (using Forecast Average—not High—P/E) of 5.2% is less than I seek for 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 start by comparing my inputs with those of Member Sentiment (MS). Based on only 21 studies done in the past 90 days (six outliers including my own excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 8.5%, 7.8%, 42.5, 31.4, and 26.7%, respectively. I am lower across the board. VL projects a future average P/E of 45.0 that is greater than MS (37.0) and greater than mine (33.0).

MS high / low EPS are $14.98 / $10.28 versus my $13.52 / $10.10 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $14.30 ($15.22—converted from €) is in the middle (greater than both).

MS LSPF of $287.70 implies a Forecast Low P/E of 28.0: less than the above-stated 31.4. MS LSPF is 10.9% less than the default $10.28/share * 31.4 = $322.79 resulting in more conservative zoning. MS LSPF is 9.6% greater than mine, though.

MOS is robust in the study because my inputs are below or in lower portion of historical/analyst/MS averages/ranges. MS TAR exceeding mine by 5.4% per year supports the assessment along with my lower LSPF.

With regard to valuation, PEG is 3.4 and 5.4 per Zacks and my projected P/E: overvalued (M* has only 1.6). Relative Value [(current P/E) / 5-year-mean average P/E] is low at 0.8. “Quick and Dirty” free cash flow method has stock undervalued by 26% (neither dividend nor debt assessments included) while M* reports the stock at a 17% discount.

Heads-up as this company appears to be maturing and possibly not continuing into the future as a “high-quality growth stock.”

Per U/D, RACE would be a BUY under $332/share. Given a forecast high price ~$541, BetterInvesting® TAR criterion would be met [540.8 / ((14.47 / 100 ) +1 ) ^ 5] ~ $275.

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

SPSC Stock Study (6-9-26)

I recently did a stock study on SPS Commerce Inc. (SPSC, $55.21).

M* writes:

     > SPS Commerce Inc is a provider of cloud-based supply chain management
     > services for retailers, grocers, distributors, suppliers, and logistics firms
     > to increase supply chain performance, optimize inventory levels and
     > sell-through, reduce operational costs, improve order visibility, and satisfy
     > consumer demands for a seamless omnichannel experience. Its solutions are
     > delivered through the SPS Commerce platform and provide integrations and
     > retail performance analytics to its customers. The company has one
     > operating segment Supply Chain Management Solutions, that derives revenues
     > from customers by providing access to cloud-based supply chain management
     > services, primarily under subscription-based service arrangements.

Since 2018 (excluding ’16 due to small EPS base and ’17 due to negative EPS—either of which would arithmetically exaggerate growth rate), this small-size company has grown sales and earnings 17.7% and 18.3% per year, respectively. Lines are mostly up, straight, and parallel except for EPS dip in ’21. Value Line (VL) gives an Earnings Predictability score of 70. Shares outstanding increase 8.0% (1.0%/year).

Since 2018, PTPM leads peer and industry averages while increasing from 4.6% to 16.5% (’25) with a last-5-year mean of 15.5%. ROE leads peer averages but trails the industry while ranging from 7.6% in ’18 to 11.3% in ’20 with a last-5-year mean of 9.8% (shareholder equity consistently positive with 16.3% CAGR). Debt-to-Capital is less than peer and industry averages with a last-5-year mean of 2.3%.

Quick ratio is 1.4 and interest coverage N/A (effectively debt-free) per M* who gives a B grade for Financial Health (per BetterInvesting® website). VL gives a B++ grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 6.2% and 7.0% for ’26 and ’27, respectively (based on 12 analysts).
• Zacks gives YOY ACE 6.2% and 6.8% for ’26 and ’27 (4 analysts).
• VL projects 7.4% per year from ’25-’30.
• CFRA gives ACE 6.2% YOY and 6.6% per year for ’26 and ’25-’27, respectively (12).

