MSFT Stock Study (3-15-26)

I recently did a stock study on Microsoft Corp. (MSFT, $395.55).

M* writes:

     > Microsoft develops and licenses consumer and enterprise
     > software. It is known for its Windows operating systems
     > and Office productivity suite. The company is organized
     > into three equally sized broad segments: productivity
     > and business processes (legacy Microsoft Office, cloud-
     > based Office 365, Exchange, SharePoint, Skype, LinkedIn,
     > Dynamics), intelligence cloud (infrastructure- and
     > platform-as-a-service offerings Azure, Windows Server
     > OS, SQL Server), and more personal computing
     > (Windows Client, Xbox, Bing search, display advertising,
     > and Surface laptops, tablets, and desktops).

Over the past decade, this mega-size ( > $100B annual revenue) company grows sales and EPS at annualized rates of 14.6% and 25.1%, respectively (FY ends Jun 30). Lines are up, straight, and parallel. Value Line (VL) gives an Earnings Predictability score of 100. Shares outstanding decrease 6.8% (0.8%/year).

Over the past decade, PTPM trails peer and industry averages while increasing from 23.1% to 43.9% (’25) with a last-5-year mean of 42.9%. ROE is roughly even with peer and industry averages while ranging from 21.9% in ’16 to 45.0% in ’21 with a last-5-year mean of 38.5%. Debt-to-Capital is less than peer and industry averages while falling from 42.7% to 15.0% (’25) with a last-5-year mean of 23.3%.

Quick Ratio is 1.12 and Interest Coverage 56.4 per M* who assigns “Wide” Economic Moat, “Exemplary” rating for Capital Allocation, and an A grade for Financial Health (per BetterInvesting® website). VL gives an A++ rating for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 16.4% and 15.4% for ’26 and ’27 (based on 48 analysts).
• Zacks gives YOY ACE 16.1% and 14.4% for ’26 and ’27, respectively (17 analysts).
• VL gives 6.3% per year from ’24-’29.
• CFRA projects 16.4% YOY and 15.6% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 15.9% per year and projects 5-year annualized 11.4% in Equity Report.

I am forecasting below the range at 6.0% per year.

With regard to EPS growth:

• MarketWatch gives ACE 16.5% and 18.8% per year for ’25-’27 and ’25-’28, respectively (based on 60 analysts).
• Nasdaq.com gives ACE 15.5% and 15.9% per year for ’26-’28 and ’26-’29 [13 / 7 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year annualized of 13.5%.
• Finviz gives ACE 5-year annualized of 18.2% (14).
• Argus gives 5-year annualized of 12.0%.
• LSEG projects LTG of 16.0%.
• YF gives YOY ACE 22.7% and 12.6% for ’26 and ’27, respectively (30).
• Zacks gives YOY ACE 24.4% and 10.4% for ’26 and ’27, respectively, and 5-year annualized of 15.6% (18).
• VL gives 11.0% annualized from ’24-’29.
• CFRA projects 18.5% YOY and 17.7% per year for ’26 and ’25-’27 along with 3-year CAGR of 15.0%.
• M* gives ACE long-term 15.1%/year and projects 16.9% annualized from ’24-’29 in Equity Report.

My 11.0% forecast is at bottom of the long-term-estimate range (mean of eight: 14.8%). Initial value is ’25 EPS of $13.64/share rather than 2026 Q2 $15.99 (TTM).

My Forecast High P/E is 30.0. Over the past 10 years, high P/E ranges from 26.9 in ’17 to to 38.7 in ’24 (excluding upside outlier of 48.2 in ’18) with a last-5-year mean of 36.3 and last-5-year-mean average P/E of 30.5 (also excluding upside low P/E outlier in ’18). I am below the latter.

My Forecast Low P/E is 21.0. Over the past 10 years, low P/E increases from 18.9 to 25.3 (’25) with a last-5-year mean of 24.6. I am forecasting the lowest since 2019.

My Low Stock Price Forecast (LSPF) of $286.50 is based on initial value from above. This is 27.6% less than previous close and 16.9% less than 52-week low.

Over the past 10 years, Payout Ratio (PR) falls from 66.2% to 23.8% (’25) with a last-5-year mean of 25.7%. I am forecasting below the range at 23.0%.

These inputs land MSFT in the HOLD zone with a U/D ratio of 2.7. Total Annualized Return (TAR) is 12.5%.

PAR (using Forecast Average—not High—P/E) of 9.1% is decent for a mega-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 Member Sentiment (MS). Based on 711 studies done in the past 90 days (my study and 238 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 13.5%, 13.1%, 33.0, 23.6, and 25.7% respectively. I am lower across the board. VL projects a future average P/E of 34.0 that is much greater than MS (28.3) and greater than mine (25.5).

MS high / low EPS are $28.25 / $14.66 versus my $22.98 / $13.64 (per share). My high EPS is less mainly due to a lower growth rate. VL (M*) high EPS of $23.00 ($25.46) is in the middle.

MS LSPF of $333.20 implies a Forecast Low P/E of 22.7: less than the above-stated 23.6. MS LSPF is 3.7% less than the default $14.66/share * 23.6 = $345.98 resulting in more conservative zoning. MS LSPF exceeds mine by 16.3%, however.

MOS is robust in the study because my growth rates are less than or at the bottom of historical/analyst/MS averages/ranges. A P/E disconnect seems to occur in 2020 and my forecast P/E numbers are below those of 2020 and beyond. Also supportive of the MOS is MS TAR exceeding mine by 5.5% per year and my substantially lower LSPF.

Regarding valuation, PEG is 1.5 and 2.0 per Zacks and my projected P/E, respectively: slightly high, perhaps (M* has 1.3). Relative Value [(current P/E) / 5-year-mean average P/E] is low at 0.81. M* has stock trading at a 34% discount while “Quick and Dirty” DCF method perplexingly has stock overvalued by 40% due to heavy future CapEx projections.

Per U/D, MSFT is a BUY under $387/share. BetterInvesting® TAR criterion would be met [689.4 / ((14.07 / 100 ) +1 ) ^ 5]
~ $357 given a forecast high price ~$689.

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

ZTS Stock Study (3-11-26)

I recently did a stock study on Zoetis Inc. (ZTS, $120.49).

M* writes:

     > Zoetis sells anti-infectives, vaccines, parasiticides,
     > diagnostics, and other health products for animals. The
     > firm earns roughly 35% of total revenue from production
     > animals (cattle, pigs, poultry, and so on) and nearly 65%
     > from companion animal (dogs, horses, cats) products. Its
     > USA business is skewed even more heavily toward
     > companion animals, while its international business is
     > slightly skewed toward production animals. The firm has
     > the largest market share in the industry and was
     > previously Pfizer’s animal health unit.

Over the past decade, this medium-size company grows sales and EPS at annualized rates of 8.0% and 15.4%, respectively. Lines are up, straight, and parallel. Value Line (VL) gives an Earnings Predictability score of 100. Shares outstanding decrease 10.9% (1.3%/year).

