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I cross posted this on Saul’s board but really belongs here:

Many of your stocks followed here have very impressive P/S ratios.....are you holding potential timebombs?

I have been looking over several stocks recently from the perspective of how they might perform if the numerous companies that are guiding lower revenue for 2019 actually materializes......that is, if this were to be a larger swath tech industry trend (potentially over-built tech sectors, etc.) how might the higher P/S stocks behave from a return probability perspective.

Many of these “nosebleed” stocks can have rather violent stock movements with any suggestion of lowered guidance because so much growth is already priced in. I am going to set up a couple hypothetical portfolios of NPI type stocks (NPI, Bert, Gary, Saul, etc.) with the only criteria separating them being a high P/S (perhaps those above 10 and below 10 although I may choose below 10, 10-15 and above 15).

The theory goes that the higher P/S stocks will underperform lower P/S stocks. What is this based on?

There are numerous studies that suggest the highest P/S stocks will perform the worst in future years. Here is one example:

http://www.fatpitchfinancials.com/2288/price-sales-ratio-bac.........

You can see that stocks in the highest quintile of P/S are usually the worst investment performers.

One of the very few stocks that I have seen maintain a very high P/S is FB (now at 12 with recent drop)....not even GOOG or AAPL has had such nosebleed levels. Some here have argued that SHOP is the equivalent of the FB anomaly but IMO, this contorted logic is what gets people in trouble.....arguing by exception.

Tinker has argued to stay invested in stocks with growing revenue irrespective of them being high valuations and that lower valuations stocks are low for a reason......there is some sound logic in that assertion. I have argued that there is often a huge disconnect between a technology adoption lifecycle and the accumulation of the stock....something I have coined the TALC/SALC disconnect......and that stocks can sometimes get way ahead of themselves. These two viewpoints are NOT mutually exclusive.

There are numerous examples in recent past of similar extreme high P/S stocks like LNKD and TWTR that dropped precipitously. If you contemplate similar asset class historical records, one needn't go much further than to the 2000 bubble when tech stocks like MSFT traded at P/S of 35 and CSCO traded at 37! We are not there yet.

The FOOL also had an article here with some historical context as well:

https://www.fool.com/how-to-invest/2014/06/28/beware-of-high......

When investors pay an irrational P/S ratio, they pay for irrational growth. When investors buy stocks with high P/S ratios, those stocks need to grow revenue at least 30%-40% on a yearly basis for many years into the future. This is because investors are paying a big premium today for growth that is expected to happen in the future. But, with any deviation from future growth expectations, the premium paid today may no longer be deserved. As a result, and because an irrationally high P/S ratio cannot be maintained by an increase in revenue growth, the stock is likely to collapse.

I made a similar argument with SHOP back in Oct 2017 when the P/S was well above 20 and the stock traded at 116....now up around 6% since then......though I know many of you bought it again at even lower values when Citron did their “magic”.

But let’s look at a few of your/our favorites:

NVDA P/S 14
AYX P/S 17
SHOP P/S 20
TEAM P/S 19
VEEV P/S 15
NKTR P/S 47
OKTA P/S 17
ALGN P/S 14
ZS P/S 21

MDB P/S 12
ANET P/S 12
TDOC P/S 11
SPLK P/S 12
GWRE P/S 12
TWLO P/S 10
ZEN P/S 12
HUBS P/S 12
ZUO P/S 12

SQ P/S 6
AAXN P/S 7
AMZN P/S 4
NTNX P/S 9
TTD P/S 7
CLDR P/S 6
PSTG P/S 5
TLND P/S 9
CELG P/S 5
YEXT P/S 6

I fully recognize there are various “qualifications” like drugs stocks, growth rates and forward P/S’s, etc. But those arguments for another day.

I am just doing a fun compare and contrast between tech driven stocks that might show up in NPI type investing to track an equal weighted portfolio based on valuations. I will report results from time to time.

