CASH Stock Study (5-14-26)

I recently did a stock study on Pathward Financial Inc. (CASH, $79.93).

M* writes:

     > Pathward Financial Inc is a unitary savings and loan holding company.
     > It’s a wholly owned full-service banking subsidiary of Meta Financial,
     > is both a community-oriented financial institution offering a
     > variety of financial services to meet the needs of the communities
     > it serves, and a payments company providing services on a nationwide
     > basis. It operates through three reportable segments: Consumer: The
     > Consumer segment includes the Partner Solutions business line,
     > which collaborates with partners to navigate payment and lending
     > needs; Commercial: The Commercial segment includes the Commercial
     > Finance business line, which helps businesses access funds needed
     > to launch, operate, and grow; and Corporate Services. The majority
     > of the revenue is generated from Consumer segment.

Over the past decade, this small-size company grows sales and EPS at annualized rates of 16.2% and 23.7%, respectively. Lines are mostly up, straight, and parallel except for revenue dips in ’20 and ’22. Brett Pharr took over as CEO in 2021. Value Line (VL) gives an Earnings Predictability score of 80. Shares outstanding decrease 7.5% (0.9%/year).

Over the past decade, PTPM trails peer and industry averages despite increasing from 26.4% to 33.1% (’25) with a 5-year mean of 33.1%. ROE leads peer and industry averages while increasing from 10.0% to 21.9% (’25) with a 5-year mean of 21.9% [shareholder equity consistently positive and increasing (except for -4.2% YOY in ’23) by 11.8%/year]. Debt-to-Capital is less than peer and industry averages while falling from 78.0% to 4.7% (’25) with a 5-year mean of 11.8%.

Return on Average Assets, the marquee metric I look for in banks, has been over 2.0% since ’21 with a 5-year mean of 2.3%. That is stellar! M* assigns a “Narrow” [quantitative] Economic Moat but only a C grade for Financial Health (per BetterInvesting® website). VL gives a B++ rating for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 1.7% contraction and 6.1% growth for ’26 and ’27 (based on 3 analysts).
• Zacks gives YOY ACE growth of 0.7% and 5.5% for ’26 and ’27, respectively (2 analysts).
• CFRA gives ACE 1.6% YOY contraction and 2.2%/year growth for ’26 and ’25-’27, respectively (3).

My 5.0% annualized forecast is less than the 7.3% realized since Pharr took over.

With regard to EPS growth:

• MarketWatch gives ACE 13.3% YOY and 12.4% per year for ’26 and ’25-’27 (based on 3 analysts).
• Nasdaq.com gives ACE 10.3% YOY for ’27 (2 analysts).
• YF gives YOY ACE 18.3% and 11.5% for ’26 and ’27, respectively (3).
• Zacks gives YOY ACE 10.9% and 10.3% for ’26 and ’27, respectively (2).
• VL reports ACE 10.4% growth from ’25-’27 (1).
• CFRA gives ACE 10.3% YOY and 10.8% per year for ’26 and ’25-’27, respectively (3).

With no long-term analyst projections available, my 9.0% forecast is a haircut to the 14% growth rate realized since Pharr took over. Initial value is ’25 EPS of $7.87/share rather than 2026 Q2 $8.42 (TTM).

My Forecast High P/E is 10.0. Over the past 10 years, high P/E decreases from 16 to 10.9 (’25) with a 5-year mean of 11.3 and a 5-year mean average P/E of 8.7. I am below the 10-year range.

My Forecast Low P/E is 7.0. Over the past 10 years, low P/E ranges from 4.4 in ’21 to 15.4 in ’18 with a last-5-year mean of 6.0. I am [aggressively] forecasting above the latter.

My Low Stock Price Forecast (LSPF) of $55.10 is default based on initial value from above. That is 31.1% less than previous close and 16.4% less than the 52-week low.