Over the past decade, PTPM leads peer and industry averages while increasing from 25.1% to 35.5% (’25) with a last-5-year mean of 33.7%. ROE leads peer and industry averages while ranging from 42.8% in ’17 to 66.3% in ’18 with a last-5-year mean of 45.6%. Debt-to-Capital is greater than peer and industry averages while ranging from 57.5% in ’23 to 75.0% in ’16 with a last-5-year mean of 62.8%.

Quick Ratio is 1.75 and Interest Coverage 16.1 per M* who assigns “Wide” Economic Moat, “Exemplary” rating for Capital Allocation, and a B grade for Financial Health (per BetterInvesting® website). VL rates the company A for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 4.7% and 5.0% for ’26 and ’27 (based on 17 analysts).
• Zacks gives YOY ACE 4.7% and 5.2% for ’26 and ’27, respectively (9 analysts).
• VL gives 5.2% per year from ’24-’29.
• CFRA gives ACE 5.6% YOY and 5.1% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 4.2% per year and projects 5-year annualized 4.5% in Equity Report.

I am forecasting below the range at 4.0% per year.

With regard to EPS growth:

• MarketWatch projects 8.6% and 8.8% per year for ’25-’27 and ’25-’28, respectively (based on 23 analysts).
• Nasdaq.com gives ACE 7.8% and 6.7% per year for ’26-’28 and ’26-’29 (9 / 7 / 2 analysts for ’26 / ’28 / ’29).
• Seeking Alpha projects 4-year annualized of 8.0%.
• Finviz gives ACE 5-year annualized of 8.4% (8).
• Argus gives 5-year annualized of 11.0%.
• LSEG projects LTG of 7.8%.
• YF gives YOY ACE 9.6% and 7.8% for ’26 and ’27, respectively (15).
• Zacks gives YOY ACE 8.7% and 7.8% for ’26 and ’27, respectively, and 5-year annualized of 9.3% (11).
• VL gives 6.7% annualized from ’24-’29.
• CFRA projects 9.7% YOY and 7.7% per year for ’26 and ’25-’27 along with 3-year CAGR of 8.0%.
• M* gives ACE long-term 8.8%/year and projects 9.4% annualized from ’24-’29 in Equity Report.

My 6.0% forecast is below the long-term-estimate range (mean of eight: 8.7%). Initial value is ’25 EPS of $6.02/share.

My Forecast High P/E is 29.0. Over the past 10 years, high P/E ranges from 29.5 in ’25 to 58.4 in ’21 with a last-5-year mean of 43.7 and last-5-year-mean average P/E of 35.3. I am below the range.

My Forecast Low P/E is 15.0. Over the past 10 years, low P/E ranges from 19.1 in ’25 to 33.1 in ’21 with a last-5-year mean of 26.9. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $90.30 is default based on initial value from above. This is 25.1% less than previous close and 21.7% less than 52-week low.

Over the past 10 years, Payout Ratio (PR) increases from 23.0% to 33.2% (’25) with a last-5-year mean of 29.4%. I am forecasting below the range at 17.0%.

These inputs land ZTS in the BUY zone with a U/D ratio of 3.8. Total Annualized Return (TAR) is 15.2%.

PAR (using Forecast Average—not High—P/E) of 9.4% 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 Member Sentiment (MS). Based on 156 studies done in the past 90 days (my study and 62 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 4.7%, 7.2%, 30.0, 20.0, and 27.4% respectively. I am lower across the board. VL [M*] projects a future average P/E of 25.0 [14.0, which seems unreasonably low] that is equal to MS and greater than mine (22.0).

MS high / low EPS are $8.45 / $5.87 versus my $8.06 / $6.02 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $8.20 ($8.34) is in the middle.

MS LSPF of $108.50 implies a Forecast Low P/E of 18.5: less than the above-stated 20.0. MS LSPF is 7.6% greater than the default $5.87/share * 20.0 = $117.40 that results in more conservative zoning. MS LSPF exceeds mine by 20.2%, however.

MOS is robust in the study because my inputs are less than historical/analyst/MS averages/ranges. Also backing this assessment is MS TAR exceeding mine by 1.6% per year and my lower LSPF.

Regarding valuation, PEG is 1.9 and 3.1 per Zacks and my projected P/E, respectively: a bit overvalued (M* has 1.7). Relative Value [(current P/E) / 5-year-mean average P/E] is exceedingly low at 0.57. M* has stock trading at a 29% discount.

Some would argue this is not a high-quality growth stock because forecast growth rates are less than 9.0%-10.0%. I don’t adhere to these criteria and have faced some criticism over it. One good thing about the BetterInvesting® methodology is some room for subjectivity. Indeed, we don’t have sufficient data or studies necessary to prove any is one best answer.

Per U/D, ZTS is a BUY under $126/share. BetterInvesting® TAR criterion would be met [233.7 / ((13.87 / 100 ) +1 ) ^ 5]
~ $122 given a forecast high price ~$234.

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

ACMR Stock Study (3-10-26)

I recently did a stock study on ACM Research Inc. (ACMR, $46.69). The previous study is here.

M* writes:

     > ACM Research Inc supplies capital equipment developed for the
     > semiconductor industry. The company focuses on developing
     > differentiated process solutions that enable effective particle
     > removal, uniform material deposition, and reliable process
     > control for the fabricators of integrated circuits. Its product
     > offerings include wet-cleaning, plating, furnace, PECVD, track,
     > and other front-end processing equipment. Additionally, it
     > develops, manufactures, and sells a range of packaging equipment
     > to wafer assembly and packaging customers. Geographically, the
     > company generates maximum revenue from its customers in
     > Mainland China, and the rest from other regions.

Since 2018, this small-size company grows sales and EPS at annualized rates of 45.6% and 40.6%, respectively. Lines are mostly up, straight, and parallel except for EPS dips in ’20 and ’25. Five-year EPS R^2 is 0.82 but Value Line (VL) gives an Earnings Predictability score of 60. Shares outstanding increase 25.3% (3.3%/year).

Since 2018, PTPM leads peer averages but trails the industry despite increasing from 9.9% to 15.0% (’25) with a last-5-year mean of 18.2%. ROE leads peer averages and trails the industry while decreasing from 12.20% to 6.2% (’25) with a last-5-year mean of 10.4%. Debt-to-Capital is less than industry averages but greater than peers while ranging from 5.5% in ’21 to 26.2% in ’20 with a last-5-year mean of 12.3%.

Quick Ratio is 2.3 and Interest Coverage 20.4 per M* who assigns “Narrow” [quantitative] Economic Moat and a C grade for Financial Health (per BetterInvesting® website). VL rates the company B for Financial Strength and has Performance and Technical ranks suspended.

With regard to sales growth:

• YF gives YOY ACE 26.9% and 23.1% for ’26 and ’27 (based on 7 analysts).
• Zacks gives YOY ACE 26.0% and 23.7% for ’26 and ’27, respectively (3 analysts).
• CFRA gives ACE 26.9% YOY and 25.0% per year for ’26 and ’25-’27, respectively (7).
• M* gives a 2-year ACE of 21.8%.

I am forecasting well below the short-term range at 12.0% (no long-term estimates available).