Anyone care to add other tech stocks you think have the greatest promise of all?

Best:
Duma
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duma that link seems to be 2000 to 2013 or 2014, a beginning point where we were in a growth stock bubble. But it won't work for me now when i tried to confirm that impression.
Wonder what a 2009 to 2017 would have shown.

A surprise- NVDA and ALGN same P/S when NVDA seems way more likely to outperform in the near future. OTOH in 20 years there will still be lots of people needing braces. But I don't think the market thinks that far ahead. Tesla maybe excluded ...
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<<<Tinker has argued to stay invested in stocks with growing revenue irrespective of them being high valuations and that lower valuations stocks are low for a reason......there is some sound logic in that assertion.>>>

Yes, as a general rule. But there are exceptions. My gut is telling me that PSTG is an exception to that rule and is undervalued. A company like AYX on the other hand fits the rule I think because of an inability to print cash in hordes.

That differs from ANET or NVDA, who may have high price to sales but they also have extraordinarily high cash printing capabilities.

SHOP may be an exception to that rule as well as long as growth continues because it is a singular company. There is a real risk as SHOP transitions from being valued based upon merchant growth to becoming valued based upon Shopify Plus and B2B.

What I find is if you cannot find real world evidence as to why a "cheap" stock is such a great value other than conjecture, then you have a problem. PSTG appears to not be conjecture as to its value.

I also find on the other hand, that extraordinarily high valued stocks on price to sale, with high growth rates, but it appears to have little in ability to print cash in hordes, like an AYX, then the general rule you cite will hold.

But I keep distracting myself. Must get some other stuff done.

Tinker
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Nektar seems an oddball here...may skew results.

You have all my stocks except Pot and China...but your list is solid for comparison.

Obviously the faster you are growing the revenues the quicker you can compress the P/S.

What about measuring these factors across all the stocks:

P/S
Growth y/y for most recent 12 months.
FCF
Rule of 40

I think adding in the FCF and rule of 40 may be interesting as it could indicate if positive or negative FCF impacts (or insulates) a stock against larger moves up or down and during market hiccups.

Dreamer
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Hi Duma,

I'm fairly new around here, and to be honest, despite a decade of investing, these types of numbers are meaningless to me. Not that I think they lack meaning, but that I don't understand their meaning. I honestly truly do not comprehend how to use them to evaluate the value or future performance of a company using them.

My, admittedly naive, way of valuing a company probably leaves a tremendous amount to be desired. I look at the company, the product or service, and try to figure out if it has any personal value to me, and where do I think, based on past performance, will it go anywhere. I'll also factor in industry norms, and various macro factors in, but it's really all a "gut feel". For example, I won't invest in retail because generally they have very low margins, lots of waste, tons of overhead, etc. Whether it's clothes, groceries, hardware, etc. And I won't usually invest in pharma because it's too hit-or-miss, trials cost too much, take too long, and could go either way. But things like NFLX, AMZN, FB, they have the power of the commons, are addictive, and almost no real competition. Lots of people like me love them and will throw money at them. And the more they succeed, the more likely they will succeed more. ANET isn't that different, just a smaller commons (cloud titans, companies running private clouds on-prem, etc.)

But I feel like this isn't the smartest way to invest and that I may be missing something and really want to understand this more quantitative method vs. my "does it feel right" method :)

For example, no one would ever buy NFLX based on P/E, and yet:


9/3/2010 Current % Gain
Price Value Shares Price Value since 9/3/2010
NFLX 19.78 $3,437 173.76 332.70 $57,810 1582%
SPY 94.73 268.89 184%


NFLX has also had an historic P/S of around 12. But I don't understand whether 12 is high or low. And do I need to compare a P/S with a P/E to determine what that means? Or are you saying ignore P/E and just use P/S ?

Sorry if these are dumb questions.

Thanks.
--
Paul
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I read it at Saul's but I didn't want to respond there. You write

The theory goes that the higher P/S stocks will underperform lower P/S stocks. What is this based on?