Over the past 10 years, Payout Ratio (PR) falls from 13.2% to 2.5% (’25) with a last-5-year mean of 3.5%. I am forecasting below the range at 2.0%.

These inputs land CASH in the HOLD zone with a U/D ratio of 1.7. Total Annualized Return (TAR) is 8.9%.

PAR (using Forecast Average—not High—P/E) of 5.4% 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 compare my inputs with those of Member Sentiment (MS). Based on 47 studies done in the past 90 days (13 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 10.0%, 12.0%, 11.3, 6.0, and 3.5%. Only my Forecast Low P/E is higher.

MS high / low EPS are $14.62/ $8.21 versus my $12.11 / $7.87 (per share). My high EPS is less due to a lower growth rate.

MS LSPF of $58.80 implies a Forecast Low P/E of 7.2: greater than the above-stated 6.0. MS LSPF is 19.4% greater than the default $8.21/share * 6.0 = $49.26 that results in more aggressive zoning. MS LSPF also exceeds mine by 6.7%.

MOS is at least moderate in this study because most of my inputs are discounts to what scant data are available (Forecast Low P/E excepted). In support of the MOS is MS TAR exceeding mine by 4.7% per year.

With no other confirmatory long-term data available, I need to build in a MOS rather than assuming future growth will be the same as historical. Relative Value [(current P/E) / 5-year-mean average P/E] is slightly elevated at 1.1. I will set a price alert at the 52-week low then look to re-evaluate at that time.

Per U/D, CASH is a BUY around $71.50/share. Given a forecast high price ~$121, BetterInvesting® TAR criterion would be met [121.1 / ((14.67 / 100 ) +1 ) ^ 5] ~ $61.

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

MELI Stock Study (5-13-26)

I recently did a stock study on MercadoLibre Inc. (MELI, $1,578.78).

M* writes:

     > MercadoLibre is the largest e-commerce marketplace in Latin
     > America, with more than 120 million unique active buyers and
     > 1 million active sellers at the end of 2025. The company is
     > roughly split between its e-commerce business, which includes
     > its fulfillment and advertising services, and its fintech
     > segment, which comprises its rapidly expanding payment and
     > digital wallet platform (Mercado Pago) and its lending business
     > (Mercado Credito). While the company operates in 18 countries,
     > its primary markets are Brazil, Argentina, and Mexico, which
     > account for more than 95% of its revenue.

Since 2022, this large-size company grows sales and EPS at annualized rates of 40.3% and 63.5%, respectively. Lines are mostly up, straight, and parallel except for sluggish EPS growth in ’25. The case to exclude earlier data, as discussed in BetterInvesting® circles (e.g. Manifest Investing), is a “growth-at-any cost” approach where revenue was heavily reinvested into logistics and expansion resulting in volatile or negative (e.g. 2018 – 2020) EPS. Starting in 2022, the company begins demonstrating significant operating leverage with net income seeing explosive growth. Value Line (VL) gives an Earnings Predictability score of only 25 reflecting the volatile EPS in earlier years. Shares outstanding increase 8.5% (0.9%/year).

Since 2022, PTPM trails peer and industry averages despite increasing from 7.4% to 9.8% (’25) with a mean of 9.9%. ROE leads peer and industry averages while ranging from 29.4% in ’22 to 47.8% in ’24 with a mean of 36.3% (shareholder equity consistently positive and increasing). Debt-to-Capital is less than peer and industry averages while falling from 74.8% to 62.8% (’25) with a mean of 65.6%.

Quick Ratio is 0.75 and Interest Coverage 15.6 per M* who assigns “Wide” Economic Moat, “Exemplary” rating for Capital Allocation, but only a C for Financial Health (per BetterInvesting® website). VL gives a B++ rating for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 37.1% and 24.7% for ’26 and ’27 (based on 23 analysts).
• Zacks gives YOY ACE 34.3% and 23.4% for ’26 and ’27, respectively (4 analysts).
• VL projects 24.1% per year from ’25-’30.
• CFRA gives ACE 36.5% YOY and 30.3% per year for ’26 and ’25-’27, respectively (23).
• M* gives 2-year ACE of 28.2% per year and projects 5-year annualized 21.8% in Equity Report.