With regard to EPS growth:

• MarketWatch projects 24.3% and 23.3% per year for ’25-’27 and ’25-’28, respectively (based on 7 analysts).
• Finviz gives ACE 5-year annualized 32.4% (2 analysts).
• YF gives YOY ACE 11.0% and 27.6% for ’26 and ’27, respectively (3).
• Zacks gives YOY ACE 5.6% and 41.2% for ’26 and ’27, respectively (1).
• VL gives ACE contraction of 15.6% per year from 2024 to 2026 / 2027 (1).
• CFRA gives ACE 30.7% YOY and 29.0% per year for ’26 and ’25-’27, respectively (3).

Analyst estimates are scant with just one long-term available. My 8.0% forecast is well below the range excepting VL [projects contraction]. Initial value is ’25 EPS of $1.37/share (down 11% YOY).

My Forecast High P/E is 32.0. Since 2018, high P/E ranges from 18.2 in ’23 to 83.7 in ’21 (128 in ’20 excluded) with a last-5-year mean of 41.7 and last-5-year-mean average P/E of 25.5 (’21 low P/E also excluded). I am below the last-5-year mean but above the 7-year median (27.5).

My Forecast Low P/E is 8.0. Since 2018, low P/E ranges from 7.5 in ’23 to 17.9 in ’20 with a last-5-year mean of 9.2. I am forecasting near bottom of the range (only ’23 is less).

My Low Stock Price Forecast (LSPF) is $16.80. Default ($11.00) given initial value from above seems unreasonably low at 76.4% less than previous close and 34.5% less than 52-week low. My selection is the 52-week low itself: still 64.2% less than the previous close (and results in an effective Forecast Low P/E of 12.3).

These inputs land ACMR in the HOLD zone with a U/D ratio of 0.6. Total Annualized Return (TAR) is 6.6%.

PAR (using Forecast Average—not High—P/E) of NEGATIVE 2.9% is unthinkable as an investment candidate. If a healthy MOS anchors this study, then I can proceed based on TAR instead (still lower than I seek in a small-size company).

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 90 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, and Forecast Low P/E are 13.0%, 14.0%, 29.2, and 12.1. I am lower on growth rates but higher on P/E range.

MS high / low EPS are $3.17 / $1.60 vs. my $2.01 / $1.37 (per share). My high EPS is less due mainly to a lower growth rate.

MS LSPF of $18.80 implies a Forecast Low P/E of 11.8: less than the above-stated 12.1. MS LSPF is 2.9% less than the default $1.60/share * 12.1 = $19.36 that results in more conservative zoning. MS LSPF is 11.9% greater than mine, however.

MOS is moderate in the study. My growth rates are lower than analyst/MS ranges (except VL EPS). My LSPF is lower and MS TAR exceeds mine by 5.3% per year. I elevate forecast P/E range to get a valid study, though.

Regarding valuation, PEG is 6.5 per my projected P/E: way overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is also high at 1.3. M* says stock trades at a 3% discount to fair value.

My overall impression of this stock is nothing worth considering at this time. The C [Financial Health] grade from M* is due to significant margin deterioration (over 870 and 720 basis points in Q4 2025 for gross and operating margin, respectively), increased competition from newer local semiconductor entrants in the Chinese market, high stock volatility (2.66 beta), geopolitical tensions, soaring operating expenses (up 34% YOY in ’25), and inventory accumulation.

Per U/D, ACMR is a BUY under $28.70/share. BetterInvesting® TAR criterion would be met [64.4 / ((14.87 / 100 ) +1 ) ^ 5] = $32.20 given a forecast high price ~ $64 (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).

UFPT Stock Study (3-6-26)

I recently did a stock study on UFP Technologies Inc. (UFPT, $201.36).

M* writes:

     > UFP Technologies Inc is a contract development and manufacturing
     > organization that specializes in single-use and single-patient
     > medical devices. The company manufactures its products by
     > converting raw materials using laminating, molding, radio
     > frequency, and impulse welding, and fabricating manufacturing
     > techniques. It is an important link in the medical device supply
     > chain and a valued outsource partner to many of the top medical
     > device manufacturers in the world. The company’s single-use and
     > single-patient devices and components are used in a wide range of
     > medical devices, disposable wound care products, infection
     > prevention, minimally invasive surgery, wearables, orthopedic
     > soft goods, and orthopedic implant packaging.

Over the past decade, this small-size company grows sales and EPS at annualized rates of 17.7% and 26.7%, respectively. Lines are mostly up, straight, and parallel except for sales+EPS decline in ’20. Five- (10-) year EPS R^2 is 0.81 (0.89) and Value Line (VL) gives an Earnings Predictability score of 60. Shares outstanding increase 6.8% (0.7%/year).

Over the past decade, PTPM leads peer averages but trails the industry despite increasing from 8.4% to 13.7% (’25) with a last-5-year mean of 13.4%. ROE leads peer averages and is even with the industry while increasing from 7.1% to 16.7% (’25) with a last-5-year mean of 15.5%. Debt-to-Capital is less than peer and industry averages despite increasing from 0.8% to 26.7% (’25) with a last-5-year mean of 26.1%.

Quick Ratio is 1.4 and Interest Coverage 9.4 per M* who assigns “Narrow” [quantitative] Economic Moat and a B grade for Financial Health (BetterInvesting® website). VL rates the company B+ for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 6.0% and 5.7% for ’26 and ’27 (based on 4 analysts).
• Zacks gives YOY ACE 6.5% and 5.7% for ’26 and ’27, respectively (3 analysts).
• CFRA gives ACE 6.2% YOY and 5.9% per year for ’26 and ’25-’27, respectively (4).

I am forecasting below the range at 4.0% per year.

With regard to EPS growth:

• MarketWatch projects 10.5% YOY and 11.4% per year for ’26 and ’25-’27, respectively (based on 4 analysts).
• Nasdaq.com gives ACE 11.6% YOY for ’27 (3 analysts).
• YF gives YOY ACE 4.9% and 11.8% for ’26 and ’27, respectively (4).
• Zacks gives YOY ACE 4.5% and 11.6% for ’26 and ’27, respectively (3).
• VL gives ACE 14.3% annualized from 2024 to 2026 / 2027 (3).
• CFRA gives ACE 17.0% YOY and 14.4% per year for ’26 and ’25-’27, respectively (4).

Analyst estimates are scant with VL providing the longest-term estimate at only 2.5 years out. My 7.0% forecast is near bottom of the short- and longer-term range. Initial value is ’25 EPS of $8.75/share.

My Forecast High P/E is 26.0. Over the past 10 years, high P/E increases from 25.0 to 33.1 (’25) with a last-5-year mean of 35.2 and last-5-year-mean average P/E of 26.6. I am below the range.

My Forecast Low P/E is 13.0. Over the past 10 years, low P/E ranges from 10.3 in ’22 to 21.1 in ’21 with a last-5-year mean of 17.9. I am forecasting near bottom of the range [only ’22 and ’19 (10.6) are less].

My Low Stock Price Forecast (LSPF) is $140.00. Default ($114.10) given initial value from above seems unreasonably low at 43.3% less than previous close and 36.0% less than 52-week low. My [arbitrary] selection is 30.5% and 21.5% less, respectively (and results in an effective Forecast Low P/E of 16.0).

These inputs land UFPT in the HOLD zone with a U/D ratio of 1.9. Total Annualized Return (TAR) is 9.6%.

