TTEK Stock Study (11-11-25)

I recently did a stock study on Tetra Tech Inc. (TTEK, $32.07). The previous study is here.

M* writes:

     > Tetra Tech Inc provides consulting and engineering services for
     > environmental, infrastructure, resource management, energy, and
     > international development markets. It specializes in providing
     > water-related services for public and private clients. It designs
     > infrastructure, facilities, and other structures with complex
     > plans and resource management. Tetra Tech has two reportable
     > segments. Its Government Services Group (GSG) segment includes
     > activities with U.S. government clients (federal, state and
     > local) and activities with development agencies world-wide.
     > Commercial/International Services Group (CIG) segment, which
     > derives maximum revenue, includes activities with U.S. commercial
     > clients and international clients other than development agencies.

Since 2016, the medium-size company has grown sales and EPS at annualized rates of 8.1% and 19.0%, respectively [2015 ($0.13/share) excluded to avoid artificial inflation of EPS growth rate]. Lines are mostly up, straight, and parallel except for sales dip in ’20 [FY ends 9/30]. 10-year sales R^2 is 0.88 and Value Line (VL) gives an Earnings Predictability score of 95.

Since 2016, PTPM leads peer and industry averages while trending up from 4.8% to 8.9% (’24) with a last-5-year mean of 8.7%. ROE also leads peer and industry averages while trending up from 9.5% to 19.8% (’24) with a last-5-year mean of 19.3%. Debt-to-Capital is less than peer and industry averages despite increasing from 28.5% to 35.7% (’24) with a last-5-year mean of 33.8%.

Quick Ratio is 1.1 and Interest Coverage is 9.6 per M* who gives a “Narrow” [quantitative] Economic Moat and Financial Health grade of B (per BI website). VL gives a B++ rating for Financial Strength.

With regard to sales growth:

• YF projects YOY 4.4% growth and 8.5% contraction for ’25 and ’26 (based on 7 analysts).
• Zacks projects YOY 4.5% growth and 9.7% contraction for ’25 and ’26 (1 analyst).
• VL projects 3.4% annualized growth from ’24-’29.
• CFRA gives ACE 4.4% YOY growth and 2.3%/year contraction for ’25 and ’24-’26, respectively (6).
• M* gives 2-year ACE of 11.0% contraction per year.

While the rough patch is projected to be short-term, I am forecasting zero long-term growth to be conservative.

With regard to EPS growth:

• MarketWatch projects 15.2% and 10.4% per year for ’24-’26 and ’24-’27 (based on 9 analysts).
• Nasdaq.com projects 3.3% YOY contraction and 4.5%/year growth for ’26 and ’25-’27, respectively (1 analyst).
• Finviz gives ACE 5-year annualized growth of 10.1% (4).
• YF projects YOY 20.3% growth and 2.9% contraction for ’25 and ’26, respectively (7).
• Zacks projects YOY 19.8% growth and 3.3% contraction for ’25 and ’26, respectively (1).
• VL projects 7.4% annualized growth from ’24-’29.
• CFRA gives ACE growth of 23.6% YOY and 9.7% per year for ’25 and ’24-’26 (7).

My 3.0% forecast is less than both long-term estimates (mean: 8.8%). Initial value is ’24 EPS of $1.23/share rather than 2025 Q3 $0.80 (annualized).

My Forecast High P/E is 29.0. Since 2016, high P/E increases from 25.5 to 39.2 (’24) with a last-5-year mean of 36.1 and a last-5-year-mean average P/E of 29.5. I am at lowest level since ’17 (23.5).

My Forecast Low P/E is 18.0. Since 2016, low P/E increases from 16.1 to 23.3 (’24) with a last-5-year mean of 22.9. I am forecasting the lowest level since ’17 (17.0).

My Low Stock Price Forecast (LSPF) of $22.10 is default given initial value from above. That is 31.1% less than the previous close, 19.0% less than the 52-week low, and 10.2% less than the 2023 low.

Since 2016, Payout Ratio (PR) decreases from 23.9% to 17.9% (’24) with a last-5-year mean of 18.5%. I am forecasting below the range at 15.0%.

These inputs land TTEK in the HOLD zone with a U/D ratio of 0.9. Total Annualized Return (TAR) is 5.8%.

PAR (using Forecast Average—not High—P/E) of 1.6% is less than the current risk-free rate (T-bills). If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR but even that is less than I seek in a medium-size company.

To assess MOS, I would compare my inputs with those of Member Sentiment (MS). Four studies (mine excluded) available from the past 90 days are too small a sample for anything but anecdotal comparison. Averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 9.5%, 11.4%, 32.0, 20.2, and 18.6%. I am lower across the board. VL projects an average annual P/E of 28.0, which is greater than MS (26.1) and greater than mine (23.5).