I am forecasting below the range at 21.0% per year.

With regard to EPS growth:

• MarketWatch projects 24.1% and 30.2% per year for ’25-’27 and ’25-’28, respectively (based on 27 analysts).
• Nasdaq.com gives ACE 40.3% and 39.0% per year for ’26-’28 and ’26-’29 [6 / 4 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year annualized of 31.7%.
• Finviz gives ACE 5-year annualized of 30.7% (3).
• LSEG projects LTG of 33.6%.
• YF gives YOY ACE 13.8% and 42.6% for ’26 and ’27, respectively (17).
• Zacks gives YOY ACE 14.3% and 44.4% for ’26 and ’27, respectively, and 5-year annualized of 39.6% (5).
• VL projects 26.0% annualized from ’25-’30.
• CFRA gives ACE 16.8% YOY and 28.6% per year for ’26 and ’25-’27, respectively (15).
• M* gives ACE long-term 31.5%/year and projects the same in Equity Report.

My 21.0% forecast is below the long-term-estimate range (mean of seven: 32.1%). Initial value is 2026 Q1 EPS of $37.89/share (TTM) rather than ’25 EPS of $39.40.

My Forecast High P/E is 35.0. Since 2022, high P/E decreases from 143 to 66.9 (’25) with a mean of 88.0 and a mean average P/E (also using low P/E from ’22 forward) of 66.9. I am below the range and at top of my comfort zone.

My Forecast Low P/E is 30.0. Since 2022, low P/E decreases from 63.0 to 43.3 (’25) with a mean of 45.9. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $1136.70 is default based on initial value from above. That is 28.0% less than previous close and 26.0% less than the 52-week low.

These inputs land MELI in the BUY zone with a U/D ratio of 4.5. Total Annualized Return (TAR) is 17.2%.

PAR (using Forecast Average—not High—P/E) of 15.4% is outstanding especially 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 109 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 21.5%, 21.9%, 45.0, and 34.4, respectively. I am lower across the board. VL projects a future average P/E of 28.0: less than MS (40.2) and less than mine (32.5).

MS high / low EPS are $106.49 / $39.23 versus my $98.28 / $37.89 (per share). My high EPS is less due to a lower growth rate and TTM initial value. VL (M*) high EPS of $125.00 ($154.86) soars above both.

MS LSPF of $1302.70 implies a Forecast Low P/E of 33.2: less than the above-stated 34.4. MS LSPF is 3.5% less than the default $39.23/share * 34.4 = $1349.51 that results in more conservative zoning. MS LSPF exceeds mine by 14.6%, however.

MOS is robust in this study because my inputs are less than or near bottom of most historical/analyst/MS averages/ranges. Also supporting this assessment is MS TAR exceeding mine by 4.9% per year and my significantly lower LSPF.

With regard to valuation, PEG is 0.87 and 1.6 per Zacks and my projected P/E, respectively: fairly valued (M* has 0.91). Relative Value [(current P/E) / 5-year-mean average P/E] is quite low at 0.61. “Quick and Dirty” DCF calculates the stock as 37% undervalued while M* reports a 26% undervaluation.

Per U/D, MELI is a BUY right now. BetterInvesting® TAR criterion would be met [3439.7 / ((14.87 / 100 ) +1 ) ^ 5] ~ $1,720 given a forecast high price ~$3,440 (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).

BSX Stock Study (5-12-26)

I recently did a stock study on Boston Scientific Corp. (BSX, $53.37).