PAR (using Forecast Average—not High—P/E) of 3.5% is less than I seek for a small-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 Member Sentiment (MS). Based on 70 studies done in the past 90 days (my study and 38 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 13.2%, 12.8%, 30.0, and 17.3 respectively. I am lower across the board.

MS high / low EPS are $15.68 / $8.63 vs. $12.27 / $8.75 (per share). My high EPS is less due mainly to a lower growth rate.

MS LSPF of $155.30 implies a Forecast Low P/E of 18.0: greater than the above-stated 17.3. MS LSPF is 4.0% greater than the default $8.63/share * 17.3 = $149.30 that results in more aggressive zoning. MS LSPF is also 10.9% greater than mine.

MOS is robust in the study because my inputs are [near or] less than [bottom of] historical/analyst/MS averages/ranges. Also backing this assessment is MS TAR exceeding mine by 5.9% per year and my lower LSPF.

Regarding valuation, PEG is 3.1 per my projected P/E: overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is slightly low at 0.86. M* says stock trades at a 9% discount.

Per U/D, UFPT is a BUY under ~$185/share. BetterInvesting® TAR criterion would be met [319.1 / ((14.87 / 100 ) +1 ) ^ 5] ~ $160 given a forecast high price ~$319 (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).

BRO Stock Study (3-3-26)

I recently did a stock study on Brown & Brown, Inc. (BRO, $72.36).

M* writes:

     > Brown & Brown Inc is a diversified insurance agency, wholesale
     > brokerage, insurance programs, and service. The company’s business
     > is divided into two reportable segments: (i) the Retail segment,
     > and (ii) the Specialty Distribution segment. The Retail segment
     > provides a broad range of insurance products and services to
     > commercial, public and quasi-public entities, and to professional
     > and individual customers, as well as non-insurance warranty
     > services and products through automobile and recreational vehicle
     > dealer services businesses. The Specialty Distribution segment
     > consists of wholesale brokerage and specialty businesses.
     > Its geographic area is U.S, U.K and Others.

Over the past decade, this medium-size company grows sales and EPS at annualized rates of 14.4% and 15.6%, respectively. Lines are mostly up, straight, and parallel except for EPS dips in ’18 and ’25. Five-year EPS R^2 is 0.81 and Value Line (VL) gives an Earnings Predictability score of 95. Shares outstanding increase 13.6% (1.4%/year).

Over the past decade, PTPM leads peer and industry averages while ranging from 22.1% (’19) to 27.7% (’24) with a last-5-year mean of 25.7%. ROE trails peer and industry averages while falling from 11.0% to 8.6% (’25) with a last-5-year mean of 14.1%. Debt-to-Capital is less than peer and industry averages despite increasing from 31.3% to 38.7% (’25) with a last-5-year mean of 40.4%.

Quick Ratio is 0.56 and Interest Coverage 5.5 per M* who assigns “Narrow” Economic Moat but a C grade for Financial Health (BetterInvesting® website). VL rates the company A for Financial Strength (Interest Coverage 7.8).

With regard to sales growth:

• YF gives YOY ACE 21.9% and 6.9% for ’26 and ’27 (based on 11 analysts).
• Zacks gives YOY ACE 23.5% and 5.9% for ’26 and ’27, respectively (6 analysts).
• VL projects 12.2% annualized from ’24-’29.
• CFRA projects 15.0% YOY and 13.5% per year for ’26 and ’25-’27, respectively.
• M* offers a 2-year ACE of 15.4%.

I am forecasting below the range at 6.0% per year.

With regard to EPS growth:

• MarketWatch projects 8.7% and 8.2% per year for ’25-’27 and ’25-’28, respectively (based on 20 analysts).
• Nasdaq.com gives ACE 9.9% YOY and 8.4%/year for ’27 and ’26-’28 [9 / 8 / 1 analyst(s) for ’26 / ’27 / ’28].
• Seeking Alpha projects 4-year annualized growth of 7.3%.
• Argus projects 5-year annualized growth of 10.0%.
• Finviz gives ACE 5-year annualized growth of 8.1% (6).
• LSEG estimates LTG at 7.4%.
• YF gives YOY ACE 6.1% and 10.2% for ’26 and ’27, respectively (16).
• Zacks gives YOY ACE 7.0% and 9.7% for ’26 and ’27 (7) along with 5-year annualized growth of 7.3%.
• VL projects 9.7% annualized from ’24-’29.
• CFRA projects 5.6% YOY and 7.8% per year for ’26 and ’25-’27 along with 3-year CAGR of 11.0%.

My 7.0% forecast is below the long-term-estimate range (mean of six: 8.3%). Initial value is ’25 EPS of $3.16/share.

My Forecast High P/E is 25.0. Over the past 10 years, high P/E ranges from 18.7 in ’17 to 39.8 in ’25 with a last-5-year mean of 32.6 and last-5-year-mean average P/E of 26.8. I am near bottom of the range (only ’17 is less).

My Forecast Low P/E is 15.0. Over the past 10 years, low P/E ranges from 14.6 in ’17 to 24.1 in ’25 with a last-5-year mean of 20.9. I am forecasting near bottom of the range (only ’17 is less).

My Low Stock Price Forecast (LSPF) of $48.00 is default based on initial value from above. This is 33.7% less than previous close and 26.9% less than the 52-week low.

Over the last 10 years, Payout Ratio (PR) falls from 27.6% in ’16 to 19.5% in ’25 with a last-5-year mean of 17.4%. I am forecasting below the range at 15.0%.

These inputs land BRO in the HOLD zone with a U/D ratio of 1.6. Total Annualized Return (TAR) is 9.5%.

PAR (using Forecast Average—not High—P/E) of 4.9% 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 77 studies done in the past 90 days (my study and 37 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 11.7%, 11.3%, 29.2, 19.7, and 17.6% respectively. I am lower across the board. VL projects a future average annual P/E of 22.5 that is less than MS (24.5) and greater than mine (20.0).

MS high / low EPS are $5.57 / $3.20 versus my $4.43 / $3.16 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $5.50 is in the middle.

MS LSPF of $61.00 implies a Forecast Low P/E of 19.1: less than the above-stated 19.7. MS LSPF is 3.2% less than the default $3.20/share * 19.7 = $63.04 that results in more conservative zoning. MS LSPF is 27.1% greater than mine, however.

MOS is robust in the study because my inputs are [near or] less than [bottom of] historical/analyst/MS averages/ranges. Also backing this assessment are MS TAR exceeding mine by 8.6% per year [arguably too high] and the much greater LSPF.

Regarding valuation, PEG is 2.2 and 3.0 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 somewhat low at 0.84. “Quick and Dirty DCF” calculates stock undervalued by 29% (M* currently says 25% discount).

I wish I hadn’t seen two things about this stock. First, the Financial Health grade of C (M*) is diametrically-opposed to the VL A-rating (Financial Strength). Also questionable is a “smart score” of 1 (“likely underperform”) by CNN Business. I don’t know how reliable the metric, but I can never recall seeing a 1 before.†

On the other hand, Cy Lynch does present the company as his Manifest Investing Round Table selection for Feb 2026.

