CBT Stock Study (10-27-25)

I recently did a stock study on Cabot Corp. (CBT, $71.34).

M* writes:

     > Cabot Corp manufactures and sells a variety of chemicals, materials,
     > and chemical-based products. The company organizes itself into the
     > following operating segments based on the product type; the
     > Reinforcement Materials segment which generates maximum revenue
     > provides reinforcing carbon products used in tires, and industrial
     > products such as hoses, belts, extruded profiles, and molded goods;
     > and the Performance Chemicals segment aggregates the specialty
     > carbons, specialty compounds, fumed metal oxides, battery
     > materials, inkjet colorants, and aerogel product lines.

Over the past nine years (FY ends 9/30), the medium-size company has grown sales and earnings at annualized rates of 6.8% and 12.7%, respectively. This excludes negative GAAP earnings in ’18 (primarily due to a significant one-time tax expense related to TCJA despite strong operating performance and healthy cash flow per Google AI) and ’20 [per Google AI, significant nonrecurrent charges include: Purification Solutions divestiture (major) resulting in large asset impairment and loss, valuation allowance (increasing on US deferred tax assets), executive transition costs, and costs associated with other restructuring actions]. Lines are somewhat up, straight (more jagged), and parallel despite sales dip in ’23 and EPS declines in ’19, ’22, and ’24. Five- (10-) year EPS R^2 is 0.56 (0.67) and Value Line (VL) gives an Earnings Predictability score of 60.

Over the past nine years, PTPM is roughly equal to peer and industry averages while ranging from -1.3% in ’20 to 13.2% in ’24 with a last-5-year mean of 8.6%. ROE is also on par with peer and industry averages despite trending up from 11.3% (’16) to 27.1% (’24) with a last-5-year mean of 17.6%. Debt-to-Capital is roughly even with peers and the industry while ranging from 38.4% in ’17 to 63.5% in ’20 with a last-5-year mean of 56.3% (per CFRA, only two of eight NYSE- or Nasdaq-traded peers are currently lower).

Quick Ratio is 1.25 and Interest Coverage is 8.80 per M* who assigns “Narrow” for Economic Moat and gives a Financial Health grade of B (per BI website). VL gives a B++ for Financial Strength.

With regard to sales growth:

• YF projects YOY 5.6% contraction and 3.4% growth for ’25 and ’26, respectively (based on 5 analysts).
• Zacks projects YOY 5.7% contraction and 3.1% growth for ’25 and ’26, respectively (2 analysts).
• VL projects 4.0% annualized growth from ’24-’29.
• CFRA gives ACE contraction of 5.6% YOY and 1.2% per year for ’25 and ’24-’26, respectively (5).
• M* gives a 2-year annualized ACE contraction of 1.1%.

My flat forecast conservatively extends doubtful near-term growth to long-term.

With regard to EPS growth:

• MarketWatch projects 9.8% and 6.2% per year for ’24-’26 and ’24-’27, respectively (based on 5 analysts).
• Nasdaq.com projects 9.6% YOY and 8.9% per year for ’26 and ’25-’27 [1, 2, and 2 analyst(s) for ’25, ’26, and ’27].
• Finviz projects 5-year annualized growth of 6.2% (1).
• YF projects YOY growth of 2.8% and 7.8% for ’25 and ’26, respectively (5).
• Zacks projects YOY growth of 3.4% and 9.6% for ’25 and ’26 (2).
• VL projects 6.1% annualized growth from ’24-’29.
• CFRA gives ACE of 8.0% YOY and 7.9%/year for ’25 and ’24-’26, respectively (5).

My 3.0% forecast is less than either long-term estimate (mean 6.1%). Initial value is ’24 EPS of $6.72/share rather than 2025 Q3 EPS of $7.65 (annualized).

My Forecast High P/E is 15.0. Over the last nine years excluding ’18 and ’20, high P/E falls from 22.9 (’16) to 16.8 (’24) with a last-5-year mean of 16.8 and a last-5-year-mean average P/E of 16.1. I am near bottom of the range (only 10.8 in ’23 is less).

My Forecast Low P/E is 8.0. Over the last nine years excluding ’18 and ’20, low P/E falls from 13.3 (’16) to 9.7 (’24) with a last-5-year mean of 9.9. I am forecasting near the bottom of the range (only 7.8 in ’23 is less).

My Low Stock Price Forecast (LSPF) of $53.80 is default based on initial value given above. This is 24.6% less than the previous closing price and 19.1% less than the 52-week low.

Over the last nine years excluding ’18 and ’20, Payout Ratio (PR) falls from 44.4% in ’16 to 24.7% in ’24 with a last-5-year mean of 29.4%. I am forecasting near bottom of the range at 20.0% (only 19.9% in ’23 is less).

These inputs land CBT in the HOLD zone with a U/D ratio of 2.6. Total Annualized Return (TAR) is 11.8%.

PAR (using Forecast Average—not High—P/E) of 6.5% is less than I seek in a medium-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on only 8 studies (three outliers including mine excluded leaves too small a sample for anything but anecdotal comparison) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 5.3%, 5.9%, 14.5, 9.0, and 29.4%, respectively. I am lower on all but Forecast High P/E (15.0). VL’s projected average annual P/E of 14.0 is greater than MS (11.8) and greater than mine (11.5).

MS high / low EPS are $9.79 / $7.41 versus my $7.79 / $6.72 (per share). My high EPS is less due to a lower growth rate. VL is in the middle at $9.50.

MS LSPF of $62.00 implies a Forecast Low P/E of 8.4: less than the above-stated 9.0. MS LSPF is 7.0% less than the default $7.41/share * 9.0 = $66.69 resulting in more conservative zoning. MS LSPF is 15.2% greater than mine, however.

I think MOS is solid in this study because my inputs are near or below analyst/MS/historical estimates/ranges. Adding some anecdotal support is MS 16.3% TAR being 4.5% per year greater than mine.

With regard to valuation, PEG is 3.0 and 0.2 per my projected P/E and M*: overvalued or dirt cheap, respectively. Relative Value [(current P/E) / 5-year-mean average P/E] is also cheap at 0.72.

Per U/D, CBT is a BUY under $69/share. BI TAR criterion is met [116.8 / ((13.57 / 100 ) +1 ) ^ 5] ~ $61.50 with a forecast high price ~$117.

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APD Stock Study (10-24-25)

I recently did a stock study on Air Products and Chemicals Inc. (APD, $254.93). Previous studies are here and here.

M* writes:

     > Since its founding in 1940, Air Products has become one of the
     > leading industrial gas suppliers globally, with operations in
     > 50 countries and 19,000 employees. The company is the largest
     > supplier of hydrogen and helium in the world. It has a unique
     > portfolio serving customers in a number of industries, including
     > chemicals, energy, healthcare, metals, and electronics.

Over the last decade, this large-size company has grown sales and earnings at annualized rates of 4.0% and 10.7%, respectively. Lines are somewhat up and parallel. Sales has a long flat time from ’15-’21 followed by further YOY dips in ’23 and ’24. EPS declines YOY in ’17 (perhaps TCJA). 5- (10-) year EPS R^2 is 0.75 (0.81) and Value Line (VL) gives an Earnings Predictability score of 100.