MS high / low EPS are $1.94 / $1.09 versus my $1.43 / $1.23 (per share). My high EPS is less due to a lower growth rate. VL’s $1.80 high EPS is in the middle.

MS LSPF of $25.30 implies a Forecast Low P/E of 23.2 versus the above-stated 20.2. MS LSPF is 14.9% greater than the default $1.09/share * 20.2 = $22.02 resulting in more aggressive zoning. MS LSPF is 14.5% greater than mine.

MOS is robust in this study because my inputs are near or below historical/analyst averages/ranges. MS TAR (13.3%) exceeding mine by 7.5% per year and my lower LSPF are suggestive [anecdotally] of MOS.

With regard to valuation, PEG is 4.3 and 12.5 per M* and my projected P/E, respectively: significantly overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is also rich at 1.36. “Quick and dirty DCF” has stock undervalued by 17%.

Per U/D, TTEK is a BUY just under $27/share. BI TAR criterion would be met [41.5 / ((14.37 / 100 ) +1 ) ^ 5] ~ $21.20 with a forecast high price ~$42.

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DPZ Stock Study (11-10-25)

I recently did a stock study on Domino’s Pizza Inc. (DPZ, $410.18). The previouis study is here.

M* writes:

     > Domino’s is a restaurant operator and franchiser with over
     > 21,500 global stores across more than 90 international markets
     > at the end of the second quarter of 2025. The firm generates
     > revenue through the sales of pizza, wings, salads, sandwiches,
     > and desserts at company-owned stores, royalty and marketing
     > contributions from franchise-operated stores, and its network
     > of 25 domestic (and five Canadian) dough manufacturing and
     > supply chain facilities, which centralize purchasing, preparation,
     > and last-mile delivery for the firm’s US and Canadian
     > restaurants. With roughly $19.2 billion in 2024 system sales,
     > Domino’s is the largest player in the global pizza market,
     > ahead of Pizza Hut, Little Caesars, and Papa John’s.

Over the past decade, the medium-size company has grown sales and earnings at annualized rates of 9.0% and 18.7%, respectively. Lines are mostly up, straight, and parallel except for sales dip in ’23 and EPS dip in ’22. Five-year EPS R^2 is 0.75 and Value Line (VL) gives an Earnings Predictability score of 95.

Over the past decade, PTPM lags the industry but leads peers while ranging from 12.5% in ’18 to 15.3% in ’24 with a last-5-year mean of 14.1%. ROE leads the industry but lags peers while ranging from d15.2% in ’20 to d9.0% in ’17 with a last-5-year mean of d12.8% [negative due to long history of using debt to buy back shares therefore resulting in shareholders’ deficit]. Debt-to-Capital soars above peer and industry averages while ranging from 412% in ’20 to 754% in ’17 with a last-5-year mean of 455%.

Quick Ratio is 0.77 and Interest Coverage 4.9 per M* who assigns “Wide” Economic Moat, gives “Exemplary” rating for Capital Allocation [puzzling since analyst note describes balance sheet as average with large debt load in addition to having mixed view on shareholder distributions due to history of buying back stock for inflated prices], and a B grade for Financial Health (per BI website). VL gives a B grade for Financial Strength.

With regard to sales growth:

• YF projects YOY 4.7% and 6.5% for ’25 and ’26, respectively (based on 29 analysts).
• Zacks projects YOY 4.6% and 6.7% for ’25 and ’26, respectively (8 analysts).
• VL projects 7.5% annualized growth from ’24-’29.
• CFRA projects 3.7% YOY and 3.7% per year for ’25 and ’24-’26, respectively.
• M* provides a 2-year annualized ACE of 5.6% and projects 5.6% per year from ’25-’29 in its analyst note.

I am forecasting toward lower end of the range.

With regard to EPS growth:

• MarketWatch projects 8.3% and 8.6% per year for ’24-’26 and ’24-’27, respectively (based on 37 analysts).
• Nasdaq.com projects 10.5% and 11.5% per year for ’25-’27 and ’25-’28 [8 / 5 / 1 analyst(s) for ’25 / ’27 / ’28].
• Seeking Alpha projects 4-year annualized growth of 9.8%.
• Finviz gives ACE 5-year annualized growth of 8.5% (8).
• Argus projects 5-year annualized growth of 13.0%.
• LSEG gives LTG estimate of 10.2%.
• YF projects YOY 5.5% and 11.0% for ’25 and ’26, respectively (27).
• Zacks projects YOY 5.3% and 12.5% for ’25 and ’26, respectively (8), along with 5-year annualized growth of 10.8%.
• VL projects 13.6% annualized growth from ’24-’29.
• CFRA projects 5.3% YOY and 3.5% per year for ’25 and ’24-’26, respectively, along with a 3-year CAGR of 4.0%.
• M* projects long-term annualized growth of 9.8%.