Per U/D, BRO is a BUY under ~$63.50/share. BetterInvesting® TAR criterion would be met [110.8 / ((14.07 / 100 ) +1 ) ^ 5] ~ $57 given a forecast high price ~$111.

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

†—“Smart score” pertains only to the next 12 months rather than long-term.

NOW Stock Study (2-21-26)

I recently did a stock study on ServiceNow, Inc. (NOW, $104.27).

M* writes:

     > ServiceNow Inc provides software solutions to structure and automate
     > various business processes via a SaaS delivery model. The company
     > primarily focuses on the IT function for enterprise customers.
     > ServiceNow began with IT service management, expanded within the
     > IT function, and more recently directed its workflow automation
     > logic to functional areas beyond IT, notably customer service,
     > HR service delivery, and security operations. ServiceNow also
     > offers an application development platform as a service.

Since 2019, this large-size company grows sales and EPS at annualized rates of 24.9% and 41.9%, respectively (’16-’18 excluded due negative earnings in two of three years). Lines are mostly up, straight, and narrowing except for EPS declines in ’20 and ’24. Seven- (Five-) year EPS R^2 is 0.51 (0.78). Value Line (VL) gives an Earnings Predictability score of 30. Shares outstanding increase 6.1% (1.0%/year).

Since 2019, PTPM trails peer and industry averages despite increasing from 1.9% to 17.0% (’25) with a last-5-year mean of 10.7%. ROE is about even with peer and industry averages despite falling from 42.2% to 15.5% (’25) with a last-5-year mean of 13.7%. Debt-to-Capital is less than peer and industry averages while falling from 34.7% to 15.6% (’25) with a last-5-year mean of 25.2%.

Quick Ratio is 0.85 and Interest Coverage 99.3 per M* who assigns “Wide” Economic Moat, gives “Exemplary” rating for Capital Allocation, but a B grade for Financial Health (BetterInvesting® website). VL rates the company A for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 20.1% and 18.5% for ’26 and ’27 (based on 41 analysts).
• Zacks gives YOY ACE 20.3% and 18.0% for ’26 and ’27, respectively (13 analysts).
• VL projects 13.8% annualized from ’24-’29.
• CFRA projects 20.8% YOY and 19.2% per year for ’26 and ’25-’27, respectively.
• M* offers a 2-year ACE of 19.1% and projects 17.0% per year x5 years (analyst report).

I am forecasting below the range at 13.0% per year.

With regard to EPS growth:

• MarketWatch projects 20.3% and 21.2% per year for ’25-’27 and ’25-’28, respectively (based on 47 analysts).
• Nasdaq.com gives ACE 25.4% YOY and 27.5%/year for ’27 and ’26-’28 (17 / 13 / 2 analysts for ’26 / ’27 / ’28).
• Seeking Alpha projects 4-year annualized growth of 23.6%.
• Argus projects 5-year annualized growth of 21.0%.
• Finviz gives ACE 5-year annualized growth of 20.6% (9).
• LSEG estimates LTG at 20.2%.
• YF gives YOY ACE 18.6% and 20.4% for ’26 and ’27, respectively (41).
• Zacks gives YOY ACE 17.7% and 19.6% for ’26 and ’27 (14) along with 5-year annualized growth of 23.9%.
• VL projects 26.3% annualized from ’24-’29.
• CFRA projects 19.4% YOY and 18.8% per year for ’26 and ’25-’27 along with 3-year CAGR of 17.0%.
• M* gives long-term ACE of 27.2% and projects 24.8% from ’25-’29 in Equity Report.

My 19.0% forecast is below the long-term-estimate range (mean of eight: 23.5%). Initial value is ’25 EPS of $1.67/share.

My Forecast High P/E is 53.0. Since 2019, three of seven are over 400 (highest 960). Excluding those as extreme, high P/E ranges from 85.6 in ’23 to 169 in ’24 with a last-5-year mean of 133 and last-5-year-mean average P/E of 103 (corresponding years excluded from low P/E calculation). I am below the range (and current P/E of 62.5).

My Forecast Low P/E is 35.0. Since 2019, three of seven are over 200 (highest 405). Excluding those as extreme, low P/E ranges from 42.0 in ’23 to 93.3 in ’24 with a last-5-year mean of 72.2. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) is $70.00. Default ($58.40) based on initial value from above seems unreasonably low at 44.0% less than the previous close and 40.4% less than the 52-week low. My [arbitrary] selection is 32.9% and 28.6% less, respectively. My Forecast Low P/E is effectively $70.00 / $1.67 = 41.9.

These inputs land NOW in the BUY zone with a U/D ratio of 3.2. Total Annualized Return (TAR) is 15.6%.

PAR (using Forecast Average—not High—P/E) of 11.2% is decent for 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 70 studies done in the past 90 days (my study and 18 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 17.1%, 20.1%, 76.0, and 50.0 respectively. I am lower across the board. VL [M*] projects a future average annual P/E of 50.0 [15.4—unreasonably low and I suspect they use current rather than future stock price] that is less than MS (63.0) and greater than mine (effectively 47.5).

MS high / low EPS are $4.16 / $1.67 versus my $3.99 / $1.67 (per share). My high EPS is less due to a lower growth rate. VL [M*] high EPS of $4.40 [$4.05] is higher than both [in the middle].

MS LSPF of $83.80 implies a Forecast Low P/E of 50.2, which is almost equal to the above-stated 50.0. MS LSPF is 19.7% greater than mine, however: much more aggressive.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Also backing this assessment are MS TAR exceeding mine by 5.1% per year and the greater LSPF.

Regarding valuation, PEG is 1.1 and 2.8 per Zacks and my projected P/E—slightly overvalued, perhaps (M* is undervalued at 0.89). Relative Value [(current P/E) / 5-year-mean average P/E] is quite low at 0.61. “Quick and Dirty DCF” calculates stock overvalued by ~23% (high projected CapEx).

Per U/D, NOW is a BUY under ~$106/share. BetterInvesting® TAR criterion would be met [215.5 / ((14.87 / 100 ) +1 ) ^ 5]
~ $108 given a forecast high price ~$216 (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).

VRT Stock Study (2-19-26)

I recently did a stock study on Vertiv Holdings Co. (VRT, $243.21).

M* writes:

     > Vertiv has roots tracing back to 1946 when its founder, Ralph Liebert,
     > developed an air-cooling system for mainframe data rooms. As computers
     > started making their way into commercial applications in 1965, Liebert
     > developed one of the first computer room air conditioning, or CRAC,
     > units, enabling the precise control of temperature and humidity. The
     > firm has slowly expanded its data center portfolio through internal
     > product development and the acquisition of thermal and power
     > management products like condensers, busways, and switches. Vertiv
     > has global operations today; its products can be found in data
     > centers in most regions throughout the world.

Since 2018, this large-size company is all over the place [M* states it went public in 2020 despite price bars showing on the BetterInvesting® website for the two years prior]. Sales are positive since first recording any in 2020. EPS crosses zero four times, however. To sufficiently clean up the chart, I have to exclude 2017-2022 leaving a brief 3-year data history. Over that time, sales and EPS grow at annualized rates of 22.1% and 69.3%, respectively, with lines up, mostly straight, and parallel. Value Line (VL) gives Earnings Predictability score of 30 and Stock Price Stability score of only 10.