Over the last decade, PTPM leads peer and industry averages while trending higher from 17.5% (’15) to 39.8% (’24) with a last-5-year mean of 27.2%. ROE slightly lags peer and industry averages despite increasing from 16.7% (’15) to 25.4% (’24) with a last-5-year mean of 17.9%. Debt-to-Capital is less than peer and industry averages while ranging from 23.1% in ’19 to 46.8% in ’16 and ’24 with a last-5-year mean of 41.5%.

Quick Ratio is 1.07 and Interest Coverage is 10.9 per M* who gives a Capital Allocation rating of “Standard,” assigns “Wide” for Economic Moat, and gives a Financial Health grade of B (per BI website). VL gives an A+ for Financial Strength.

With regard to sales growth:

• YF projects YOY 0.7% contraction and 4.6% growth for ’25 and ’26, respectively (based on 22 analysts).
• Zacks projects YOY 0.1% contraction and 4.8% growth for ’25 and ’26, respectively (5 analysts).
• VL projects 2.9% annualized growth from ’24-’29.
• CFRA projects 0.2% YOY contraction and 2.9% growth per year for ’25 and ’24-’26.
• M* gives a 2-year annualized ACE of 2.5% and projects 9.5% per year for next 5 years in analyst note.

My 1.0% forecast is near bottom of the range.

With regard to EPS growth:

• MarketWatch projects 2.3% and 4.3% per year for ’24-’26 and ’24-’27, respectively (based on 27 analysts).
• Nasdaq.com projects 7.3% YOY and per year for ’26 and ’25-’27, respectively (7, 7, and 5 analysts for ’25, ’26, and ’27).
• Seeking Alpha projects 4-year annualized growth of 7.2%.
• Finviz projects 5-year annualized growth of 4.0% (1).
• LSEG gives LTG estimate of 3.7%.
• YF projects YOY 3.5% contraction and 7.6% growth for ’25 and ’26, respectively (23).
• Zacks projects YOY 3.3% contraction and 7.3% growth for ’25 and ’26 (7) and 5-year growth of 3.7%/year.
• VL projects 4.5% annualized growth from ’24-’29.
• CFRA projects 2.7% contraction YOY and 2.9% growth/year for ’25 and ’24-’26 and 3-year growth of 8.0%/year.
• M* projects long-term annualized growth of 3.1%.

My initial forecast of 2.0% is below the range of seven long-term estimates (mean 4.5%), but I am lowering further to zero. One option for initial value is trendline $13.13/share. A second option is to use ’24 EPS of $17.24/share; being up 67.4% YOY, this seems extremely high. Google AI explains: “a nonrecurring gain from the sale of its liquefied natural gas (LNG) business boosted Air Products and Chemicals’ (APD) fiscal year 2024 GAAP earnings per share (EPS) by $5.38.” Also explained is why CFRA shows normalized EPS of $12.43 (puzzling that VL does not mention the nonrecurring gain in footnotes). The third option is 2025 Q3 EPS of $7.05 (annualized): extremely low. Of the three options, trendline is most reasonable but still high. I am compensating for that by decreasing the 2.0% forecast.

My Forecast High P/E is 24.0. Over the last 10 years, high P/E ranges from 17.5 in ’24 to 36.3 in ’20 with a last-5-year mean of 30.6 and a last-5-year-mean average P/E of 25.5. I am near bottom of the range (greater than ’24 and equal to 21.0 in ’16).

My Forecast Low P/E is 15.0. Over the last 10 years, low P/E ranges from 12.3 in ’24 to 26.9 in ’21 with a last-5-year mean of 20.4. I am forecasting near the bottom of the range (only ’24 is less).

My Low Stock Price Forecast (LSPF) of $197.00 is default based on initial [trendline] value. This is 22.7% less than the previous closing price and 19.2% less than the 52-week low.

Over the last decade, Payout Ratio (PR) ranges from 41.0% in ’24 to 71.9% in ’17 with a last-5-year mean of 59.1%. I am forecasting bottom of the range at 41.0%. Per M*, dividend has grown 43 years in a row.

These inputs land APD in the HOLD zone with a U/D ratio of 0.4. Total Annualized Return (TAR) is 3.5%.

PAR (using Forecast Average—not High—P/E) of 0.8% is much less than the current risk-free rate (T-bills). If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR but even that would be too low.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 27 studies (my study and 9 other outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 5.0%, 6.1%, 28.4, 19.7, and 59.1%, respectively. I am lower across the board. VL’s projected average annual P/E of 28.0 is greater than MS (24.1) and much greater than mine (19.5).

MS high / low EPS are $16.01 / $7.05 versus my $13.13 / $13.13 (per share). My high EPS is lower due to a zero growth rate. VL is in the middle at $15.00.

MS LSPF of $192.80 implies a Forecast Low P/E of 27.3: greater than the above-stated 19.7. MS LSPF is 38.8% greater than the default $7.05/share * 19.7 = $138.89 resulting in more aggressive zoning. MS LSPF is 2.1% greater than mine, however.

I think MOS is solid in this study because my [adjusted] inputs are near or below analyst/MS/historical estimates/ranges. TAR is much lower than MS 12.7%.

With regard to valuation, PEG is 2.4 and 2.3 per M* and Zacks, respectively: both overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is also rich at 1.4.

APD is a BUY under $216. With a forecast high price ~$276, BI TAR criterion is met [275.7 / ((12.87 / 100 ) +1 ) ^ 5] ~ $150.

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ALRM Stock Study (10-23-25)

I recently did a stock study on Alarm.com Holdings, Inc. (ALRM, $51.04).

M* writes:

     > Alarm.com Holdings Inc has a cloud-based platform that offers
     > an expansive suite of IoT solutions addressing world-wide
     > opportunities in the residential, multi-family, small business
     > and enterprise commercial markets. It has two reportable
     > segments: Alarm.com & Other. The Alarm.com segment
     > represents the cloud-based Software platforms for intelligently
     > connected property & related solutions. The other segment is
     > focused on researching, developing & offering residential
     > & commercial automation solutions & energy management
     > products & services in adjacent markets. The… Alarm.com
     > segment… allows home & business owners to secure their
     > properties and automate & control an array of connected devices.

Since 2017, the small-size company has grown sales and earnings at annualized rates of 16.2% and 20.2% [earlier years excluded due to negative base resulting in mathematical distortion of growth rate (71.9%/year)]. Lines are mostly up, straight, and parallel except for EPS declines in ’18 and ’21. Five- (10-) year EPS R^2 is 0.34 (0.70) and Value Line (VL) gives an Earnings Predictability score of 50.

Since 2017, PTPM leads peer and industry averages while edging up from 9.5% to 15.1% (’24) with a last-5-year mean of 10.4%. ROE also leads peer and industry averages while trending up from 12.1% to 16.5% (’24) with a last-5-year mean of 12.5%. Unfortunately, Debt-to-Capital is higher than peer and industry averages over the last few years by increasing from 23.4% to 59.3% (’24) with a last-5-year mean of 43.6%.

Quick Ratio is 1.7 and Interest Coverage is 10.1 per M* who also assigns a “Narrow” [quantitative] Economic Moat and Financial Health grade of B (per BI website). VL gives a B+ grade for Financial Strength.

With regard to sales growth:

• YF projects YOY 5.7% and 4.3% for ’25 and ’26, respectively (based on 7 analysts).
• Zacks projects YOY 5.8% and 4.6% for ’25 and ’26, respectively (3 analysts).
• VL projects 4.1% annualized growth from ’24-’29.
• CFRA gives ACE of 5.7% YOY and 5.0% per year for ’25 and ’24-’26, respectively (7).