I am forecasting below the long-term-estimate range (mean of seven: 10.8%). Initial value is ’24 EPS of $16.69/share rather than 2025 Q3 EPS of $17.11 (annualized).

My Forecast High P/E is 26.0. Over the past 10 years, high P/E ranges from 28.4 in ’23 to 45.1 in ’22 with a last-5-year mean of 36.6 and a last-5-year-mean average P/E of 29.6. I am below the range.

My Forecast Low P/E is 19.0. Over the past 10 years, low P/E ranges from 19.5 in ’23 to 26.8 in ’15 and ’17 with a last-5-year mean of 22.5. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $317.10 is default based on initial value given above. That is 22.7% less than the previous close and 19.3% less than the 52-week low.

Over the past 10 years, Payout Ratio (PR) ranges from 25.2% in ’20 to 36.2% in ’24 with a last-5-year average of 31.5%. I am forecasting below the range at 25.0%.

These inputs land DPZ in the HOLD zone with an U/D ratio of 2.1. Total Annualized Return (TAR) is 9.2%.

PAR (using Forecast Average–not High–P/E) of 6.2% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors this study, then I can focus on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 22 studies done in the past 90 days (10 outliers including my study excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 5.7%, 9.0%, 29.9, 20.8, and 31.1%. Although sample size is too small for a valid comparison, I am lower across the board. VL projects a future average annual P/E of 25.0: less than MS (25.4) but greater than mine (22.5).

MS high / low EPS are $26.50 / $17.06 versus my $23.41 / $16.69 (per share). My high EPS is less due to a lower growth rate. VL’s $31.55 high EPS soars above both.

MS LSPF of $352.80 is roughly equal to the above-stated 20.8. MS LSPF is 11.3% greater than mine, however.

MOS is robust in this study because my inputs are near or below historical/analyst averages/ranges. Tiny sample size aside, MS TAR (14.8%) exceeding mine by 5.6% per year and my lower LSPF are suggestive of MOS.

With regard to valuation, PEG is 2.2 and 3.2 per Zacks and my projected P/E: somewhat overvalued (3.0 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is a bit cheap at 0.81. “Quick and dirty DCF” has stock undervalued by 20%.

Per U/D, DPZ is a BUY under $390/share. BI TAR criterion would be met [608.7 / ((13.87 / 100 ) +1 ) ^ 5] ~ $318 given a forecast high price ~$609.

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POOL Stock Study (11-10-25)

I recently did a stock study on Pool Corp. (POOL, $252.01). Previous studies are here and here.

M* writes:

     > Pool Corp distributes swimming pool supplies and related
     > products. Its products include non-discretionary pool-
     > maintenance products, like chemicals and replacement parts,
     > as well as pool equipment, like packaged pools (kits to build
     > swimming pools), cleaners, filters, heaters, pumps, and lights.
     > Customers include pool builders and remodelers, independent
     > retail stores, and pool repair and service companies.

Over the past decade, the medium-size company has grown sales and earnings at annualized rates of 11.9% and 21.6% per year, respectively. Lines are up, mostly straight, and parallel except for sales+EPS declines in ’23 and ’24. Five- (10-) year EPS R^2 is 0.02 (0.83) and Value Line (VL) gives an Earnings Predictability score of 65.

Over the past decade, PTPM leads peer and industry averages while increasing from 8.8% (’15) to 10.7% (’24) with a last-5-year mean of 13.2%. ROE leads peer and industry averages despite falling from 47.4% (’15) to 29.7% (’24) with a last-5-year mean of 50.7%. Debt-to-Capital is higher than peer and industry averages despite falling from 56.3% (’15) to 50.0% (’24) with a last-5-year mean of 53.0%.

Current Ratio is 0.8 and Interest Coverage is 12.9 per M* who assigns “Narrow” Economic Moat and a B grade for Financial Health (per BI website). VL gives an A grade for Financial Strength.

With regard to sales growth:

• YF projects YOY 0.1% contraction and 3.5% growth for ’25 and ’26, respectively (based on 14 analysts).
• Zacks projects YOY 0.1% contraction and 3.3% growth for ’25 and ’26, respectively (6 analysts).
• VL projects 4.1% annualized growth from ’24-’29.
• CFRA projects contraction of 0.1% YOY and 1.7% growth per year for ’25 and ’24-’26, respectively.
• M* provides a 2-year ACE of 1.5% growth per year.