VRT is #6 on the “Top 40 Stocks Purchased by Investment Clubs” [in the past month] stock screen as of 2/10/26 (nod to the BetterInvesting® Weekly Update email). Personally, I do not think the stock passes visual inspection and would move on. M* writes, “spending on data centers has become more volatile and less predictable. Estimating Vertiv’s growth is therefore a highly erroneous exercise.” It also writes, “Vertiv’s financial history is somewhat limited given that it has changed ownership a number of times between public and private entities.” In case so many clubs are onto something here, I will proceed with the study. To be safe, perhaps give only speculative consideration for this stock with non-core position sizing.

Since 2023, PTPM leads industry averages while increasing from 7.8% to 17.0% (’25). ROE increases from 26.5% to 37.2% (’25). Debt-to-Capital decreases from 60.8% to 45.0% (’25). Three years seems very brief and too short for meaningful peers/industry comparison.

Quick Ratio is 1.12 and Interest Coverage is 21.2 per M* who assigns “Narrow” Economic Moat and gives a B grade for Financial Health (per BetterInvesting® website). VL rates the company B++ for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 46.1% and 28.9% [both percentages equal to below] for ’26 and ’27 (based on 22 analysts).
• Zacks gives YOY ACE 34.0% and 24.0% for ’26 and ’27, respectively (8 analysts).
• VL projects 11.8% annualized growth from ’24-’29.
• CFRA projects 32.8% YOY and 28.3% per year for ’26 and ’25-’27, respectively.
• M* offers a 2-year ACE of 25.9% and projects 16.6% per year from ’25-’30 (Equity Report).

I am forecasting below the range at 11.0% per year.

With regard to EPS growth:

• MarketWatch projects 39.3% and 34.2% per year for ’25-’27 and ’25-’28, respectively (based on 27 analysts).
• Nasdaq.com gives ACE 23.3% and 24.1%/year for ’26-’28 and ’26-’29 [7 / 8 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year annualized growth of 32.2%.
• Finviz gives ACE 5-year annualized growth of 33.4% (9).
• LSEG estimates LTG at 31.4%.
• YF gives YOY ACE 46.1% and 28.9% for ’26 and ’27, respectively (22) [something seems amiss as both equal to above].
• Zacks gives YOY ACE 46.9% and 30.2% for ’26 and ’27 (7) along with 5-year annualized growth of 31.0%.
• VL projects 40.5% annualized from ’24-’29 (most recent report is Dec ’25, however, and 2025 full-year earnings have since been announced. I will use VL’s $4.10 estimate for 2025 to get 14.3% instead).
• CFRA projects 43.8% YOY and 39.3% per year for ’26 and ’25-’27 along with 3-year CAGR of 28.0%.
• M* gives long-term ACE of 26.1% and projects 16.2% from ’25-’30 in Equity Report (using ’29 would give 29.4% but I am using the lesser).

My 14.0% forecast is below the long-term-estimate range (mean of seven: 26.4%). Initial value is ’25 EPS of $3.41/share.

My Forecast High P/E is 40.0. Over past three years, high P/E is 42.2, 114, and 59.4. The last-3-year mean average P/E is 46.0. I am just below the range.

My Forecast Low P/E is 15.0. Over past three years, low P/E is 10.0, 34.6, and 15.7. I am forecasting just below the median.

My Low Stock Price Forecast (LSPF) is $60.00. Default ($51.20) based on initial value from above seems unreasonably low at 78.9% less than the previous close but only 4.5% less than the 52-week low. My [arbitrary] selection is 75.3% less than the previous close and 11.9% greater than the 52-week low. My effective Forecast Low P/E is therefore $60.0 / $3.41 = 17.6.

Over the past three years, Payout Ratio (PR) is 2.1%, 8.8%, and 5.1%. I am forecasting below the range at 2.0%.

These inputs land VRT in the SELL zone with a U/D ratio of 0.1. Total Annualized Return (TAR) is 1.6%.

PAR (using Forecast Average—not High—P/E) of -5.7% is unthinkable as an investment candidate. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR but even that is far below the risk-free rate (T-bills).

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 114 studies done in the past 90 days (65 outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 17.8%, 25.0%, 59.9, 31.1, and 4.7% respectively. I am lower across the board. VL [M*] projects a future average annual P/E of 32.0 [20.7 and 27.4 in ’29 and ’30, respectively] that is less than MS (40.5) and greater than mine (effectively 28.8).

MS high / low EPS are $7.13 / $2.65 versus my $6.57 / $3.41 (per share). My high EPS is less due to a lower growth rate. VL [M*] high EPS of $7.00 [$8.88 for ’30] is in the middle [soars above both].

MS LSPF of $87.30 implies a Forecast Low P/E of 32.9 versus the above-stated 31.1. MS LSPF is 5.9% greater than the default $2.65/share * 31.1 = $82.42 that results in more aggressive zoning. MS LSPF is a whopping 45.5% greater than mine.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Also backing this assessment are MS TAR exceeding mine by a gaudy 17.4% per year and a much greater LSPF.

With regard to valuation, PEG is 1.3 and 4.5 per Zacks and my projected P/E: diametrically opposed. I find it interesting that both Zacks and M* (0.8) do not find the stock overvalued although in a different section M* has it at two stars and overvalued by 32%. Based on a mere 3-year history, Relative Value [(current P/E) / 5-year-mean average P/E] is extremely high at 1.55. “Quick and Dirty DCF” calculates stock overvalued by ~28%.

This is a volatile stock with an inconsistent track record and unpredictable service/product demand as suggested by M*. I do believe lower quality can be offset by larger MOS, however, and this study has it.

Per U/D, VRT is a BUY under ~$110/share. BetterInvesting® TAR criterion would be met [262.8 / ((14.77 / 100 ) +1 ) ^ 5]
~ $132 given a forecast high price ~$263.

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

V Stock Study (2-17-26)

I recently did a stock study on Visa Inc. (V, $314.08). Previous studies are here and here.

M* writes:

     > Visa is the largest payment processor in the world. In fiscal 2025, it
     > processed almost $17 trillion in total volume. Visa operates in over
     > 200 countries and processes transactions in over 160 currencies. Its
     > systems are capable of processing over 65,000 transactions per second.

Over the past decade, this large-size company has grown sales and EPS at annualized rates of 10.6% and 16.7%, respectively [FY ends Sep 30]. Lines are mostly up, straight, and parallel except for sales+EPS dip in ’20. Shares outstanding decrease 24.1% (3.0% per year). Value Line (VL) gives an Earnings Predictability score of 95.

Over the past decade, PTPM leads peer and industry averages while increasing from 53.1% to 60.5% (’25) with last-5-year mean of 64.0%. ROE trails peer and industry averages despite increasing from 17.6% to 52.2% (’25) with last-5-year mean of 44.5%. Debt-to-Capital is far less than peer and industry averages despite increasing from 32.5% to 39.9% (’25) with last-5-year mean of 36.7%.