My 5.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 10.7% and 12.2% per year for ’25-’27 and ’25-’28, respectively (based on 14 analysts).
• Nasdaq.com gives ACE 13.2% YOY and 20.6% per year for ’27 and ’26-’28 [6 / 5 / 1 analyst(s) for ’26 / ’27 / ’28].
• Finviz gives 5-year annualized ACE of 12.0% (3).
• YF gives YOY ACE 10.9% and 10.4% for ’26 and ’27, respectively (12).
• Zacks gives YOY ACE 10.8% and 10.6% for ’26 and ’27, respectively (5).
• VL projects 5.9% per year from ’25-’30.
• CFRA gives ACE of 92.3% YOY and 45.7% per year for ’26 and ’25-’27, respectively (12).

My 5.0% forecast is below both long-term estimates (9.0% average). Initial value is 2026 Q1 EPS of $2.40/share (TTM) rather than ’25 EPS of $2.46.

My Forecast High P/E is 38.0. Since 2018, high P/E ranges from 62.9 in ’19 to 113 in ’23 (excluding 144 upside outlier in ’21) with last-5-year mean of 99.7 and a last-5-year-mean average P/E of 81.5. I am well below the range.

My Forecast Low P/E is 18.0. Since 2018, low P/E ranges from 24.8 in ’20 to 78.7 in ’24 with a last-5-year mean of 63.4. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $43.20 is default based on initial value from above: 21.8% less than previous close and 11.8% less than the 52-week low.

These inputs land SPSC in the BUY zone with a U/D ratio of 5.0. Total Annualized Return (TAR) is 16.0%.

PAR (using Forecast Average—not High—P/E) of 9.1% is less than I seek for a small-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 only 12 studies (too small for anything but anecdotal comparison) done in the past 90 days (four outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 12.4%, 13.6%, 41.5, and 20.5, respectively. I am lower across the board. VL projects a future average P/E of 20.0 that is less than MS (31.0) and less than mine (28.0).

MS high / low EPS are $4.63 / $2.37 versus my $3.06 / $2.40 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $5.70 is greater than both.

MS LSPF of $47.50 implies a Forecast Low P/E of 20.0: less than the above-stated 20.5. MS LSPF is 2.2% less than the default $2.37/share * 20.5 = $48.59 resulting in more conservative zoning. MS LSPF is 10.0% greater than mine, however.

MOS is robust in the study because my inputs are near or less than historical/analyst averages/ranges. MS TAR exceeding mine by 13.2% per year supports the assessment.

With regard to valuation, PEG is 1.7 and 4.4 per M* and my projected P/E: overvalued. Relative Value is fire-sale low at 0.28 [(current P/E) / 5-year-mean average P/E]. “Quick and Dirty” DCF method has stock undervalued by 45% while M* reports the stock at a 29% discount.

Per U/D, SPSC is a BUY right now under $61/share. Given a forecast high price ~$116, the BetterInvesting® TAR criterion is met [116.3 / ((14.87 / 100 ) +1 ) ^ 5] ~ $58 (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).

PLMR Stock Study (6-8-26)

I recently did a stock study on Palomar Holdings, Inc. (PLMR, $108.51).

M* writes:

     > Palomar Holdings Inc… provides property and casualty
     > insurance products to individuals and businesses. It provides
     > insurance products serving five categories: Earthquake,
     > Inland Marine and Other Property, Casualty, Fronting, and
     > Crop. Company distribute products through multiple channels,
     > including retail agents, program administrators, wholesale
     > brokers, and partnerships with other insurance companies.
     > The company’s Earthquake product generate high premium.

Since public trading begins in 2019, this small-size company grows sales and earnings 37.6% and 67.7% per year, respectively. Lines are mostly up, straight, and parallel except for YOY EPS decline in ’20. Seven-year R^2 is 0.85. Shares outstanding increase 26.1% (3.9%/year).