My -1.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 2.5% and 7.6% for ’24-’26 and ’24-’27, respectively (based on 16 analysts).
• Nasdaq.com projects 6.2% YOY and 7.9%/year for ’26 and ’25-’27 (8 / 8 / 5 analysts for ’25 / ’26 / ’27).
• Seeking Alpha projects 4-year annualized growth of 4.9%.
• Finviz gives ACE 5-year annualized growth of 4.8% (11).
• LSEG estimates LTG at 4.8%.
• YF projects YOY 2.0% contraction and 6.7% growth for ’25 and ’26, respectively (9).
• Zacks projects YOY 1.6% contraction and 6.2% growth for ’25 and ’26 (8) along with 5-year annualized growth of 6.6%.
• VL projects annualized growth of 9.5% from ’24-’29.
• CFRA projects contraction of 1.8% YOY and 2.7% growth per year for ’25 and ’24-’26.

My 3.0% per year forecast is below the long-term-estimate range (mean of five: 6.1%). Initial value is 2025 Q3 EPS of $10.97/share (annualized) rather than ’24 EPS of $11.30.

My Forecast High P/E is 29.0. Over the past 10 years, high P/E increases from 29.1 (’15) to 37.4 (’24) with a last-5-year mean of 35.9 and a last-5-year-mean average P/E of 28.0. I am below the range.

My Forecast Low P/E is 18.0. Over the past 10 years, low P/E ranges from 14.9 in ’22 to 26.0 in ’24 with a last-5-year mean of 20.0. I am forecasting toward bottom of the range [only ’22 and ’20 (17.9) are less].

My Low Stock Price Forecast (LSPF) of $197.50 is default based on initial value given above. That is 21.6% less than the previous close and 18.4% less than the 52-week low.

Over the past decade, Payout Ratio (PR) ranges from 18.7% in ’21 to 41.6% in ’24 with a last-5-year mean of 27.7%. I am forecasting below the range at 18.0%.

These inputs land POOL in the HOLD zone with a U/D ratio of 2.1. Total Annualized Return (TAR) is 8.5%.

PAR (using Forecast Average—not High—P/E) of 4.2% 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 start by comparing my inputs with those of Member Sentiment (MS). Based on only nine studies (mine and 2 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 3.5%, 7.6%, 29.0, 19.8, and 25.0%. Although sample size is too small for a valid comparison, I am lower on four and equal on Forecast High P/E. VL’s projected average annual P/E of 27.5 is higher than MS (24.4) and mine (23.5).

MS high / low EPS are $16.11 / $10.94 versus my $12.72 / $10.97 (per share). VL’s $17.75 high EPS soars above both.

MS LSPF of $226.00 implies a Forecast Low P/E of 20.7 versus the above-stated 19.8. MS LSPF is 4.3% greater than the default $10.94/share * 19.8 = $216.61 resulting in more aggressive zoning. MS LSPF is also 14.4% greater than mine.

MOS is robust in this study because my inputs are near or below historical/analyst averages/ranges. Tiny sample size aside, MS TAR (12.6%) exceeding mine by 4.1% per year and my lower LSPF are suggestive of MOS.

With regard to valuation, PEG is 3.5 and 7.4 (low growth rate) per Zacks/M* and my projected P/E: extremely overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is somewhat cheap at 0.82.

Per U/D, POOL is a BUY under $240/share. BI TAR criterion would be met [368.9 / ((14.27 / 100 ) +1 ) ^ 5] ~ $189 given a forecast high price ~$369.

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

COO Stock Study (11-7-25)

I recently did a stock study on Cooper Companies, Inc. (COO, $69.00).

M* writes:

     > CooperCompanies is one of the largest eyecare companies in the
     > US. It operates in two segments: CooperVision and CooperSurgical.
     > CooperVision is a pure-play contact lens business with a suite of
     > spherical, multifocal, and toric contact lenses. The company also
     > has one of the most comprehensive specialty lens portfolios in
     > the world. With brands including Proclear, Biofinity, MyDay, and
     > Clariti, Cooper controls roughly one fourth of the US contact lens
     > market. CooperSurgical, founded in 1990, is made up of
     > equipment related to reproductive care, fertility, and women’s
     > care. Cooper has the broadest medical device coverage of the
     > entire IVF cycle. It also has Paragard, the only hormone-free
     > IUD in the US, and controls 17% of the US IUD market.

Over the past decade, the medium-size company has grown sales and earnings at annualized rates of 8.7% and 5.0%, respectively [excluding ’21 due to $14.79 EPS spike resulting largely from one-time “recognition of deferred tax assets following an intra-group transfer of intellectual property to a UK subsidiary… in the third quarter of 2021” (Google AI) that would otherwise inflate growth to 9.4%/year]. Lines are mostly up, straight, and parallel except for sales dip in ’20 and EPS declines in ’18, ’20, and ’23 (FY ends Oct 31). Five- (10-) year EPS R^2 is 0.55 (0.17) and Value Line (VL) gives an Earnings Predictability score of 60.