Quick Ratio is 0.73 and Interest Coverage is 42.1 per M* who assigns “Wide” Economic Moat, rates the company “Standard” for Capital Allocation, and gives an A grade for Financial Health (per BetterInvesting® website). VL rates the company A++ for Financial Strength and points out current cash on hand nearly covers long-term debt.

V is #3 on the “Top 40 Stocks Purchased by Investment Clubs” stock screen as of 2/10/26 (nod to the BetterInvesting® Weekly Update email).

With regard to sales:

• YF gives YOY ACE 12.0% and 13.1% [both percentages equal to below] for ’26 and ’27 (based on 34 analysts).
• Zacks gives YOY ACE 11.3% and 10.2% for ’26 and ’27, respectively (13 analysts).
• VL projects 7.8% annualized growth from ’25-’29.
• CFRA projects 2.0% YOY and 11.1% per year for ’26 and ’25-’27, respectively.
• M* offers a 2-year ACE of 10.8% and projects 10.5% per year from ’25-’30 (Equity Report).

I am forecasting below the range at 7.0% per year.

With regard to EPS:

• MarketWatch projects 12.3% and 12.5% per year for ’25-’27 and ’25-’28, respectively (based on 40 analysts).
• Nasdaq.com gives ACE 13.1% and 12.9%/year for ’26-’28 and ’26-’29 [17 / 9 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year annualized growth of 13.1%.
• Finviz gives ACE 5-year annualized growth of 12.6% (8).
• LSEG estimates LTG at 13.1%.
• Argus projects 5-year annualized growth of 20.0%.
• YF gives YOY ACE 12.0% and 13.1% for ’26 and ’27, respectively (38) [something seems amiss as both equal to above].
• Zacks gives YOY ACE 11.9% and 13.3% for ’26 and ’27 (15) along with 5-year annualized growth of 13.6%.
• VL projects 7.7% annualized growth from ’25-’29.
• CFRA projects growth of 12.9% YOY and 13.1% per year for ’26 and ’25-’27 along with 3-year CAGR of 13.0%.
• M* gives long-term growth ACE of 14.2% and projects 13.1% from ’25-’30 in Equity Report.

My 8.0% forecast is near bottom of the long-term-estimate range (mean of eight: 13.4%). Initial value is ’25 EPS of $10.20/share instead of 2026 Q1 EPS $10.66 (TTM).

My Forecast High P/E is 30.0. Over the past 10 years, high P/E ranges from 30.1 in ’24 to 44.9 in ’21 with last-5-year mean of 35.2 and a last-5-year-mean average P/E of 30.4. I am below the range.

My Forecast Low P/E is 23.0. Over the past 10 years, low P/E ranges from 21.1 in ’23 to 31.8 in ’21 with last-5-year mean of 25.6. I am forecasting near bottom of the range (only ’23 is less).

My Low Stock Price Forecast (LSPF) of $234.60 is default based on initial value above. This is 25.3% less than the previous close and 21.5% less than the 52-week low.

Over the past 10 years, Payout Ratio (PR) ranges from 18.7% in ’18 to 24.5% in ’20 with a last-5-year mean of 22.1%. I am forecasting below the range at 18.0%.

These inputs land V in the HOLD zone with a U/D ratio of 1.7. Total Annualized Return (TAR) is 8.0%.

PAR (using Forecast Average—not High—P/E) of 5.5% is less than I seek from a large-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead albeit still less than desired.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 563 studies done in the past 90 days (191 outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 10.3%, 11.9%, 32.4, 24.8, and 21.9% respectively. I am lower across the board. VL [M*] projects a future average annual P/E of 28.0 [17.0, which once again seems unreasonably low] that is [much] less than MS (28.6) and greater [much less] than mine (26.5).

MS high / low EPS are $18.14 / $10.21 versus my $14.99 / $10.20 (per share). My high EPS is less due to a lower growth rate. VL [M*] high EPS of $15.45 [$17.70] is in the middle.

MS LSPF of $257.20 implies a Forecast Low P/E of 25.2 versus the above-stated 24.8. MS LSPF is 1.6% greater than the default $10.21/share * 24.8 = $253.21 that results in more aggressive zoning. MS LSPF is 9.6% greater than mine.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Also backing this assessment are MS TAR exceeding mine by 5.0% per year and a greater LSPF.

With regard to valuation, PEG is 1.8 and 3.4 per Zacks and my projected P/E: slightly overvalued (2.2 per M* for ’25). Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 0.97. “Quick and Dirty DCF” has stock overvalued by 7.1%.

Per U/D, V is a BUY under ~$288/share. BetterInvesting® TAR criterion would be met [449.7 / ((14.27 / 100 ) +1 ) ^ 5]
~ $231 given a forecast high price ~$450.

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

AAPL Stock Study (2-15-26)

I recently did a stock study on Apple Inc. (AAPL, $255.78).

M* writes:

     > Apple is among the largest companies in the world, with a broad portfolio
     > of hardware and software products targeted at consumers and businesses.
     > Apple’s iPhone makes up a majority of the firm sales, and Apple’s other
     > products like Mac, iPad, and Watch are designed around the iPhone as the
     > focal point of an expansive software ecosystem. Apple has progressively
     > worked to add new applications, like streaming video, subscription
     > bundles, and augmented reality. The firm designs its own software and
     > semiconductors while working with subcontractors like Foxconn and
     > TSMC to build its products and chips. Slightly less than half of Apple’s
     > sales come directly through its flagship stores, with a majority of
     > sales coming indirectly through partnerships and distribution.

Over the past decade, this mega-size (> $100B annual revenue) company has grown sales and EPS at annualized rates of 8.2% and 16.1%, respectively [FY ends Sep 30]. Lines are mostly up, straight, and parallel except for sales dips in ’19 and ’23 and EPS dips in ’19 and ’24. Shares outstanding decrease 31.8% (4.2% per year). Five-year EPS R^2 is 0.72 and Value Line (VL) gives an Earnings Predictability score of 85.

Over the past decade, PTPM trails peer/industry [lines have identical morphology and practically overlay each other for all three metrics] averages while ranging from 24.4% in ’20 to 31.9% in ’25 with last-5-year mean of 30.7%. ROE also trails peer/industry averages despite increasing from 35.0% to 167% (’25) with last-5-year mean of 155% (far above industry standards due to aggressive share buyback program per GoogleAI). Debt-to-Capital is less than peer/industry averages despite increasing from 40.4% to 57.2% (’25) with last-5-year mean of 65.9%.

Quick Ratio is 0.85 and Interest Coverage N/A per M* who assigns “Wide” Economic Moat, gives an A grade for Financial Health (per BetterInvesting® website), and rates the company “Exemplary” for Capital Allocation [I’m surprised M* is complimentary of share buyback program because doing so over a long time horizon while having VL Price Growth Persistence score of 100 implies costly expense for much of it: something M* detests]. VL rates the company A+ for Financial Strength.

With Interest Coverage unspecified, Cash Coverage Ratio may be calculated as an alternative metric. For 2025, GoogleAI has (CF from Operations) / Total Debt = $111.48B / $98.65B = 1.13: company generates more cash in one year to theoretically pay down its entire debt load.

AAPL is #2 on the “Top 40 Stocks Purchased by Investment Clubs” stock screen as of 2/10/26 (nod to the BetterInvesting® Weekly Update email for alerting me).