My 4.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects annualized growth of 4.6% and 3.1% for ’24-’26 and ’24-’27 (based on 8 analysts).
• Nasdaq.com gives ACE of 4.8% YOY and 11.3% per year for ’26 and ’25-’27 [3, 3, and 1 analyst(s) for ’25, ’26, and ’27].
• Seeking Alpha projects 4-year annualized growth of 10.7%.
• Finviz gives ACE of 7.1% (3).
• YF projects YOY 3.8% and 6.6% for ’25 and ’26, respectively (8).
• Zacks projects YOY 4.0% and 8.0% for ’25 and ’26, respectively (4), along with 5-year annualized growth of 10.6%.
• VL projects 6.2% annualized growth from ’24-’29.
• CFRA gives ACE of 3.5% YOY and 4.9% per year for ’25 and ’24-’26, respectively (8).

My 6.0% forecast is below the long-term-estimate range (mean of four: 8.6%). Initial value is ’24 EPS of $2.29/share instead of 2025 Q2 EPS of $2.38 (annualized).

My Forecast High P/E is 33.0. Since 2017, high P/E falls from 83.9 to 33.8 (’24) with a last-5-year mean of 66.7 and a last-5-year-mean average P/E of 52.3. I am below the range.

My Forecast Low P/E is 17.0. Since 2017, low P/E falls from 45.5 to 22.6 (’24) with a last-5-year mean of 37.9. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $38.90 is default based on initial value given above. This is 23.8% less than the previous close and 19.3% less than the 52-week low.

These inputs land ALRM in the BUY zone with a U/D ratio of 4.1. Total Annualized Return (TAR) is 14.6%.

PAR (using Forecast Average—not High—P/E) of 8.4% is less than I seek in 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 those of Member Sentiment (MS). Based on only six studies done in the past 90 days (my study and two 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 4.2%, 4.7%, 34.4, and 24.3. [Although the sample size is too small for a valid comparison] I am lower on all but EPS growth. VL projects a future average annual P/E of 29.0, which is less than MS (29.4) and greater than me (25.0).

MS high / low EPS are $2.94 / $2.35 versus my $3.06 / $2.29 (per share). My high EPS is greater due that growth rate. VL is highest at $3.10.

MS LSPF of $42.10 implies a Forecast Low P/E of 17.9: less than the above-stated 24.3. MS LSPF is 15.4% less than the default $2.35/share * 24.3 = $57.11 (INVALID on today’s date), which results in more conservative zoning. MS LSPF is 8.2% greater than mine, however.

I believe MOS is strong in this study because my inputs are near or below respective analyst/historical ranges. Although my EPS growth rate is higher than MS, the tiny sample size precludes anything but anecdotal reference.

With regard to valuation, PEG is 2.0 and 3.4 per Zacks and my projected P/E, respectively: slightly overvalued (1.3 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is very cheap at 0.41.

Per U/D, ALRM is a BUY under $54/share. BI TAR criterion is met 101 / ((14.87 / 100 ) +1 ) ^ 5 ~ $50 given forecast high price ~$101 (no dividend).

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TSM Stock Study (9-24-25)

I recently did a stock study on Taiwan Semiconductor Manufacturing Co. Ltd. ADR (TSM) with a closing price of $262.71. Previous studies are here, here, and here.

M* writes:

     > Taiwan Semiconductor Manufacturing Co. is the world’s largest
     > dedicated chip foundry, with mid-60s market share in 2024. TSMC
     > was founded in 1987 as a joint venture of Philips, the government
     > of Taiwan, and private investors. It went public in 1994 and
     > as an ADR in the US in 1997. TSMC’s scale and high-quality
     > technology allow the firm to generate solid operating margins,
     > even in the highly competitive foundry business. Furthermore,
     > the shift to the fabless business model has created tailwinds
     > for TSMC. The foundry leader has an illustrious customer
     > base, including Apple, AMD, and Nvidia, that looks to apply
     > cutting-edge process technologies to its semiconductor designs.

Over the past decade, this mega-size (> $50B annual revenue) company has grown sales and EPS at annualized rates of 15.1% and 17.4%, respectively. Lines are up, straight, and parallel except for an EPS dip in ’19 and sales/EPS dip in ’23. Five-year EPS (sales) R^2 is 0.78 (0.88) and Value Line gives an Earnings Predictability score of 75.

Over the past decade, PTPM is greater than peer and industry averages while increasing from 41.5% (’15) to 48.6% (’24) with a last-5-year mean of 46.0%. ROE slightly trails while ranging from 21.6% in ’19 to 37.4% in ’22 with a last-5-year mean of 29.5%. Debt-to-Capital is much lower than peer and industry averages, ranging from 9.8% in ’18 to 26.0% in ’21 with a last-5-year mean of 21.5%.

Quick Ratio is 2.1 and Interest Coverage is 153 per M* who assigns a “Wide” Economic Moat and rates the company “Standard” for Capital Allocation. Value Line gives an A+ rating for Financial Strength.

With regard to sales growth:

• YF projects YOY 26.5% and 16.0% growth for ’25 and ’26, respectively (based on 36 analysts).
• Zacks projects YOY 35.9% and 14.5% for ’25 and ’26, respectively (3 analysts).
• Value Line projects 12.6% annualized growth from ’24-’29.
• CFRA projects 26.0% YOY and 20.4% growth per year for ’25 and ’24-’26, respectively.
• M* gives a 2-year ACE of 21.1% annualized growth along with its own 5-year [analyst note] estimate of 15.7%.

My 12.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 25.2% and 22.7% per year for ’24-’26 and ’24-’27, respectively (based on 45 analysts).
• Nasdaq.com projects growth of 11.6% YOY and 16.8% for ’26 and ’25-’27 (5, 5, and 2 analysts for ’25, ’26, and ’27).
• Seeking Alpha projects 4-year annualized growth of 21.6%.
• Argus projects 5-year annualized growth of 13.0%.
• Finviz projects 5-year annualized growth of 25.7% (3).
• LSEG gives a LTG forecast of 21.5%.
• YF projects YOY 39.8% and 16.0% for ’25 and ’26, respectively (10).
• Zacks projects YOY 39.6% and 11.6% for ’25 and ’26, respectively (3), along with 5-year annualized growth of 21.4%.
• Value Line projects 21.3% annualized growth from ’24-’29.
• CFRA projects 26.5% YOY and 21.7% per year for ’25 and ’24-’26 along with a 3-year CAGR of 15.0%.
• M* projects long-term annualized growth of 16.7%.

My 13.0% forecast is bottom of the long-term-estimate range (mean of six: 20.2%). I will use ’24 EPS of $6.96/share as the initial value rather than 2025 Q2 EPS of $8.69.

My Forecast High P/E is 26.0. Over the past decade, high P/E increases from 14.1 (’15) to 30.5 (’24) with a last-5-year mean of 28.3 and a last-5-year-mean-average P/E of 20.4. I am forecasting above the last-10-year median of 21.8.

My Forecast Low P/E is 9.0. Over the past decade, low P/E ranges from 9.2 (’22) to 15.5 (’19) with a last-5-year mean of 12.5 (26.3 outlier in ’21 excluded). I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $134.30 is default based on $6.96/share initial value gives an unreasonable $64.70: 77.9% less than the previous close. I am going with the 52-week low despite being 52.5% less than the previous close. Semiconductors are a cyclical industry and I expect to see lower valuations again.