Over the past decade, PTPM is about even with peer and industry averages while ranging from 11.0% in ’20 to 18.4% in ’17 with a last-5-year mean of 13.7%. ROE is about even with peer and industry averages while ranging from 3.9% in ’23 to 12.7% in ’19 (excluding 43.0% upside outlier in ’21) with a last-5-year mean of 5.1%. Debt-to-Capital is slightly lower than peer and industry averages while decreasing from 33.6% in ’15 to 24.2% in ’24 with a last-5-year mean of 26.5%.

Quick Ratio is 0.91 and Interest Coverage is 7.0 per M* who assigns “Narrow” Economic Moat, gives “Standard” rating for Capital Allocation, and a B grade for Financial Health (per BI website). VL gives an A grade for Financial Strength.

With regard to sales growth:

• YF projects YOY 5.0% and 5.8% for ’25 and ’26, respectively (based on 17 analysts).
• Zacks projects YOY 5.0% and 5.6% for ’25 and ’26, respectively (6 analysts).
• VL projects 6.8% annualized growth from ’24-’29.
• CFRA projects 5.2% YOY and 5.6% per year for ’25 and ’24-’26, respectively.
• M* provides a 2-year ACE of 5.5% and projects “mid single-digit growth” long-term (analyst note).

My 4.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 9.8% and 9.6% per year for ’24-’26 and ’24-’27, respectively (based on 21 analysts).
• Nasdaq.com projects 7.3% YOY and 8.3% per year for ’26 and ’25-’27 (6 / 6 / 5 analysts for ’25 / ’26 / ’27).
• Seeking Alpha projects 4-year annualized growth of 10.3%.
• Finviz gives ACE 5-year annualized growth of 9.3% (3).
• LSEG estimates LTG at 9.5%.
• YF projects YOY 10.9% and 7.6% for ’25 and ’26, respectively (19).
• Zacks projects YOY 10.8% and 7.3% for ’25 and ’26 (5) along with 5-year annualized growth of 9.3%.
• VL projects annualized growth of 8.3% from ’24-’29.
• CFRA projects 10.8% YOY and 9.4% per year for ’25 and ’24-’26 along with 3-year CAGR of 10.0%.
• M* projects long-term annualized growth of 18.4%.

My 7.0% per year forecast is below the long-term estimate range [mean of six: 10.9%]. Initial value is ’24 EPS of $1.96/share rather than 2025 Q3 $2.03 (annualized).

My Forecast High P/E is 33.0. Over the past 10 years, high P/E ranges from 7.8 in ’21 (offset by 76 in ’20) to 99.6 in ’18 [due to a low Q3 EPS of $0.65 with stock price around $65 per Google AI, which may not be split-adjusted] for a last-5-year mean of 53.0 and a last-5-year-mean-average P/E of 43.5. I am toward the low end of the range (only ’21 is less).

My Forecast Low P/E is 29.0. Over the past 10 years, low P/E ranges from 5.4 in ’21 to 77.0 in ’18 (see above) with a last-5-year mean of 33.9. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) is $48.00. Default ($41.20) based on initial value given above seems unreasonably low at 40.3% (33.3%) less than the previous close (52-week low). My [arbitrary] selection is 30.4% (22.3%) less, respectively.

Over the past decade, Payout Ratio (PR) has decreased from 1.4% in ’15 to 0.0% in ’24. Since the dividend is still suspended, I am forecasting zero.

These inputs land COO in the HOLD zone with a U/D ratio of 1.0. Total Annualized Return (TAR) is 5.7%.

PAR (using Forecast Average—not High—P/E) of 1.5% is less than the current risk-free rate. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR but even that is less than I seek for a medium-size company.

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 excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 6.0%, 12.7%, 45.0, 29.7, and 0.5%. Although such a small sample size precludes any legit comparison, I am lower across the board. VL projects future average annual P/E of 22.0 that is much less than mine (31.0).

MS high / low EPS are $4.23 / $2.03 versus my $2.75 / $1.96 (per share). VL’s $5.50 high EPS is 100% greater than mine (offsets future P/E difference just mentioned).

MS LSPF of $57.00 implies a Forecast Low P/E of 28.1 versus the above-stated 29.7. MS LSPF is 5.5% less than the default $2.03/share * 29.7 = $60.29 resulting in more conservative zoning. MS LSPF is 18.8% greater than mine, however.

MOS is robust in this study because my inputs are near or below historical/analyst averages/ranges. Tiny sample size aside, MS TAR (21.3%) exceeding mine by 15.6% per year and my lower LSPF are suggestive of MOS.

With regard to valuation, PEG is 1.7 and 4.5 per Zacks and my projected P/E: somewhat overvalued (4.3 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.78. “Quick and dirty DCF” has the stock undervalued by 29%.