That is an incomplete theory because it does not say in what time frame it will underperform. In a buy and forget portfolio it might be ten or twenty years. In a day trader's, four hours to a couple of days. The "S" curve scenario says that P/E or P/S ratio will contract as high market penetration approaches. A high P/S for MDB is less worrisome than for AAPL.

What I find worrisome is a high P/S ratio when there are no earnings. When the company transitions to profitability investors might change their valuation metrics because the new metric might produce a less optimistic number.

Today a rather shallow analysis of ALGN by Morgan Stanley dropped the stock by 8%. You can expect lots of volatility with highly valued stocks (P/S = 14, P/E = 89) but they should hold that valuation until they start approaching market saturation.

Denny Schlesinger
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What about measuring these factors across all the stocks:
P/S
Growth y/y for most recent 12 months.
FCF
Rule of 40


Dreamer:

I have no doubt that AI is being applied to stocks and despite what Andrew Ng said about its application to investing, many out there are most certainly applying multiple factors to try to determine beset combinations for predicting stock movements. I am not sure how we could group these stocks in portfolios by adding too many others factors.

Again, we all know that highly valued stocks can stay highly valued for quite some time. This little exercise is suggested under the premise that revenue growth may be slowing in 2019.....based on numerous companies lower revenue growth rates. If that revenue compression really occurs on a board basis in technology, it stands to reason that the higher P/S stocks are in more jeopardy.

But I feel like this isn't the smartest way to invest and that I may be missing something and really want to understand this more quantitative method vs. my "does it feel right" method :) NFLX has also had an historic P/S of around 12. But I don't understand whether 12 is high or low. And do I need to compare a P/S with a P/E to determine what that means? Or are you saying ignore P/E and just use P/S ?

Hey Paul:

Your approach is a good one for consumer products but for technology, we dont have as intimate relationship with switches, servers, databases, etc. So IMO, we need to use adoption data and revenue growth data to determine if many of these companies are doing what they should be doing....gaining market share. You many have noticed that shares are often not aligned with the tech adoption.....this can be important to know when a stock is way overbought or way undervalued. I think as regards technology investments this rule has proved its metal over time:

http://boards.fool.com/the-duma-rule-20598973.aspx

I do like using historical P/S for understanding whether a stock may be undervalued but it is certainly not the only consideration in a more broad review......as you swee here at the NPI.....our deep dives are really deep.

Regarding your comment about NFLX’s historical P/S being 12.....not at all:

http://www.morningstar.com/stocks/xnas/nflx/quote.html

Click on that valuation tab and see every year’s P/S going back to 2008.......you can see that it now sits at 2-3 times it’s historical norm.

That is an incomplete theory because it does not say in what time frame it will underperform. In a buy and forget portfolio it might be ten or twenty years. In a day trader's, four hours to a couple of days. The "S" curve scenario says that P/E or P/S ratio will contract as high market penetration approaches. A high P/S for MDB is less worrisome than for AAPL.

Denny:

I agree but perhaps implicit in my post was the commentary on lowered revenue guidance for 2019......that is the timeframe I am considering.....the next 12 months......we have a convergence of very high P/S stocks with lowered revenue guidance......not a healthy set up IMO.

I am still trying to feel out whether we are potentially seeing a broader swath slowdown or just from a few stocks.....just seems that several are coming out with lower guidance and we are coming off a couple years of mind numbing massive revenue beats......maybe a bit of an overshoot.....not sure.
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Hey Duma,

Thanks. Either I misread the source I was using for P/S, Morningstar is a more accurate (or maybe easier to read) source.

So, since NFLX is at 2x it's historical norm, how bad is that? And what is a good P/S ratio? Is that entirely dependent on the company and sector it's in? Or are we merely looking at the P/S for a specific company an noting its value in relation to historical and/or projected values?