With regard to sales growth:

• YF gives YOY ACE 13.8% and 9.5% [both percentages equal to below] for ’26 and ’27 (based on 37 analysts).
• Zacks gives YOY ACE 10.8% and 7.3% for ’26 and ’27, respectively (11 analysts).
• VL projects 6.3% annualized growth from ’25-’29.
• CFRA projects 11.6% YOY and 9.6% per year for ’26 and ’25-’27, respectively.
• M* offers a 2-year ACE of 8.3%. and projects 7.7% per year from ’25-’30 (Equity Report).

I am forecasting below the range at 6.0% per year.

With regard to EPS growth:

• MarketWatch projects 12.1% and 10.3% per year for ’25-’27 and ’25-’28, respectively (based on 51 analysts).
• Nasdaq.com gives ACE 2.6% and 13.8%/year for ’26-’28 and ’26-’29 [14 / 5 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year annualized growth of 10.6%.
• Finviz gives ACE 5-year annualized growth of 11.2% (20).
• LSEG estimates LTG at 12.5%.
• Argus projects 5-year annualized growth of 13.0%.
• YF gives YOY ACE 13.8% and 9.5% for ’26 and ’27, respectively (38) [something likely amiss as both equal to above].
• Zacks gives YOY ACE 12.7% and 10.5% for ’26 and ’27 (13) along with 5-year annualized growth of 13.3%.
• VL projects 11.4% annualized growth from ’25-’29.
• CFRA projects growth of 14.6% YOY and 12.0% per year for ’26 and ’25-’27 along with 3-year CAGR of 10.0%.
• M* gives long-term growth ACE of 13.1% and projects 13.1% [puzzling duplication] from ’25-’30 in Equity Report.

My 10.0% forecast is below the long-term-estimate range (mean of eight: 12.3%). Initial value is ’25 EPS of $7.46/share instead of 2026 Q1 EPS $7.91 (TTM).

My Forecast High P/E is 27.0. Over the past 10 years, high P/E increases from 14.9 to 34.9 (’25) with last-5-year mean of 32.8 and a last-5-year-mean average P/E of 27.4. I am below the latter (and high P/E for each of last six years).

My Forecast Low P/E is 16.0. Over the past 10 years, low P/E increases from 10.8 to 22.7 (’25) with last-5-year mean of 22.0. I am forecasting below the last six years.

My Low Stock Price Forecast (LSPF) is $169.20. Default ($126.60) based on initial value above is unreasonably low at 50.5% less than the previous close and 25.2% less than the 52-week low. My (arbitrary) selection is the 52-week low itself: 33.8% less than the previous close.

Over the past 10 years, Payout Ratio (PR) has fallen from 26.2% to 13.7% (’25) with a last-5-year mean of 15.0%. I am forecasting below the range at 13.0%.

These inputs land AAPL in the HOLD zone with a U/D ratio of 0.8. Total Annualized Return (TAR) is 5.3%.

PAR (using Forecast Average—not High—P/E) of 0.8% is unthinkable as an investment candidate. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on the 5.3% TAR albeit still lower than I seek for a mega-size company.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 485 studies done in the past 90 days (159 outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 7.4%, 10.0%, 32.4, 21.9, and 15.0% respectively. I am equal on EPS growth and lower on the rest. VL [M*] projects a future average annual P/E of 31.0 [20.6] that is greater than MS (27.2) and greater [less] than mine (21.5).

MS high / low EPS are $12.28 / $7.30 versus my $12.01 / $7.46 (per share). VL [M*] high EPS of $11.50 [$12.39] is less [greater] than both.

MS LSPF of $169.20 implies a Forecast Low P/E of 23.2 versus the above-stated 21.9. MS LSPF is 5.8% greater than the default $7.30/share * 21.9 = $159.87 that results in more aggressive zoning. MS LSPF is equal to mine.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Also backing this assessment is MS TAR exceeding mine by 3.4% per year.

With regard to valuation, PEG is 2.3 and 2.9 per Zacks and my projected P/E: slightly overvalued (2.0 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is elevated at 1.18. “Quick and Dirty DCF” has stock undervalued by 11%.

Per U/D, AAPL is a BUY under $208/share. BetterInvesting® TAR criterion would be met [324.3 / ((14.37 / 100 ) +1 ) ^ 5]
~ $165 given a forecast high price ~$324.

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

Quality and Fundamentals (Part 7)

Hello end of the tunnel! Today I conclude my series on Quality vs. fundamentals and what matters most for the SSG.

Two big conclusions stated last time answer the questions I set out to explore. First, the difference between high-quality stocks and good fundamentals may only be magnitude of [sales / EPS] growth and/or management metrics (i.e. PTPM, ROE, and Debt-to-Capital). Second, stocks with good earnings predictability—historically up, straight, and parallel—are necessary for the SSG methodology.

The reason I couldn’t end with Part 6 was Neff’s inclusion of “solid forecasted earnings growth.” This may not meet the BetterInvesting® criteria for high-quality growth stocks (not to mention high-flying P/E’s), but it’s certainly not “very little growth” as mentioned in the penultimate paragraph.

My prompt for Google AI was “can value investing involve low-quality stocks?” As it turns out, this concept dates all the way back to Benjamin Graham.

While contemporary value investing often prioritizes [high-] quality growth at a reasonable price, original Graham principles include strategies for buying “low-quality” or distressed assets if the price is sufficiently low to provide a significant margin of safety [MOS in my stock studies]. This is known by some as “deep value [cigar butt] investing.”

The relationship between quality and value typically falls into two distinct categories. Deep value involves buying stock in companies that may be low-quality or even in “retrogression” if they trade below net current asset [liquidation] value. Here, investors disregard traditional quality metrics in favor of extreme price discounts. The other category includes turnaround situations. In this case, investors look to buy stock in companies of low quality due to temporary setbacks, poor management, or industry cycles with hopes of return to higher quality status.

The risk of value trap applies to both categories where a stock appearing cheap based on metrics like P/E or P/B is actually fairly priced due to its deteriorating business.

The following performance graph provided does not include statistical [inferential] analysis for significance or more than 11 recent years but it’s a start:

Although value investing with lower-quality stocks can provide return, the return may be lower and underperform benchmarks.

Different value investing philosophies treat “quality” differently:

• Traditional / modern value (Buffett / Munger) emphasizes high-quality companies with economic moats [competitive advantage] and eschews low-quality companies altogether.
• Graham’s defensive criteria recommend a minimum quality level such as S&P Earnings / Dividend Rating > B and at least 10 years of positive earnings.
• Deep value / contrarian specifically targets out-of-favor or distressed companies labeled by some as “junk.”

To help avoid value traps (permanently impaired low-quality stocks), heed these warning signs:

• Inconsistent profits in the form of frequent losses or “one-time” charges that recur.
• Companies with more debt than equity (or high Debt-to-Capital) are often considered lower quality and higher risk.
• “Cheap” prices in a dying / declining industry (e.g., legacy retail).
• Low share prices (especially < $5.00) can lead to reduced liquidity and higher volatility making recovery more difficult.

Onward and upward my fellow investors!

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