Per U/D, COO is a BUY under $58.70/share. BI TAR criterion would be met [90.8 / ((14.87 / 100 ) +1 ) ^ 5] = $45.40 with a forecast high price ~$91 (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).

DXCM Stock Study (11-7-25)

I recently did a stock study on Dexcom, Inc. (DXCM, $58.02).

M* writes:

     > DexCom designs and commercializes continuous glucose
     > monitoring systems for diabetic patients. CGM systems
     > serve as an alternative to the traditional blood glucose
     > meter process, and the company is evolving its CGM
     > systems to provide integration with insulin pumps from
     > Insulet and Tandem for automatic insulin delivery.

Since turning profitable in 2019, the medium-size company has grown sales and earnings at annualized rates of 22.5% and 29.5%, respectively. Lines are mostly up, straight, and parallel except for an EPS spike and subsequent decline in ’20-’21. Five- (Six-) year EPS R^2 is 0.18 (0.48) and Value Line (VL) gives an Earnings Predictability score of 45.

Since 2019, PTPM is about even with peer and industry averages while increasing from 7.1% to 17.6% (’24) with a last-5-year mean of 13.9%. ROE is about even with peer and industry averages while increasing from 13.2% to 28.0% (’24) with a last-5-year mean of 21.4%. Debt-to-Capital is greater than peer and industry averages while ranging from 45.5% in ’21 to 56.8% in ’20 with a last-5-year mean of 51.3%.

Quick Ratio is 1.4 and Interest Coverage is 52 per M* who assigns “Narrow” Economic Moat, gives “Exemplary” rating for Capital Allocation, and a B grade for Financial Health (per BI website). VL gives a B+ grade for Financial Strength.

With regard to sales growth:

• YF projects YOY 15.1% and 12.8% for ’25 and ’26, respectively (based on 26 analysts).
• Zacks projects YOY 15.1% and 12.4% for ’25 and ’26, respectively (9 analysts).
• VL projects 13.2% annualized growth from ’24-’29.
• CFRA projects 14.6% YOY and 13.7% per year for ’25 and ’24-’26, respectively.
• M* provides a 2-year ACE of 14.3% and projects 13.0%/year “throughout explicit forecast period.”

My 12.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 21.9% and 21.8% per year for ’24-’26 and ’24-’27, respectively (based on 32 analysts).
• Nasdaq.com projects 19.1% and 21.4% per year for ’25-’27 and ’25-’28 (9 / 8 / 2 analysts for ’25 / ’27 / ’28).
• Seeking Alpha projects 4-year annualized growth of 23.5%.
• Argus projects 5-year annualized growth of 23.0%.
• Finviz gives ACE 5-year annualized growth of 22.3% (11).
• LSEG estimates LTG at 20.3%.
• YF projects YOY 26.0% and 20.7% for ’25 and ’26, respectively (25).
• Zacks projects YOY 25.6% and 20.4% for ’25 and ’26 (9) along with 5-year annualized growth of 22.5%.
• VL projects annualized growth of 17.9% from ’24-’29.
• CFRA projects 23.8% YOY and 21.0% per year for ’25 and ’24-’26 along with 3-year CAGR of 19.0%.
• M* projects long-term annualized growth of 30.3%.

My 15.0% per year forecast is below the long-term estimate range [mean of seven: 22.8%]. Initial value is ’24 EPS of $1.42/share rather than 2025 Q3 $1.80 (annualized).

My Forecast High P/E is 45.0. Since 2019, high P/E ranges from 90.2 in ’20 to 425 in ’21 with four data points in triple digits. I am above the current P/E of 32.9 but way below the high P/E range.

My Forecast Low P/E is 29.0. Since 2019, low P/E ranges from 36.0 in ’20 to 205 in ’21 with a last-5-year mean (excluding ’21) of 54.7. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $41.20 is default based on initial value given above. That is 29.0% less than the previous closing price and 27.1% less than the 52-week low.

These inputs land DXCM in the BUY zone with a U/D ratio of 3.8. Total Annualized Return (TAR) is 16.8%.

PAR (using Forecast Average—not High—P/E) of 12.3% is decent for a medium-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 22 studies done in the past 90 days (my study along with 5 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E, are 14.9%, 19.4%, 51.8, and 35.0. I am lower across the board. VL projects future average annual P/E of 35.0 that is less than MS (43.4) and less than mine (37.0).

MS high / low EPS are $3.54 / $1.44 versus my $2.86 / $1.42 (per share). My high EPS is less due to a lower growth rate. VL’s $3.55 is greater than both.

MS LSPF of $52.60 implies a Forecast Low P/E of 36.5 versus the above-stated 35.0. MS LSPF is 4.4% greater than the default $1.44/share * 35.0 = $50.40 resulting in more aggressive zoning. MS LSPF is also 27.7% greater than mine.