Sorry for all the questions :)

Thanks again, this really enlightening!
--
Paul
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So, since NFLX is at 2x it's historical norm, how bad is that? And what is a good P/S ratio? Is that entirely dependent on the company and sector it's in? Or are we merely looking at the P/S for a specific company an noting its value in relation to historical and/or projected values?

Hey Paul:

Using P/S as a single data input is probably meaningless. Remember, high P/S in the setting of very high growth rates in revenue is more likely the norm.

So a P/S <1 is ideal when dealing with a slow growing company but would be completely unrealistic for a company growing revenue at 50% YoY.

My point really was that if one has a stock with a P/S of 20 growing revenue at 50% YoY, should they stumble even slightly.....this happens:

http://www.stockta.com/cgi-bin/analysis.pl?symb=CLDR&cob...

So there is a great deal of pressure on these high P/S stocks to keep showing very high growth.....and for some reason, we have seen several guide lower growth rates for 2019. But make no mistake, some high P/S stocks can stay high for quite some time.......so there is no timing value to the ratio.....just risk value.
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Hey Duma,

Thanks. I know as single point it's meaningless. I'm merely trying to get at the crux of what it is you're observing when looking at P/S. It sounds like you're looking at the P/S relative over time but in conjunction with revenue growth (among other things).

As for Cloudera, pure consumer software plays are tough. It's very easy to replace and/or come up with something way better or entirely different that obviates the existing product. Or, it's entirely plausible this "killer app" get's over-hyped as may have been the case with Cloudera. Big Data and hadoop were all the rage for a while, and then they suddenly died down. Now there's not so much hype. MongoDB is a great product, but I fear it too lacks stickiness and when the hype dies down, so will it's growth.

That's where I see things like ANET, SHOP, and OKTA as having huge differentiators.

ANET sells hardware and licenses their software. Whether you use EOS on a white box or their switches, ANET makes money. And no one else offers what they do. Networking equipment and analysis tools tend to be very sticky. People need that stuff, and tend to lock in for a long time the way they do things.

SHOP is integrating with other platforms that force customers to come to them. And once they're in, they're difficult to switch away from because they become an integral part of the way people do business.

OKTA is the same thing. They integrate into everything, no one else does what they do, and they're already in with so many different other vendors that displacement will be difficult.

Sorry, a little off-topic there and not really germane to the discussion :)

Thanks again! I'm going to try to start looking at P/S relative over time along with things like revenue growth and see what that tells me.
--
Paul
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Duma - can you double check SQ P/S?

They always seem closer to 9 when i look them up in my watchlist screener?
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This doesn't take into account sales from last quarter, but uses the shares outstanding from last quarter.

Revenue at the end of 2017 was $2.214B. At a stock price of $54.73 and shares out of 366.7M, the P/S is 9. The TTM P/S will be a bit lower than that.

A.J.
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I used the trailing P/S, as I said not precision but just easy to see and parse the portfolios out. SQ price was lower by 8% when P/S entered into portfolio....even now sits below 10.

Again, not trying for precision, rather proof of concept and the value limits themselves were arbitrary from lower to middle to highest in that landscape of stocks....based on lower to highest and trying to split into approximate thirds.

TLND is now above the P/S of 10 but NTNX and TTD are just barely so......the rest still below 10. The differences were most pronounced at the high extremes rather than at the middle.

I know it can be refined.....taking forward P/S, etc......but then that is work....could be worth it.....but just trying to prove concept at first blush.
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Duma,

As you know forward P/S is all I will look at. Nvidia is an obvious example, except with earnings per share. Trailing EPS tells you nothing about forward EPS, and therefore one would always avoid Nvidia and yet it is possible the trailing P/E for Nvidia in less than a year will be lower than 25! Which would certainly not make the high end of the list.

SHOP's revenues, although of course forward revenue is always speculative, it seems very probable that it will be at least $1 billion dollars, and probably somewhat higher. But with SHOP I think it is reasonable to say that their forward P/S is much greater than 10, using enterprise value (which of course I also strongly prefer - as this has been essential in the past to find "expensive" great companies that were dirt cheap) is at least 13x. That is a hefty valuation.