Over the past decade, Payout Ratio (PR) ranges from 28.6% (’22) to 58.8% (’18) with outliers from ’15 (0%) and ’19 (90.6%) excluded. The last-5-year mean is 38.7%. I am forecasting below the entire range at 28.0%.

These inputs land TSM in the SELL zone with a U/D ratio of 0.1. Total Annualized Return (TAR) is 2.1%.

PAR (using Forecast Average—not High—P/E) is NEGATIVE 4.5%. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR but even that is less than the risk-free rate (TBills).

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 254 studies (my study and 120 other outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 15.0%, 15.6%, 27.0, 15.2, and 38.7%, respectively. I am lower across the board. Value Line’s projected average annual P/E of 18.0 is lower than MS (21.1) but higher than mine (17.5).

MS high / low EPS are $16.95 / $8.21 vs. my $12.82 / $6.96 (per share). My high EPS is lower due to a lower growth rate. Value Line’s high EPS of $18.50 soars above both.

MS LSPF of $133.00 implies Forecast Low P/E of 16.2: more than the above-stated 15.2. MS LSPF is 6.6% greater than the default $8.21/share * 15.2 = $124.79 resulting in more aggressive zoning. MS LSPF is 1.0% less than mine.

With regard to valuation, PEG is 2.2 and 1.3 per my projected P/E and Zacks, respectively: slightly overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is extremely rich at 1.59.

MOS is strong in this study because my inputs are near or below respective analyst/historical ranges and MS averages. That is further supported by an MS TAR that is 12.5% per year greater than my 2.1%.

My final rating is HOLD rather than SELL because the company has double-digit long-term sales projections. Were it in my portfolio, history shows I might regret selling what appeared to be an overvalued stock that actually had the engine to continue powering higher. Otherwise, it makes no sense for me to establish a new position at this time.

Per U/D, TSM is a BUY under $134.30/share. Given a forecast high ~ $295, 294.9 * ((1 – ((15.0 – 1.2) / 100)) ^ 5) ~ $140 meets the BI TAR criterion.

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CHDN Stock Study (10-22-25)

I recently did a stock study on Churchill Downs Inc. (CHDN) with a closing price of $96.61. The previous study is here.

M* writes:

     > Churchill Downs Inc is a gaming entertainment, online wagering,
     > and racing company. It operates through three business segments:
     > Live and Historical Racing, Wagering Services, and Gaming. The
     > Live and Historical Racing segment includes live and historical
     > pari-mutuel racing. The Wagering Services segment includes the
     > revenue and expenses from pari-mutuel wagers through TwinSpires,
     > companies retail and online sports betting business and Gaming
     > segment includes revenue and expenses for the casino properties
     > and associated racetracks that support the casino license. The
     > Gaming segment generates revenue and expenses from slot
     > machines, video lottery terminals, video poker, HRMs,
     > ancillary food and beverage services, hotel services,
     > commission on pari-mutuel wagering, and racing events.

Over the past decade, the medium-size company has grown sales and earnings at annualized rates of 10.5% and 25.7%. Lines are mostly up, straight, and parallel except for sales dips in ’17 and ’20 along with EPS declines in ’19, ’20 (large), and ’23. 5- (10-) year EPS R^2 is 0.62 (0.37) and Value Line (VL) gives an Earnings Predictability score of 30.

Over the past decade, PTPM leads peer and industry averages while trending up from 9.2% (’15) to 21.0% (’24) with a last-5-year mean of 19.9%. ROE also leads peer and industry averages while trending up from 8.0% (’15) to 38.1% (’24) with a last-5-year mean of 45.7%. Unfortunately, Debt-to-Capital is higher than peer and industry averages over the last few years as it has increased from 55.9% (’15) to 81.9% (’24) with a last-5-year mean of 84.7%.

Quick Ratio is 0.39 and Interest Coverage is only 2.9 per M* (3.2 per VL) who also assigns a “Narrow” Economic Moat. VL gives a B+ grade for Financial Strength.

With regard to sales growth:

• YF projects YOY 6.2% and 4.3% for ’25 and ’26, respectively (based on 10 analysts).
• Zacks projects YOY 6.3% and 4.2% for ’25 and ’26, respectively (4 analysts).
• VL projects 6.5% annualized growth from ’24-’29.
• CFRA gives ACE of 6.3% YOY and 5.4% per year for ’25 and ’24-’26, respectively (10).

My 3.0% forecast is toward lower end of the range.

With regard to EPS growth:

• MarketWatch projects annualized growth of 8.1% and 14.1% for ’24-’26 and ’24-’27 (based on 11 analysts).
• Nasdaq.com gives ACE of 7.2% YOY and 5.8% per year for ’26 and ’25-’27 (3, 6, and 3 analysts for ’25, ’26, and ’27).
• Seeking Alpha projects 4-year annualized growth of 9.0%.
• Finviz gives ACE of 7.5% (2).
• LSEG projects LTG at 5.1%.
• YF projects YOY 2.5% and 12.6% for ’25 and ’26, respectively (6).
• Zacks projects YOY 1.5% and 15.2% for ’25 and ’26, respectively (3), along with 5-year annualized growth of 8.7%.
• VL projects 10.5% annualized growth from ’24-’29.
• CFRA gives ACE of 5.9% YOY and 9.2% per year for ’25 and ’22-’24, respectively (6).

My 5.0% forecast is below the long-term-estimate range (mean of five: 8.2%). Initial value is ’24 EPS of $5.68/share instead of 2025 Q2 EPS of $5.82 (annualized).

My Forecast High P/E is 21.0. Over the past 10 years, high P/E ranges from 21.8 in ’22 to 41.3 in ’15 and ’21 (upside outlier of 644 in ’20 excluded). The last-5-year mean is 29.2 and the last-5-year-mean average P/E (also excluding ’20) is 24.8. I am below the range.

My Forecast Low P/E is 13.0. Over the past 10 years, low P/E ranges from 15.1 in ’22 to 27.6 in ’21 (upside outlier of 160 in ’20 excluded) with a last-5-year mean of 20.3. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $73.80 is default based on initial value given above. This is 23.6% less than the previous close and 13.8% less than the 52-week low.

Over the past decade, Payoff Ratio (PR) falls from 31.1% in ’15 to 7.2% in ’24 with a last-5-year mean of 7.7% (excluding upside outlier of 189% in ’20). I am forecasting below the range at 6.0%.

These inputs land CHDN in the HOLD zone with a U/D ratio of 2.4. Total Annualized Return (TAR) is 9.8%.

PAR (using Forecast Average—not High—P/E) of 5.3% is less than I seek in a medium-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only five studies done in the past 90 days (my study and four 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 6.5%, 8.2%, 27.4, 15.5, and 30.1%. [Although a sample size of five studies is too small for a valid comparison] I am lower across the board. VL projects a future average annual P/E of 25.0, which is higher than MS (20.0) and much higher than me (17.0).

MS high / low EPS are $8.72 / $5.80 versus my $7.25 / $5.68 (per share). My high EPS is less due to a lower growth rate. VL is highest at $9.35.

MS LSPF of $76.10 implies a Forecast Low P/E of 13.1: less than the above-stated 15.5. MS LSPF is 15.4% less than the default $5.80/share * 15.5 = $89.90, which results in more conservative zoning. MS LSPF is 3.1% greater than mine, however.