Since 2019, PTPM leads peer and industry averages while increasing from 14.7% to 28.9% (’25) with a last-5-year mean of 25.5%. ROE leads peer averages but trails the industry despite increasing from 5.5% to 21.7% (’25) with a last-5-year mean of 16.5% (shareholder equity consistently positive with 27.6% CAGR). Debt-to-Capital is less than peer and industry averages with a last-5-year mean of only 3.7%.

Interest coverage is 74.1 per M* who assigns “Narrow” Economic Moat but gives a C grade for Financial Health (per BetterInvesting® website). Value Line (VL) reports no long-term debt.

With regard to sales growth:

• YF gives YOY ACE 45.5% and 25.5% for ’26 and ’27, respectively (based on 4 analysts).
• Zacks gives YOY ACE 45.4% and 20.0% for ’26 and ’27 (3 analysts).
• CFRA gives ACE 45.5% YOY and 34.5% per year for ’26 and ’25-’27, respectively (4).

My 15.0% forecast is below the short-term estimate range (no long-term estimates available).

With regard to EPS growth:

• MarketWatch gives ACE 19.6% and 16.5% per year for ’25-’27 and ’25-’28, respectively (based on 9 analysts).
• Nasdaq.com gives ACE 13.2% YOY and 9.1% per year for ’27 and ’26-’28 (6 / 5 / 2 analysts for ’26 / ’27 / ’28).
• Finviz gives 5-year annualized ACE of 15.9% (3).
• YF gives YOY ACE 25.6% and 13.2% for ’26 and ’27, respectively (6).
• Zacks gives YOY ACE 25.3% and 11.8% for ’26 and ’27, respectively (5).
• VL gives ACE 25.1% YOY (5) and 20.7% per year from ’25-’27 (4).
• CFRA gives ACE 37.8% YOY and 24.9% per year for ’26 and ’25-’27 (6).

My 12.0% forecast discounts the only long-term estimate by ~25%. Initial value is ’25 EPS of $7.17/share.

My Forecast High P/E is 18.0. Since 2019, high P/E decreases (excluding 508 outlier in ’20) from 116 to 24.5 (’25) with last-5-year mean of 36.6 and a last-5-year-mean average P/E of 27.9. I am below the range.

My Forecast Low P/E is 12.0. Since 2019, low P/E decreases (excluding 163 outlier in ’20) from 36.9 to 13.7 (’25) with a last-5-year mean of 19.2. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $86.00 is default based on initial value from above: 20.7% less than previous close and 14.7% less than the 52-week low.

These inputs land PLMR in the BUY zone with a U/D ratio of 5.3. Total Annualized Return (TAR) is 15.9%.

PAR (using Forecast Average—not High—P/E) of 11.8% is less than I seek for a small-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 135 studies done in the past 90 days (my study and 42 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 16.9%, 15.0%, 23.0, and 15.0, respectively. I am lower on each.

MS high / low EPS are $14.44 / $7.17 versus my $12.64 / $7.17 (per share). My high EPS is less due to a lower growth rate.

MS LSPF of $91.10 implies a Forecast Low P/E of 12.7: less than the above-stated 15.0. MS LSPF is 15.3% less than the default $7.17/share * 15.0 = $107.55 resulting in more conservative zoning. MS LSPF is 5.9% greater than mine, however.

MOS is robust in the study because my inputs are less than all historical/analyst/MS averages/ranges. MS TAR exceeding mine by 7.9% supports the assessment along with my lower LSPF.

With regard to valuation, PEG is 0.2 (lowest I have ever seen?) and 1.1 per M* and my projected P/E: undervalued. Relative Value [(current P/E) / 5-year-mean average P/E] is quite low at 0.54. M* reports the stock at a 21% discount.

Per U/D, PLMR is a BUY right now under $121/share. Given a forecast high price ~$228, the BetterInvesting® TAR criterion is met [227.5 / ((14.87 / 100 ) +1 ) ^ 5] ~ $114 (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).