MOS is robust in this study because my inputs are near or below historical/analyst averages/ranges. Although a small MS sample size only allows for anecdotal comparison, MS TAR (21.1%) exceeding mine by 4.3% per year and my lower LSPF are evidence for MOS.

With regard to valuation, PEG is 1.3 and 1.9 per Zacks/M* and my projected P/E: fairly valued. Relative Value is extremely cheap [(current P/E) / 5-year-mean average P/E] with history of sky-high P/Es, but I don’t find that credible as multiple contraction will occur sooner or later.

Reading reports makes it clear the company has its challenges from a qualitative standpoint. I let the analysts mind these details with the estimates they provide.

Nevertheless, discovering a BUY with MOS strong against a sufficient number of analysts [all with the opportunity to estimate accordingly] leaves me walking away with confidence.

Per U/D, DXCM is a BUY under $63/share. BI TAR criterion is currently met: [128.7 / ((14.87 / 100 ) +1 ) ^ 5] ~ $64 with a forecast high price ~$129 (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).

CRM Stock Study (11-6-25)

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

M* writes:

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

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

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

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

With regard to sales growth:

• YF projects YOY 8.9% and 9.1% for ’26 and ’27, respectively (based on 52 analysts).
• Zacks projects YOY 10.8% and 8.8% for ’26 and ’27, respectively (16 analysts).
• VL projects 7.2% annualized growth from ’25-’29.
• CFRA projects 8.8% and 8.9% per year for ’25-’27 and ’25-’28, respectively.
• M* provides a 2-year ACE of 9.0% and projects 5-year annualized growth of 8.0% in its analyst note.

My 7.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 12.7% and 13.3% per year for ’25-’27 and ’25-’28, respectively (based on 55 analysts).
• Nasdaq.com projects 12.4% YOY and 12.0% per year for ’27 and ’26-’28 (18 /17 / 5 analysts for ’26 / ’27 / ’28).
• Seeking Alpha projects 4-year annualized growth of 17.1%.
• Argus projects 5-year annualized growth of 13.0%.
• Finviz gives ACE 5-year annualized growth of 12.6% (19).
• LSEG estimates LTG at 13.5%.
• YF projects YOY 11.3% and 11.9% for ’26 and ’27, respectively (54).
• Zacks projects YOY 11.4% and 11.3% for ’26 and ’27 (18) along with 5-year annualized growth of 13.9%.
• VL projects annualized growth of 15.1% from ’25-’29.
• CFRA projects 11.1% and 11.5% per year for ’25-’27 and ’25-’28, respectively, along with 3-year CAGR of 11.0%.
• M* projects long-term annualized growth of 16.7%.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

RMD Stock Study (11-5-25)

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

M* writes:

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

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

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

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

With regard to sales growth:

• YF projects YOY 8.9% and 7.5% for ’26 and ’27, respectively (based on 26 analysts).
• Zacks projects YOY 8.3% and 6.9% for ’26 and ’27, respectively (6 analysts).
• VL projects 6.0% annualized growth from ’25-’29.
• CFRA projects 9.1% YOY and 8.2% per year for ’26 and ’25-’27, respectively.
• M* provides a 2-year ACE of 8.1% and projects 5-year annualized growth of 8.0% in its analyst note.

My 5.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 12.5% and 11.3% per year for ’25-’27 and ’25-’28, respectively (based on 29 analysts).
• Nasdaq.com projects 9.1% YOY and 9.0% per year for ’27 and ’26-’28 (6, 6, and 3 analysts for ’26, ’27, and ’28).
• Seeking Alpha projects 4-year annualized growth of 13.7%.
• Finviz gives ACE 5-year annualized growth of 11.3% (5).
• LSEG estimates LTG at 18.0%.
• YF projects YOY 14.0% and 10.1% for ’26 and ’27, respectively (19).
• Zacks projects YOY 13.0% and 9.1% for ’26 and ’27, respectively (6), along with 5-year annualized growth of 13.7%.
• VL projects annualized growth of 6.5% from ’25-’29.
• CFRA projects 15.2% YOY and 12.1% per year for ’26 and ’25-’27, respectively, along with a 3-year CAGR of 10.0%.
• M* projects long-term annualized growth of 10.0% (per analyst note although BI website gives 14.3%).

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

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

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

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

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

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

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

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

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

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

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

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

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

Full disclaimer: I currently own shares of the stock.

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

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

ALGN Stock Study (11-5-25)

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

CFRA writes:

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

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

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

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

With regard to sales growth:

• YF projects YOY 0.6% and 3.8% for ’25 and ’26, respectively (based on 15 analysts).
• Zacks projects YOY 0.6% and 3.7% for ’25 and ’26, respectively (5 analysts).
• VL projects 6.8% annualized growth from ’24-’29.
• CFRA projects 0.8% YOY and 2.7% per year for ’25 and ’24-’26, respectively.
• M* offers 2-year ACE of 1.6%/year and longer-term projects double-digit midcycle growth (analyst note).