I believe MOS is robust in this study because my inputs are near or below respective analyst/historical ranges [and MS averages]. In [anecdotal support is MS TAR (20.5%): 10.7% per year greater than mine.

With regard to valuation, PEG is 1.8 and 3.2 per Zacks and my projected P/E, respectively: somewhat overvalued (1.6 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.67.

Qualitatively speaking, my only concern with this company includes low liquidity ratios and high Debt-to-Capital.

Per U/D, CHDN is a BUY under $93/share. BI TAR criterion is met 152.2 / ((14.57 / 100 ) +1 ) ^ 5 ~ $77 given forecast high price ~$152.

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

P.S. The Kentucky Derby is coming to Prime Time in ’26. You heard it here first!

YETI Stock Study (10-21-25)

I recently did a stock study on YETI Holdings (YETI, $33.99). Previous studies are here, here, here, and here.

M* writes:

     > YETI Holdings Inc is a designer, marketer, and distributor of
     > premium products for the outdoor and recreation market sold under
     > the YETI brand. The company offers products including coolers and
     > equipment, drinkware, and other accessories. Its trademark products
     > include YETI Tundra, Hopper, YETI TANK, Rambler, Colster, Rambler
     > among others. The company distributes products through wholesale
     > channels and through direct-to-consumer, or DTC, channels.

Since 2018 when this medium-size company begins public trading, sales and earnings have grown at annualized rates of 15.9% and 20.2%, respectively. Lines are up and somewhat parallel due to EPS dips in ’19 and ’22 [latter due to operational snafus including recall of defective items and inflation-induced demand destruction per Value Line (VL)]. 5- (10-) year EPS R^2 is 0.00 (0.49) per BI website and VL gives an Earnings Predictability score of 75.

Since 2018, PTPM leads peer and industry averages while ranging from 7.3% in ’22 to 19.0% in ’21 with a last-5-year mean of 14.3%. Over the last six years, ROE also leads peer and industry averages despite falling from 57.3% in ’19 to 22.1% in ’24 with a last-5-year mean of 36.3%. Debt-to-Capital is less than peer and industry averages in falling from 91.9% (’18) to 18.9% (’24) with a last-5-year mean of 25.4%.

Quick Ratio is 1.32 per M* and Interest Coverage is 241 per Barchart.com. M* also assigns a “Narrow” Economic Moat and gives a B grade for Financial Health (per BI website). VL gives a B for Financial Strength.

With regard to sales growth:

• YF projects YOY 1.2% and 4.8% for ’25 and ’26, respectively (based on 17 analysts).
• Zacks projects YOY 0.7% and 4.7% for ’25 and ’26, respectively (6 analysts).
• VL projects 5.1% annualized growth from ’24-’29.
• CFRA gives ACE 1.2% YOY and 3.0% per year for ’25 and ’24-’26, respectively (17).
• M* offers a 2-year annualized ACE of 3.0%.

My 1.0% forecast is near bottom of the range.

With regard to EPS growth:

• MarketWatch projects 1.9% and 4.7% per year for ’24-’26 and ’24-’27 (based on 17 analysts).
• Nasdaq.com projects 13.7% YOY and 13.1% per year for ’26 and ’25-’27 [9 / 9 / 1 analyst(s) for ’25 / ’26 / ’27].
• Seeking Alpha projects 4-year annualized growth of 7.0%.
• Finviz gives 5-year annualized ACE of 3.7% (4).
• YF projects YOY 11.5% contraction and 14.2% growth for ’25 and ’26, respectively (17).
• Zacks projects YOY 12.1% contraction and 12.5% growth for ’25 and ’26 (10) and 5-year growth of 6.5% per year.
• VL projects annualized growth of 7.9% from ’24-’29.
• CFRA gives ACE of 18.0% YOY and 16.0% per year for ’25 and ’24-’26, respectively (17).

My 3.0% forecast is below the long-term-estimate range (mean of four: 6.3%). Initial value will be ’24 EPS of $2.05/share rather than 2025 Q2 EPS of $2.10 (annualized).

My Forecast High P/E is 25.0. Since 2018, high P/E ranges from 25.0 in ’24 to 80.6 in ’22 with a last-5-year mean of 44.2 and a last-5-year-mean average P/E of 31.6. I am at bottom of the range.

My Forecast Low P/E is 13.0. Since 2018, low P/E ranges from 8.6 in ’20 to 27.0 in ’22 with a last-5-year mean of 19.0. I am forecasting below all but ’20.

My Low Stock Price Forecast (LSPF) of $26.60 is default based on initial value given above. This is 21.7% less than the previous close and equal to the 52-week low.

These inputs land YETI in the BUY zone with a U/D ratio of 4.1. Total Annualized Return (TAR) is 13.6%.

PAR (using Forecast Average—not High—P/E) of 6.9% 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 start by comparing my inputs with those of Member Sentiment (MS). Based on only 21 studies (my study and 7 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 5.4%, 6.6%, 25.0, and 15.5, respectively. I am equal to (high P/E) or lower across the board. VL’s projected average annual P/E of 15.0 is lower than MS (20.3) and lower than mine (19.0).

MS high / low EPS are $2.89 / $2.08 versus my $2.38 / $2.05 (per share). My high EPS is less due to a lower growth rate. VL’s $4.00 soars above both.

MS LSPF of $26.30 implies a Forecast Low P/E of 12.6: less than the above-stated 15.5. MS LSPF is 18.4% less than the default $2.08/share * 15.5 = $32.24 resulting in more conservative zoning. MS LSPF is also 1.1% less than mine.

I believe MOS is robust in this study because my inputs are near or below respective analyst/historical ranges and MS averages. MS TAR (14.5%) is 0.9% per year greater than mine.

With regard to valuation, PEG is 2.0 and 5.2 per Zacks and my projected P/E (low growth rate) with the latter extremely overvalued (M* is undervalued at 0.74). Relative Value [(current P/E) / 5-year-mean average P/E] is quite cheap at 0.51.

Per U/D, YETI is a BUY under $36. BI TAR criterion is met ~ 64.2 / ((14.87 / 100 ) +1 ) ^ 5 = $32 given forecast high price ~$64 (no dividend).

Full disclosure: I currently own YETI shares.

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

NFLX Stock Study (10-21-25)

I recently did a stock study on Netflix Inc. (NFLX, $1238.56). Previous studies are here, here, here, here, and here.

M* writes:

     > Netflix’s relatively simple business model involves only one business,
     > its streaming service. It has the biggest television entertainment
     > subscriber base in both the US and the collective international
     > market, with more than 300 million subscribers globally. Netflix has
     > exposure to nearly the entire global population outside of China. The
     > firm has traditionally avoided live programming or sports content,
     > instead focusing on on-demand access to episodic television, movies,
     > and documentaries. The firm introduced ad-supported subscription
     > plans in 2022, giving the firm exposure to the advertising market
     > in addition to the subscription fees that have historically
     > accounted for nearly all its revenue.

Over the past decade, this large-size company has grown sales and earnings at annualized rates of 21.6% and 59.2%, respectively. Lines are mostly up, straight, and parallel except for an EPS decline in ’22. 5-year EPS R^2 is 0.82 and Value Line (VL) gives an Earnings Predictability score of 65.