SHOP is clearly one of the stocks that has not seen much, if anything, in regard to multiple retraction as has become common with most stocks over the last few months. True, SHOP also continues to grow faster than almost anyone as well (well except Nvidia - like OMG!).

Yes, I know, it does take more work. On an iPad you can keep three screens open at a time and get it done, or multiple screens with multiple windows. But mostly has to be done by hand. Not easy download the data work.

I have an offer with IBD. Being cheap I have avoided paying for IBD.

SHOP is not a company that I think IBD would have uncovered (but I need to look closer to see if they have an unprofitable best stock measure like Duma is great at) but I was astonished that when I picked Nvidia and Arista they were #1 and #2 in the entirety of the stock market for IBD rankings. I think I will put that on my grave stone!

This leads me to believe that inspecting the IBD rankings will greatly narrow down the best investment opportunities - although a company like SHOP or Twilio may take more heavy lifting (but Duma found SHOP, I found Twilio at the IPO - so IBD will clearly not be my only source).

Put it this way, we were discussing Nutanix a year before the Fool recommended Nutanix, I remember Elan, we were discussing that 2 years prior to the Fool recommended it, and then only after the big money was made in the Tysabri drama. Yeah, we do have an awesome track record here on NPI despite being "amateurs" at the task.

I am going to give IBD a try. I believe they have earned it when one correlates what rises to top in their rankings. Another method to reduce the labor necessary to find the best stocks to examine. Which could open up more time for examination of tings on a forward enterprise value basis.

Tinker
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Rather than simple, arbitrary categories, have you considered computing the correlation and regression?
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Tinker,

Following my good fortune to have been on the good side of a short squeeze 2 days in a row with UBNT Thursday and TTD's insane 43% 1-day gain on Friday......I think I am going to start taking an increasing interest in looking at stock's short interest, for possible discontinuities. Tesla is massively shorted, of course, but I really struggle to believe the thesis. There are so many negative marks against it, with a VP of engineering or some such taking a sabbatical as of just the past few days even.......also, working in nuclear power for almost 9.5 years now, I have maintained a healthy skepticism of Elon due to his solar propensity and lack of ever being pro-nuclear on
ther than maybe one or two little comments on it. Solar power is decent in a few niche applications, but California is definitively proving that the returns from solar become very diminishing once a lot has been built. Negative electricity pricing is a massive market failure.

Went on a bit of tangent there, but having done well with BOFI, UBNT, and TTD; I like high short interest for some companies.......but definitely not Tesla, I might short a few shares outright, in part simply to have the experience of going through the mechanics of shorting a stock directly.
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Vol,

I believe what you are doing is FUD investing. Something we use to specialize on NPI. We have not had much need of it lately as the market has been so good, no need to find FUD events.

High short interests usually indicates some sort of Fear, Uncertainty, Doubt, and if you can see through the haze to find that such FUD is largely overdone, you can make a pretty penny. I had a streak one year of multiple 2 or 3 days 40% plus or greater returns. I just saw it coming, it was transparent but the rest of the market just didn't perceive things as fast. It is as if the market will not react en masse until an authorized thought leader talks about it. A lot of herd mentality.

In retrospect said opportunities must have been accompanied by high short interest. I never paid attention to it as I looked at price action, long-term fundamentals, and intuitively sensed the FUD issue like a spring.

Thus, finding a list of high short interest is likely to produce much more systematically such opportunities for you. So it is a good idea.

One thing I found back in these forays is that once these stocks popped 40% or better in a few days (and sometimes better was much better) the long-term fundamentals would fade away at the new valuation and I would mostly sell thereafter. Valuation is implicitly wrapped up with long-term fundamentals. But a stock under FUD attack looks a heck of a lot better at the FUD valuation, then after it springs when the FUD is found to be false.