M* writes:

     > Boston Scientific produces less invasive medical devices that
     > are inserted into the human body through small openings
     > or cuts. It manufactures products for use in angioplasty,
     > blood clot filtration, kidney stone management, cardiac
     > rhythm management, catheter-directed ultrasound imaging,
     > upper gastrointestinal tract diagnostics, interventional
     > oncology, neuromodulation for chronic pain, and treatment
     > of incontinence. The firm markets its devices to healthcare
     > professionals and institutions globally. Foreign sales
     > account for roughly 36% of the firm’s total sales.

Over the past decade, this large-size company grows sales and EPS at annualized rates of 9.2% and 20.8%, respectively. Lines are up, straight, and parallel since 2022 but a bit “wonky” before that. I am excluding 2020 from the full analysis due to negative EPS (massive reduction in elective procedures due to COVID-19). 2019 EPS shows a massive boost due to a deferred tax benefit from internal transfer of assets (intellectual property) between legal entities. The adjusted EPS line is much smoother, increasing every year except ’20 at an average rate of 11.9%. Five- (10-) year EPS R^2 is 0.76 (0.29) and Value Line (VL) gives an Earnings Predictability score of 75. Shares outstanding increase 8.5% (0.9%/year).

Over the past decade, PTPM trails peer and industry averages despite increasing from 2.1% to 16.9% (’25) with a last-5-year mean of 12.5%. ROE trails peer and industry averages while increasing from 5.3% to 12.3% (’25) with a last-5-year mean of 7.8% (shareholder equity positive and consistently growing). Debt-to-Capital is less than peer and industry averages while falling from 44.9% to 32.1% (’25) with a last-5-year mean of 34.0%.

Quick Ratio is 0.98 and Interest Coverage 11.5 per M* who assigns “Narrow” Economic Moat, “Standard” 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 8.0% and 8.9% for ’26 and ’27 (based on 28 analysts).
• Zacks gives YOY ACE 8.0% and 8.9% for ’26 and ’27, respectively (11 analysts).
• VL gives 5.3% per year from ’25-’30.
• CFRA gives ACE 8.6% YOY and 10.7% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 9.1% per year and projects 5-year annualized 8.4% in Equity Report.

I am forecasting below the range at 5.0% per year.

With regard to EPS growth:

• MarketWatch projects 13.7% and 13.6% per year for ’25-’27 and ’25-’28, respectively (based on 37 analysts).
• Nasdaq.com gives ACE 10.5% and 10.4% per year for ’26-’28 and ’26-’29 (13 / 6 / 3 analysts for ’26 / ’28 / ’29).
• Seeking Alpha projects 4-year annualized of 15.4%.
• Finviz gives ACE 5-year annualized of 11.4% (8).
• Argus gives 5-year annualized of 10.0%.
• LSEG projects LTG of 10.8%.
• YF gives YOY ACE 10.4% and 11.4% for ’26 and ’27, respectively (29).
• Zacks gives YOY ACE 10.5% and 11.0% for ’26 and ’27, respectively, and 5-year annualized of 16.2% (13).
• VL gives 6.8% annualized from ’25-’30.
• CFRA projects 11.1% YOY and 14.9% per year for ’26 and ’25-’27 along with 3-year CAGR of 13.0%.
• M* gives ACE long-term 24.6%/year but projects 9.2% annualized [adjusted] from ’25-’30 in Equity Report.

My 6.0% forecast is below the long-term-estimate range (mean of eight: 13.1%). Initial value is ’25 EPS of $1.94/share rather than 2026 Q1 $2.39 (TTM).

My Forecast High P/E is 35.0. Since 2018 (excluding near-triple-digit values or higher: 99.2 in ’16, 374 in ’17, and 107 in ’22), high P/E increases from 33.1 to 56.4 (’25) with a last-5-year mean of 62.9 and last-5-year-mean average (excluding same three years for low) P/E of 54.1. I am below all but 14.0 in ’19 and 33.1 in ’18.

My Forecast Low P/E is 21.0. Since 2018 (same years excluded as above), low P/E increases from 20.9 to 44.3 (’25) with a last-5-year mean of 45.4. I am forecasting near bottom of the range (9.8 in ’19 and 20.9 in ’18 are less).