Over the past decade, PTPM is about even with peer and industry averages despite trending higher from 2.1% (’15) to 25.6% (’24) with a last-5-year mean of 18.6%. ROE is also about even with peer and industry averages despite trending up from 5.5% (’15) to 37.3% (’24) with a last-5-year mean of 28.2%. Debt-to-Capital is a bit higher than peer and industry averages despite falling from 51.6% (’15) to 38.6% (’24) for a last-5-year mean of 40.6%.

Quick Ratio and Interest Coverage are 1.12 and 16.7 per M* who assigns “Narrow” Economic Moat, rates the company “Exemplary” for Capital Allocation, and gives an A grade for Financial Health (per BI website). VL gives an A+ rating for Financial Strength.

With regard to sales growth:

• YF projects YOY 15.5% and 12.9% for ’25 and ’26, respectively (based on 43 analysts).
• Zacks projects YOY 15.6% and 13.0% for ’25 and ’26, respectively (12 analysts).
• VL projects 12.4% growth per year from ’24-’29.
• CFRA projects 16.7% YOY and 13.8% per year for ’25 and ’24-’26, respectively.
• M* provides a 2-year ACE of 14.0%/year while projecting 10.0% annualized growth x5 years (analyst note).

My 10.0% forecast is at bottom of the range.

With regard to EPS growth:

• MarketWatch projects annualized ACE of 27.9% and 25.9% for ’24-’26 and ’24-’27, respectively (based on 55 analysts).
• Nasdaq.com projects 22.3% and 19.5% per year for ’25-’27 and ’25-’28 (12, 7, and 3 analysts for ’25, ’27, and ’28).
• Seeking Alpha projects 4-year annualized growth of 24.3%.
• Argus projects 5-year annualized growth of 15.0%.
• Finviz gives 5-year annualized growth ACE of 25.8% (17).
• LSEG LTG forecast is 22.3%.
• YF projects YOY 32.5% and 23.3% for ’25 and ’26, respectively (37).
• Zacks projects YOY 31.6% and 23.6% for ’25 and ’26, respectively (12), along with 5-year annualized growth of 22.8%.
• VL projects annualized growth of 17.8% from ’24-’29.
• CFRA projects 32.1% YOY and 21.9% per year for ’25 and ’24-’26 along with a 3-year CAGR of 20.0%.
• M* gives a long-term annualized growth estimate of 28.8%.

My 15.0% forecast is at bottom of the long-term-estimate range (mean of seven: 22.4%). I will use ’24 EPS of $19.83/share as the initial value rather than 2025 Q2 $23.47 (annualized).

My Forecast High P/E is 35.0. Over the past 10 years, high P/E decreases from triple digits to 47.5 (’24) with a last-5-year mean of 61.5 and a last-5-year-mean average P/E of 46.1. At some point, I expect P/E to fall back to earth. For now, I am forecasting at the upper end of my comfort zone.

My Forecast Low P/E is 23.0. Over the past 10 years, low P/E decreases from triple digits to 23.3 (’24) with a last-5-year mean of 30.7. I am forecasting toward the bottom of the range (only 16.4 in ’22 is less).

My Low Stock Price Forecast (LSPF) is $744.00. Default $466.10 based on initial value given above seems unreasonably low at 63.2% (38.7%) less than the previous close (52-week low). My forecast, the 52-week low, is 39.9% less than previous close.

These inputs land NFLX in the SELL zone with a U/D ratio of 0.3. Total Annualized Return (TAR) is 2.4%.

PAR (using Forecast Average—not High—P/E) of NEGATIVE 1.4% is unthinkable as a new investment prospect. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR albeit much less than the current risk-free rate.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 149 studies (my study and 67 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 12.8%, 17.5%, 48.0, and 28.5. I am lower across the board. VL’s projected average annual P/E of 39.5 is greater than MS (38.3) and much greater than mine (29.0).

MS high / low EPS are $51.46 / $22.72 versus my $39.89 / $19.83 (per share). My high EPS is less due to a lower growth rate. VL is in the middle at $45.00.

MS LSPF of $720.50 implies a Forecast Low P/E of 31.7: more than the above-stated 28.5. MS LSPF is 11.3% greater than the default $22.72/share * 28.5 = $647.52, which results in more aggressive zoning. MS LSPF is 3.2% less than mine, however.

I believe MOS is robust in this study because my inputs are near or below respective analyst/historical ranges and MS averages. In support is MS TAR (14.6%): 12.2% per year greater than mine.

With regard to valuation, PEG is 2.00 and 3.10 per Zacks and my projected P/E, respectively: somewhat overvalued (1.61 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is also a bit expensive at 1.15.

Despite my SELL rating, existing shareholders may want to HOLD because sales growth is still projected in the double digits.

Per U/D, NFLX is a BUY under $907. BI TAR criterion is met at 1396 / ((14.87 / 100 ) +1 ) ^ 5 = $698 given forecast high price $1396 (no dividend). I am not surprised to see a stock up 68% in the past 12 months far extended from a buy point.

Full disclosure: I currently own NFLX shares.

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

MBUU Stock Study (10-20-25)

I recently did a stock study on Malibu Boats Inc. (MBUU, $30.25). Previous studies are here, here, here, and here.

M* writes:

     > Malibu Boats is a leading designer and manufacturer of power
     > boats in the United States. It is the market leader in
     > performance sport boats, sold under its Malibu and Axis brands.
     > It acquired Cobalt Boats, a leading producer of sterndrive
     > boats in the U.S. in the 24-foot to 29-foot segment, and
     > Pursuit Boats, which makes high-end offshore and outboard
     > motorboats in 2018. In 2021, it purchased Maverick Boat Group,
     > a top seller of flat fishing boats, with exposure to bay,
     > dual-console, and center-console boats. Malibu has also
     > expanded into boat trailers and accessories, and in 2020
     > began producing its own engines (Monsoon) for its
     > performance sport boats and now for Cobalt. Malibu’s target
     > market includes a wide range of water enthusiasts who
     > embrace the active outdoor lifestyle.

Over the past decade, the small-size company grows sales and earnings at annualized rates of 18.6% and 7.8% excluding ’24 whose negative earnings disrupts the calculation [I think overall earnings growth should still be negative since ’16 to ’25 is $1.00 to $0.76/share]. Through ’23, lines are mostly up, straight, and parallel except for a sales dip in ’20 (FY ends Jun 30) and EPS dips in ’18, ’20, and ’23. With 2024-5, however, visual analysis looks broken. 5- (10-) year EPS R^2 is 0.77 (0.01) [excluding ’24, these become 0.76 (0.07); with a negative number in ’24, I can’t explain why the 5-year only dips by 0.01] and Value Line (VL) gives an Earnings Predictability score of 35.

Over the past decade, PTPM leads peer and industry averages until ’24 despite falling from 12.7% (’16) to 2.5% (’25) with a last-5-year mean of 7.8%. ROE falls from 72.6% (’17) to 2.9% (’25) with a last-5-year mean of 15.1%. Debt-to-Capital is lower than peer and industry averages while falling from 84.0% (’16) to 3.8% (’25) with a last-5-year mean of 10.4%.

Quick Ratio is only 0.52 with Interest Coverage 11.8 per M* who assigns a “Narrow” Economic Moat, gives a “Standard” rating for Capital Allocation, and gives a C grade for Financial Health (via BI website). VL rates the company B for Financial Strength.