My experience anyways. So yes, an excellent idea to find such candidates.

Tinker
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Duma,

Could you please post an update on your latest statistics? I may be a slow learner, but I'm trying. Really beginning to see your point here.

Please and thanks.
Mark
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No. of Recommendations: 4
Price/Sales	Symbol
25.46	ZS
22.09	AYX
19.83	OKTA
19.22	SHOP
18.91	MDB
16	TTD
15.53	ILMN
15	ADBE
14.74	TWLO
14.25	NVDA
11.44	PVTL
10.98	SQ
9.11	NTNX
5.88	IQ
4.71	PSTG

Thoughts on MDB at a lofty 18.91?
I was surprised to see NVDA and ADBE so high compared to others.

Trying to learn from you.

Mark
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And Tinker, ZS at 25 doesn't bother you? Again, I am new.... trying to correlate Duma's stats which make sense to the collective momentum of the board... which also makes sense. NVDA/MDB/ZS 14/19/25 respectively.

Currently makes IQ look more attractive.

M
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M, look at forward enterprise price to sale. Also look at buy out value of peers. An inferior peer was recently acquired by Symantec for $4.2 billion or so.

Forward enterprise value to sales I figure is 13-14, Still high but not 20+.

But for different thread fundamentals.

MDB has a forward enterprise to sales is 8-9 I calculate.

Nvidia has high price to sales because their profit margins are so high.

Tinker
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I know I'm remedial.... but one has to start somewhere...

Where does one find or how does one calculate Forward Enterprise Value to Sales?

Thanks
Mark
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A good intentioned guess that you hope does not turn out to be wrong ;).

No one can guarantee forward looking revenues, but all great growth stocks are valued based on them. Backward is irrelevant other than ascertaining historical growth.

For MDB, I figure they will at least do $225 million this year, and then 40-50% next year. They have $270 million or so in cash. Whereas consensus has something like 25-35% growth, which if true would be disastrous, and we know that number is not real unless something bad happens to the economy or the company.

Tinker
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Btw/ remember Mulesoft 16x consensus forward revenues, Mobileye 30x consensus forward revenues. In actuality growth would have been greater than consensus, but those are the official numbers. I doubt Salesforce was stupid to spend that much for Mulesoft. Intel certainly was not stupid to buy Mobileye for so much.

How much wold Zs go for? MDB? Nvidia? Certainly more than current valuation absent some bad things happening.

Tinker
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Where does one find or how does one calculate Forward Enterprise Value to Sales?
-----------------------------------------------------------------------------------------

Mark,

Enterprise Value is simply the market cap adjusting for the net cash position (cash minus debt), so is higher for net debt companies (like Tesla) and lower for net cash companies (like NVDA, and especially Apple.....also Arista).

If you hadn't read before, here was my thread on EV/CF as a superior ratio to P/E from back in February.
http://boards.fool.com/evfcf-ratioa-superior-valuation-metri...

-volfan84
long NVDA, AAPL, ANET
short TSLA

That reminds me, I think it was you who posted a list that had P/S and EV/S ratios. It prompted me to think of using the delta or a ratio of those 2 ratios for a valuation adjustment of some sort, but I didn't get around to finishing that thought nor replying.
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Tinker is this right....

MDB Market Cap is $3.22B
Cash is $0.271B
Debt -s $0

Enterprise Value is 3.22-(0.271-0)= $2.949B

Revenue last year was $170M. You're estimating 32% growth this year, which would seem conservative, to give $225M for this year.

EV/S for this year would be 2.949/0.225 = 13.10

Yes?

Mark
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Joel,

I follow you on why EV is better to use than market cap.

Saul's theory seems to highly correlate revenue growth acceleration. He sold SHOP at 60% Revenue Growth because the Revenue Growth Rate was decelerating...

EV/R or EV/(Future Revenue = Revenue * Revenue Growth Rate) also doesn't account for rev growth rate acceleration.