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

With regard to EPS growth:

• MarketWatch projects 8.2% and 12.1% per year from ’24-’26 and ’24-’27, respectively (based on 18 analysts).
• Nasdaq.com projects 9.3% and 11.2% per year for ’25-’27 and ’25-’28 [5 / 5 / 1 analyst(s) for ’25 / ’27 / ’28].
• Seeking Alpha projects 4-year annualized growth of 9.0%.
• Finviz gives ACE 5-year annualized growth of 8.4% (3).
• LSEG estimates LTG at 5.7%.
• YF projects YOY 9.4% and 7.3% for ’25 and ’26, respectively (15).
• Zacks projects YOY 9.4% and 7.3% for ’25 and ’26, respectively (6), along with 5-year annualized growth of 10.1%.
• VL projects 11.8% annualized growth from ’24-’29.
• CFRA projects 7.4% YOY and 8.1% per year for ’25 and ’24-’26, respectively.
• M* has long-term ACE at 15.6% annualized.

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

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

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

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

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

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

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

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

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

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

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

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

Full disclaimer: I currently own shares of ALGN.

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

EW Stock Study (11-4-25)

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

M* writes:

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

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

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

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

With regard to sales growth:

• YF projects YOY 10.8% and 9.8% for ’25 and ’26, respectively (based on 31 analysts).
• Zacks projects YOY 0.8% and 9.8% for ’25 and ’26, respectively (12 analysts).
• VL projects 8.7% annualized growth from ’24-’29.
• CFRA projects 9.5% YOY and 9.9% per year for ’25 and ’24-’26, respectively.
• M* offers 2-year ACE of 9.4%/year and projects “high single-digit revenue growth for 2025 and beyond” in analyst note.

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

With regard to EPS growth:

• MarketWatch projects 5.5% and 7.7% per year for ’24-’26 and ’24-’27, respectively (based on 33 analysts).
• Nasdaq.com projects 11.0% and 12.0% per year for ’25-’27 and ’25-’28 (11 / 10 / 4 analysts for ’25 / ’27 / ’28).
• Seeking Alpha projects 4-year annualized growth of 9.3%.
• Finviz gives ACE 5-year annualized growth of 9.8% (10).
• Argus projects 5-year annualized growth of 11.0%.
• LSEG gives LTG estimate of 9.4%.
• YF projects YOY 6.0% and 10.9% for ’25 and ’26, respectively (31).
• Zacks projects YOY 6.2% and 10.1% for ’25 and ’26, respectively (12), along with 5-year annualized growth of 8.6%.
• VL projects 9.9% annualized growth from ’24-’29.
• CFRA projects 6.2% YOY and 8.3% per year for ’25 and ’24-’26, respectively, along with a 3-year CAGR of 8.0%.
• M* projects long-term growth of 6.8% per year.

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

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

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

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

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

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

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

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

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

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

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

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

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COST Stock Study (11-1-25)

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

M* writes:

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

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

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

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

Wow.

With regard to sales growth:

• YF projects YOY 7.9% and 7.5% for ’26 and ’27, respectively (based on 27 analysts).
• Zacks projects YOY 7.7% and 8.1% for ’26 and ’27, respectively (8 analysts).
• VL projects 6.5% annualized growth from ’25-’29.
• CFRA projects 7.8% YOY and 7.7% per year for ’26 and ’25-’27.
• M* provides a 2-year CAGR of 7.9% and projects 7.4% annualized for the next 5 years in its analyst note.

My 6.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects annualized growth of 10.5% and 10.8% for ’25-’27 and ’25-’28 (based on 35 analysts).
• Nasdaq.com projects 10.1% and 9.3% per year for ’26-’28 and ’26-’29 [14, 3, and 1 analyst(s) for ’26, ’28 and ’29].
• Seeking Alpha projects 4-year annualized growth of 8.7%.
• Finviz gives ACE 5-year annualized growth of 10.6% (11).
• Argus projects 5-year annualized growth of 12.0%.
• LSEG gives LTG estimate of 8.8%.
• YF projects YOY 10.4% and 10.2% for ’26 and ’27, respectively (30).
• Zacks projects YOY 11.0% and 9.1% for ’26 and ’27 (9) along with 5-year annualized growth of 8.3%.
• VL projects 9.3% annualized growth from ’25-’29.
• CFRA projects 10.7% YOY and per year for ’26 and ’25-’27 along with a 3-year CAGR of 11.0%.
• M* projects long-term annualized growth of 8.9%.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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