With regard to sales growth:

• YF projects YOY 2.7% contraction and 8.6% growth for ’26 and ’27, respectively (based on 8 analysts).
• Zacks projects YOY 0.1% contraction and 7.0% growth per year for ’26 and ’27, respectively (3 analysts).
• VL projects 2.7% annualized growth from ’25-’29.
• CFRA gives ACE 2.7% YOY contraction and 2.8% per year growth for ’26 and ’25-’27 (8).
• M* gives a 2-year ACE of 1.9% annualized growth and 6.5% per year from ’26-’35 (analyst note).

My 1.0% forecast is near bottom of the range.

With regard to earnings growth:

• MarketWatch projects 12.1% YOY and 18.4% per year for ’26 and ’25-’27, respectively (based on 10 analysts).
• Nasdaq.com gives ACE of 63.3% YOY for ’27 (2 analysts).
• YF projects YOY 1.6% and 1.5% for ’26 and ’27, respectively (8).
• Zacks projects YOY 22.8% contraction and 50.8% growth for ’26 and ’27 (2), respectively.
• VL projects 22.0% annualized growth from ’25-’29.
• CFRA gives ACE growth 93.4% YOY and 76.6% per year for ’26 and ’25-’27 (8).
• M* projects long-term annualized growth of 55.5%.

My 20.0% forecast is below the long-term-estimate range [mean of only two: 38.8%; negative annual earnings often disrupts long-term forecasts from Zacks, Seeking Alpha, LSEG, and apparently Finviz for the next year(s)]. My initial value is ’25 EPS of $0.76/share: an 85% EPS decline from ’23.

My Forecast High P/E is 17.0. Over the last 10 years, high P/E decreases from 21.5 (’16) to 14.0 (’23) with a last 5-year mean of 14.4 (NMF and 62.9 excluded from ’24 and ’25, respectively) and last 5-year-mean average P/E of 11.3 (same years excluded from low P/E calculation). My forecast is arbitrarily high enough to avoid an INVALID study.

My Forecast Low P/E is 6.0. Over the last 10 years, low P/E decreases from 11.4 (’16) to 9.2 (’23) with a last-5-year mean of 8.1 (’24 and ’25 excluded). I am forecasting below the range.

My Low Stock Price Forecast is $21.00. Default $4.60 based on initial value given above is unreasonably low at 84.8% (81.1%) less than the previous close (52-week low). My arbitrary selection is 30.6% (13.9%) less (respectively).

These inputs land MBUU in the SELL zone with an U/D ratio of 0.2. Total Annualized Return (TAR) is 1.2%.

PAR (using Forecast Average—not High—P/E) of NEGATIVE 6.4% is unthinkable for an investment prospect. If a healthy margin of safety (MOS) anchors this study, then I can proceed based TAR instead but even that is much lower than the current risk-free rate.

To assess MOS, I would normally start with Member Sentiment but this novel situation confuses us all. Aside from mine, only three other studies have been done in the last 90 days. Two of the four use negative numbers for low EPS, which I find unreasonable. The other study uses the 55.5% EPS long-term growth estimate to get a forecast high stock price of $183, which I find unreasonable.

I find my study unreasonable with its Forecast High P/E greater than three of the past five years (including an NMF but not including ’25, which is mathematically exaggerated due to small base).

I have little confidence with what multiple the market will assign the stock going forward or how/if its earnings recovery will proceed since the ’24-’25 debacle is a novel event. In my opinion, this is precisely why we seek up, straight, and parallel visual analysis thereby representing consistent historical behavior.

Per U/D, MBUU is a BUY under $23.80/share. BI TAR criterion is met under $16.00/share given a forecast high price ~ $32. Possibly even better to avoid for the next five years altogether. I may periodically revisit just to check this supposition.

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

Full disclosure: I currently own MBUU shares.

BIRK Stock Study (10-19-25)

I recently did a stock study on Birkenstock Holding PLC (BIRK, $41.94).

M* writes:

     > Birkenstock Holding PLC is a company that manufactures and sells
     > footbed-based products, including sandals, closed-toe silhouettes,
     > and other products, such as skincare and accessories, for everyday
     > leisure, and work. It sells its products through two main channels:
     > business-to-business (B2B) which comprises sales made to established
     > third-party store networks, and direct-to-consumer (DTC) which
     > comprises sales made on globally owned online stores through the
     > Birkenstock.com domain and sales made in Birkenstock retail stores.

The medium-size company begins trading publicly in Oct 2023. For purposes of this analysis, I will use data since 2021 (excluding 2020 due to negative EPS). Given the limited amount of historical data available, I would consider no more than a speculative position in this stock.

Since 2021 (FY ends Sep 30), the company has grown sales and EPS at annualized rates of 19.3% and 2.8%, respectively. Lines are somewhat up, straight, and parallel except for big EPS dip in ’23.

Since 2021, PTPM leads peer and industry averages while ranging from 10.3% in ’23 to 20.2% in ’22 with a last-4-year mean of 15.6%. ROE in ’24 trails peers and the industry at 7.0%. Debt-to-Capital is comparable to peers and the industry while falling from 48.2% (’21) to 34.0% (’24) with a last-4-year mean of 43.6%.

Quick Ratio is 1.13 with Interest Coverage 7.5 per M* who assigns a “Narrow” [quantitative] Economic Moat and gives a B grade for Financial Health. Value Line (VL) rates the company B+ for Financial Strength.

With regard to sales growth:

• YF projects YOY 15.9% and 14.4% for ’25 and ’26, respectively (based on 16 analysts).
• Zacks projects YOY 27.7% and 13.4% per year for ’25 and ’26, respectively (4 analysts).
• VL projects 12.3% annualized growth from ’24-’29.
• CFRA gives ACE of 15.8% YOY and 15.1% per year for ’25 and ’24-’26, respectively (16).
• M* gives a 2-year ACE of 19.0% annualized growth.

My 12.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects annualized growth of 30.1% and 27.1% for ’24-’26 and ’24-’27 (based on 19 analysts).
• Nasdaq.com gives ACE of 18.5% YOY and 21.1% per year for ’26 and ’25-’27 (7 / 7 / 4 analysts for ’25 / ’26 / ’27).
• Seeking Alpha projects 4-year annualized growth of 25.4%.
• Finviz gives 5-year ACE of 25.4% per year (4).
• LSEG gives LTG projection of 22.8%.
• YF projects YOY 34.3% and 22.8% for ’25 and ’26, respectively (20).
• Zacks projects YOY 40.3% and 18.5% per year for ’25 and ’26 (7) along with 5-year annualized growth of 22.8%.
• VL projects 19.6% annualized growth from ’24-’29.
• CFRA gives ACE of 68.6% YOY and 43.8% per year for ’25 and ’24-’26, respectively (20).

My 18.0% per year forecast is below the long-term-estimate range (mean of five: 23.2%). My initial value will be ’24 EPS of $1.11 rather than 2025 Q3 EPS of $1.80 (annualized).

My Forecast High P/E is 24.0. High P/E from ’24 is 58.6. I am centering forecasts below VL’s future average annual P/E of 20.

My Forecast Low P/E is 14.0. Low P/E from ’24 is 32.4. I am centering forecasts below VL’s future average annual P/E of 20.