If my previous math was right, and applying to SHOP...

Market Cap is 14.79B
Cash is $1.58B
Debt is 0.
EV would be 13.21B

Revenue was 0.760B
Revenue Growth last quarter was 62%.

So, EV/FR would be 13.21/(0.760*1.62) = 10.72.

That would indicate SHOP isn't over valued.

How would we factor in growth rate acceleration/deceleration? MDB is on an upward trajectory and SHOP supposedly has peaked out.... is growth rate acceleration/deceleration the distinguishing factor???


And again.... teach me please. Trying to catch up.

Mark
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Joel,

Could you also explain your thought process in dividing by FCF versus Revenue/Earnings?

I think I'm trying to get to the same you've already done but piecing it together.

Mark
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Joel,

Could you also explain your thought process in dividing by FCF versus Revenue/Earnings?

I think I'm trying to get to the same you've already done but piecing it together.

Mark


Basically, cash flows are what a company needs to survive and thrive, even moreso than GAAP earnings in some ways. Run out of cash, no way to pay the bills, then possible defaults.

Ideally, a mature company would have great earnings and cash flows and a young, growing company would have a clear path to positive earnings and cash flows (if expanding to "take over the world" like Amazon, needing positive earnings might become less important if the revenue growth rate basically exceeds 30% for a full 20-year period). Only looking at earnings or only looking at cash flows might not give a full story. A company could have much better cash flows than earnings if they have a high amount of stock-based compensation or if they are able to improve their working capital position (accounts receivable and payable).

Consistent and growing earnings and cash flows, with revenue still growing is what you'd ideally like to see with a company. Deferring striving for earnings during expansion mode can make a lot of sense for companies that are still growing their customer base (and thus revenues) at a rapid rate.

In a way perception of TTD is almost skewed negatively by a few folks simply because they've already managed to be profitable (GAAP and non-GAAP basis), but they're also still in essentially "hyper-growth" mode with the past 2 quarters having been at 61% and 54% y-o-y revenue growth if the numbers I'm recalling off the top of my head are correct. The fact that they've already shown they can turn a profit is something that myself and DreamerDad alternately view as a positive.

There may be room for some calculus and throwing a derivative into an equation (or group of equations) to incorporate acceleration or deceleration of revenue growth into an improved valuation metric. I have yet to tack that on and "integrate" it into my EV/CF methodology, but perhaps you'll figure out a decent easy way, since you're a NASA guy :)

-volfan84
I followed up the OP here with a few spreadsheets projecting future hypothetical EV/CF ratios. Here are links to a few of those threads:

PSTG:
http://boards.fool.com/pstg-future-evfcf-projections-3300352...

NVDA:
http://boards.fool.com/self-assignment-nvda-evfcf-projection...
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Prodigal,

I use a simple spreadsheet that pulls the stock price and has the relevant data in it to calculate P/S and EV/S, P/E (shares, cash, debt, TTM Sales, TTM Earnings if profitable, etc...).

I update the relevant numbers quarterly (mostly).

I estimate a forward growth rate for the next year which I usually try to hedge on a bit. Meaning I'll use a conservative growth rate. For instance, I assume 50% growth over the next 12 months for Shopify.

On the SHOP current numbers, I have TTM Sales at $853.6M taking into account the most recent quarter. EV/S 15.4. Since I'm factoring in 50% growth compared to the 62% you show, our EV/S over the next 12 months are very close.

As to the value of the spreadsheet, for me it is pretty priceless. But the primary purpose is to provide first level evaluation of the business which provides a stepping stone to further research. I am indebted to this board in helping with that research.

Hope this was somewhat helpful.


A.J.
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Hi Mark, This cloud index calculates it for you on many of the stocks we follow:


https://www.bvp.com/strategy/cloud-computing/index
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Thanks for all the replies. I'll be processing that data for a while.

More to come.

Mark
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