My Low Stock Price Forecast (LSPF) of $40.70 is based on initial value from above. That is 23.7% less than previous close and 23.4% less than the 52-week low.

These inputs land BSX at cusp of the BUY zone with a U/D ratio of 3.0. Total Annualized Return (TAR) is 11.3%.

PAR (using Forecast Average—not High—P/E) of 6.4% 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 105 studies done in the past 90 days (38 outliers excluded including mine), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 9.6%, 13.8%, 40.0, and 30.0, respectively. I am lower across the board. VL [M*] projects a future average P/E of 25.0 [11.5, which seems unreasonably low]: less than MS (35.0), less than mine (28.0), and less than its own previous quarterly report (32.0).

MS high / low EPS are $3.90 / $1.94 versus my $2.60 / $1.94 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $4.25 ($4.65 adjusted) is greater than both.

MS LSPF of $53.40 (INVALID on today’s date) implies a Forecast Low P/E of 27.5: less than the above-stated 30.0. MS LSPF is 8.3% less than the default $1.94/share * 30.0 = $58.20 that results in more conservative zoning. MS LSPF exceeds mine by 31.2%, however.

MOS is robust in the study because my inputs are less than or near bottom of historical/analyst/MS averages/ranges. Also backing this assessment is MS TAR exceeding mine by 8.9% (too high, really) per year and my lower LSPF.

Regarding valuation, PEG is 0.98 and 3.5 per Zacks and my projected P/E, respectively: a bit overvalued (M* has 0.29, which seems unreasonably low). Relative Value [(current P/E) / 5-year-mean average P/E] is exceedingly low at 0.41 (even with all upside outliers removed). “Quick and Dirty” DCF calculates the stock undervalued by 34%, precisely matching M* assessment.

BSX makes for a challenging stock study because of the GAAP/adjusted EPS differences and because the historical P/E data is so scattered. I feel I’ve discounted my inputs substantially throughout, though. If adjusted numbers are used to forecast future EPS, then the current study is well into the BUY zone.

Per U/D, BSX is a virtual BUY right now. Given a forecast high price of $91, BetterInvesting® TAR criterion would be met at [91.0 / ((14.87 / 100 ) +1 ) ^ 5] = $45.50 (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).

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).

CTSH Stock Study (6-10-26)

I recently studied Cognizant Technology Solns Corp. (CTSH, $52.94). Previous studies are here, here, here, here, and here.

M* writes:

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

Over the past 10 years, this large-size company has grown sales and earnings 4.6% and 7.1% per year, respectively. Lines are somewhat up, straight, and parallel with YOY sales dips in ’20 and ’23 along with EPS dips in ’17, ’19, ’23, and a larger decline in ’20. Five- (10-) year EPS R^2 is 0.68 (0.72) and Value Line (VL) gives an Earnings Predictability score of 95. Shares outstanding decrease 19.8% (2.4%/year).

Over the past 10 years, PTPM leads peer and industry averages despite decreasing from 17.5% to 16.5% (’25) with a last-5-year mean of 15.3%. ROE trails peer and industry averages while ranging from 12.2% in ’20 to 18.9% in ’18 with a last-5-year mean of 16.7% (shareholder equity consistently positive with 3.8% CAGR). Debt-to-Capital is much less than peer and industry averages while ranging from 6.1% in ’18 to 14.0% in ’20 with a last-5-year mean of 9.7%.

Quick ratio is 1.7 and interest coverage 109 per M* who assigns “Narrow” Economic Moat, gives a “Standard” rating for Capital Allocation, and a B grade for Financial Health (per BI website). VL gives an A+ grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 5.7% and 5.0% for ’26 and ’27, respectively (based on 29 analysts).
• Zacks gives YOY ACE 5.7% and 5.8% for ’26 and ’27 (8 analysts).
• VL projects 4.3% per year from ’25-’30.
• CFRA projects 5.9% YOY and 6.1% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 4.9% per year and projects 5-year CAGR of 4.4% in Equity Report.