My Low Stock Price Forecast (LSPF) is $29.00. Default ($15.50) based on initial value given above is unreasonably low at 63.0% (61.8%) less than previous close (52-week low), respectively. My arbitrary forecast is 30.9% (28.6%) less.

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

PAR (using Forecast Average—not High—P/E) 2.8% is less than the current risk-free rate (T-bills). If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead (still less than I seek in a medium-size company).

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only seven studies done in the past 90 days (two outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 14.7%, 19.8%, 37.8, and 29.4. I am lower across the board. VL projects a future average annual P/E of 20.0, which is higher than MS (33.6) and [intentionally] higher than mine (19.0).

MS high / low EPS are $3.31 / $1.44 versus my $2.53/ $1.11 (per share). My high EPS is less due to a lower growth rate. VL is greater than both at $3.50.

MS LSPF of $40.30 implies a Forecast Low P/E of 28.0: less than the above-stated 29.4. MS LSPF is 4.8% less than the default $1.44/share * 29.4 = $42.34 resulting in more conservative zoning. MS LSPF is 39.0% greater than mine, however.

I believe MOS is robust in this study because my inputs are below respective analyst/historical ranges [and MS averages although low MS sample size only makes sense as anecdotal comparison] including significant multiple compression. Supporting the MOS is MS TAR (20.8%) being 13.1% per year greater than mine.

With regard to valuation, PEG is 0.8 and 1.1 per Zacks and my projected P/E, respectively: fairly valued. In contrast, M* suggests extremely undervalued at 0.3.

Per U/D, BIRK is a BUY under $36.90/share. BI TAR criterion is met at 60.7 / ((14.87 / 100) + 1) ^ 5 = $30.35 given forecast high price $60.70.

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TROW Stock Study (10-18-25)

I recently did a stock study on T. Rowe Price Group, Inc. (TROW, $103.15). Previous study is here.

M* writes:

     > T. Rowe Price provides asset management services for individual
     > and institutional investors. It offers a broad range of no-load
     > US and international stock, hybrid, bond, and money market funds…
     > Approximately two-thirds of managed assets are held in retirement-
     > based accounts, which provides T. Rowe Price with a somewhat
     > stickier client base than most of its peers. The firm also
     > manages private accounts, provides retirement planning advice,
     > and offers discount brokerage and trust services. The company
     > is primarily a US-based asset manager, deriving less than 10%
     > of its AUM from overseas.

Over the last decade, this medium-size company has grown sales and EPS at annualized rates of 6.5% and 7.6%, respectively. Lines are up, straight, and parallel except for sales dips in ’22 (large) and ’23 and EPS dip in ’22. Five- (10-) year EPS R^2 is 0.19 (0.46) and Value Line (VL) gives an Earnings Predictability rating of 90.

Over the last decade, PTPM leads peer and industry averages despite falling from 47.7% (’15) to 39.7% (’24) with a last-5-year mean of 42.5%. ROE also leads peer and industry averages despite falling from 24.8% (’15) to 19.9% (’24) with a last-5-year mean of 24.7%. The company has no long-term debt and is therefore lower than peers and the industry on Debt-to-Capital with a last-5-year mean of 2.8% (rentals).

Quick Ratio is 10.95 with Interest Coverage N/A (consistent with no long-term debt) per M* who assigns a “Narrow” Economic Moat, gives an “Exemplary” rating for Capital Allocation, and offers an A grade for Financial Health. VL rates the company A+ for Financial Strength.

With regard to sales growth:

• YF projects YOY 4.0% and 6.2% for ’25 and ’26, respectively (based on 6 analysts).
• Zacks projects YOY 2.4% and 6.3% per year for ’25 and ’26, respectively (4 analysts).
• VL projects 7.1% annualized growth from ’24-’29.
• M* gives a 2-year ACE of 2.9% annualized growth and projects 6.9% from ’25-’29 in its analyst note.

My 2.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects annualized growth of 1.2% and 2.2% for ’24-’26 and ’24-’27 (based on 16 analysts).
• Nasdaq.com gives ACE of 5.9% YOY and 2.9% per year for ’26 and ’25-’27 (7 / 7 / 5 analysts for ’25 / ’26 / ’27).
• Seeking Alpha projects 4-year annualized growth of 2.0%.
• Finviz gives 5-year ACE of 3.4% per year (4).
• Argus projects 5-year annualized growth of 10.0%.
• LSEG gives LTG projection of -3.2%.
• YF projects YOY growth of 0.9% and 7.7% for ’25 and ’26, respectively (14).
• Zacks projects YOY growth of 0.5% and 5.6% for ’25 and ’26 (7) along with 5-year annualized of 1.9%.
• VL projects 7.3% annualized growth from ’24-’29.
• CFRA projects 2.8% contraction YOY and 0.6% per year for ’25 and ’24-’26 along with a 3-year CAGR of +5.0%.
• M* projects long-term annualized growth of 3.0%.

My 0.5% per year forecast is toward bottom of the long-term-estimate range (mean of seven: 3.5%). My initial value is 2025 Q2 EPS of $8.95/share (annualized) instead of ’24 EPS of $9.15.

My Forecast High P/E is 13.0. Over the last 10 years, high P/E decreases from 18.8 (’15) to 13.7 (’24) with a last 5-year mean of 15.9 (29.7 outlier in ’22 excluded) and last 5-year-mean average P/E of 13.5. I am below the range.

My Forecast Low P/E is 8.0. Over the last 10 years, low P/E decreases from 14.2 (’15) to 11.0 (’24) with a last-5-year mean of 11.1. I am forecasting below the range and current P/E (14.8).

My Low Stock Price Forecast (LSPF) of $71.60 is default based on initial value given above. This is 30.6% (8.0%) less than the previous close (52-week low).

Over the past decade, Payout Ratio ranges from 32.9% in ’21 to 71.6% in ’22 with a last-5-year mean of 51.5%. I am forecasting below the range at 32.0%.

These inputs land TROW in the HOLD zone with a U/D ratio of 0.5. Total Annualized Return (TAR) is 5.4%.

PAR (using Forecast Average—not High—P/E) is less than the current risk-free rate (T-bills) at 1.7%. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead (still less than I seek in a medium-size company).

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 78 studies done in the past 90 days (my study and 27 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and Payout Ratio are 5.2%, 5.8%, 15.0, 10.7, and 47.4%. I am lower across the board. VL projects a future average annual P/E of 13.0, which is higher than MS (12.9) and higher than mine (10.5).

MS high / low EPS are $12.01 / $8.79 versus my $9.18 / $8.95 (per share). My high EPS is less due to a lower growth rate. VL’s high EPS soars above both at $13.00.

MS LSPF of $89.30 implies a Forecast Low P/E of 10.2: less than the above-stated 10.7. MS LSPF is 5.1% less than the default $8.79/share * 10.7 = $94.05 resulting in more conservative zoning. MS LSPF is still 24.7% greater than mine.

I believe MOS is robust in this study because my inputs are near or below respective analyst/historical ranges and MS averages. MS TAR of 14.8% is 9.4% per year greater than mine.

With regard to valuation, PEG is 5.7 and 22.9 (fractional growth rate) per Zacks and my projected P/E, respectively: significantly overvalued (also by M* at 9.4). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.85.

Per U/D, TROW is a BUY under $83/share. BI TAR criterion is met ~ 119.3 / ((12.37 / 100 ) +1 ) ^ 5 = $66.50 given forecast high price ~$119.

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