My 4.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 8.9% and 8.6% per year for ’25-’27 and ’25-’28, respectively (based on 31 analysts).
• Nasdaq.com gives YOY ACE 8.9% and 9.7% per year for ’27 and ’26-’28 (9 / 9 / 4 analysts for ’26 / ’27 / ’28).
• Seeking Alpha projects 4-year CAGR of 7.4%.
• Finviz gives 5-year annualized ACE of 9.1% (10).
• Argus projects 5-year CAGR of 10.0%.
• LSEG has LTG at 8.3%.
• YF gives YOY ACE 7.6% and 8.4% for ’26 and ’27, respectively (30).
• Zacks gives YOY ACE 7.9% and 8.9% for ’26 and ’27 along with 5-year CAGR of 8.3% (9).
• VL projects 6.7% per year from ’25-’30.
• CFRA projects 8.3% YOY and 8.2% per year for ’26 and ’25-’27 along with 3-year CAGR of 9.0%.
• M* gives long-term ACE 10.7% and projects 5-year CAGR of 7.5% (lower of GAAP/adjusted) in Equity Report.

My 6.0% forecast is below the long-term-estimate range (mean of eight: 8.5%). Initial value is ’25 EPS of $4.56/share rather than 2026 Q1 EPS of $4.60 (TTM).

My Forecast High P/E is 18.0. Over the past decade, high P/E decreases from 24.9 to 19.9 (’25) with last-5-year mean of 20.0 and a last-5-year-mean average P/E of 17.0. I am below the range.

My Forecast Low P/E is 9.0. Over the past decade, low P/E decreases from 17.8 to 14.3 (’25) with a last-5-year mean of 14.0. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $41.00 is default based on initial value from above: 22.6% less than previous close and 9.9% less than the 52-week low.

Since 2017, Payout Ratio (PR) increases from 17.8% to 27.2% (’25) with a last-5-year mean of 25.9%. I am forecasting conservatively below the range at 17.0%.

These inputs land CTSH in the BUY zone with a U/D ratio of 4.8. Total Annualized Return (TAR) is 16.7%.

PAR (using Forecast Average—not High—P/E) of 10.5% 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 65 studies done in the past 90 days (28 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 5.2%, 8.0%, 19.0, 13.2, and 25.9%, respectively. I am lower across the board. VL projects a future average P/E of 17.0 that is greater than MS (16.1) and greater than mine (13.5).

MS high / low EPS are $6.79 / $4.54 versus my $6.10 / $4.56 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $7.30 ($7.55) is greater than both.

MS LSPF of $45.60 implies a Forecast Low P/E of 10.0: less than the above-stated 13.2. MS LSPF is 23.9% less than the default $4.54/share * 13.2 = $59.93 resulting in more conservative zoning. MS LSPF is 11.2% greater than mine, though.

MOS is robust in the study because my inputs are near or less than historical/analyst/MS averages/ranges. MS TAR exceeding mine by 3.6% supports the assessment along with my lower LSPF.

With regard to valuation, PEG is 1.1 and 1.8 per Zacks and my projected P/E: fairly valued (M* has 1.2). Relative Value [(current P/E) / 5-year-mean average P/E] is low at 0.7. “Quick and Dirty” DCF method has stock undervalued by 44% while M* (CFRA) reports the stock at a 36% (1.4%) discount.

With historical growth falling to the mid-single digits, this is no longer a high-quality growth stock. I’d like to see a higher CAGR for shareholder equity. The company seems to have done a nice job of buying back shares—likely at levels below intrinsic value because the stock has languished for years.

Per U/D, CTSH is a BUY right now under $58/share. Given a forecast high price ~$110, the BetterInvesting® TAR criterion is met [109.8 / ((13.97 / 100 ) +1 ) ^ 5] ~ $57.

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).