Mayukh Mukherjee

Mayukh Mukherjee
Contributor since: 2013
Company: EquiSearch
Thanks Pepo, I personally don't look at quarterly eps estimates - in fact an eps miss might be an opportunity to pick up stocks for good businesses. Cheers
Thanks for your comment. I agree buying back shares alone can't help. In fact focusing on earnings alone is also a mirage as companies like IBM can manage that as well (see how they've consistently improved net margins and hence earnings, despite a relatively flat top-line).
IBM is a solid long-term stock precisely because of their superb capital allocation process. They tend to get good revenue growth every 3-4 years, followed by flat or declining revenues. They have figured out how to ride out these lean years by managing margins and cashflows. When they do generate solid revenues, they can pay down debt and relax on the margin front. Its a cycle they have ridden before and seem to have perfected.
@bahamas
Its called scenario analysis, you should try it sometimes.
Self promotion on SA, shocking!
Yes thats my model Josh. Check out the site in general, would love to get your feedback.
I've got an article coming out on IBM too, maybe next week.
Cheers
Good use of data. Maybe lulu goes the way of crocks. Its so hard to keep riding the fashion wave. I ran a dcf for this stock and got a value of less than $40...
I should have mentioned, thats a site that I run (its fairly new so you wouldn't have heard of it). Here are a few assumptions why cashflows reduce as you get to steady state
Assumptions (the ones driving lowering of free cashflows):
1. Taxes increase gradually from about 24% at current levels to 40% in year 10. More taxes means less after-tax income to generate free cashflows
2. Reinvestments at IBM are currently negative.. (net capex - change in working cap). This isn't sustainable and the model corrects for that in the long term. Theoretically the long-term reinvestment rate is tied to long-term growth rate and the return on capital. As the reinvestment rate goes up, free cashflows to the firm goes down.
Sounds like academic jargon, I know, but dcf's are a theoretical construct after all
I adjusted some of the numbers and I got upto $160/share as an intrinsic valuation. -- http://bit.ly/12sFfO5
Josh, Im researching IBM too at the moment and my findings tell me that while there is an opportunity in IBM it has more to do with IBM's ability to manage and generate steady cashflows (borrowing if need be) and manage its eps numbers well.
From an intrinsic valuation perspective I get about $120 http://bit.ly/10g5Ut4 -- but I feel that a dcf of free cashflows (in the traditional sense) misses out on how IBM is generating positive returns for an investor
The key as you said is many Chineses companies ...and not all. In fact the over-reaction has created an opportunity to buy and hold a few companies for the long term. Im not saying CYD is the one for sure, but there are opportunities in PRC that didn't exist a few years ago.
Similar sentiment to Doyle above, I don't see how LNKD valuations are justified,- I'm just choosing to stay away..
http://bit.ly/14qQUBp
MSFT is undervalued in my opinion, but then its been so for a long time.. The question is what will be the catalyst that drives investors to take a look at its huge pile of cash, strong margins and tremendous growth opportunities in the enterprise space.
I view MSFT purely as an enterprise play with the consumer segment (search,xbox etc) as an added bonus.
I agree the 3D printing market holds a lot of potential. The opportunities are tremendous, however I can't see a clear winner in this space yet.
DDD seems to be leading right now, but I feel its too expensive even after dropping 30% in 3 months. Despite putting in optimistic revenue estimates of over 40% revenue growth for the next 5 years, I still find the stock being fairly priced at around $30.
The other concern is what are the barriers to entry in this space ? If the market continues to grow astronomically, I'd expect stronger, well capitalized entrants into this space.
So yes, very excited about 3D printing, just don't see a clear long-term investing opportunity in it yet.
I like Red Hat and looking at its performance management has done a great job in running it, but like the author find it's current valuation too high for my taste..
Valuation:
20% annual revenue growth (steady for 5 years then tapering), 16% operating margins and 10% cost of capital gives me around $26.. http://bit.ly/149Jv9x
Comparisons:
Comparing RHT against Oracle,CRM and CA leads me to believe that while this definitely a strong competitor I don't see anything that stands out
http://bit.ly/149Jv9x
disclosure: getquisearch.com is a tool that I've been working on to help me do long-term valuations. still a work in progress
I took a quick glance at SCSC. From a Net current asset value it definitely stands out (I get $17 compared to current price of $29) -- a higher ratio than a lot of other companies out there.
However the major concern for me is the -ve gap between operating cash versus earnings and the fact that op cash has been volatile. Haven't done a deeper dive into why that is but maybe one of these days.
I've liked DELL for the last 3 months now!
I like VMW as a business, but at current levels ( ~ $77) despite a 20% drop I still consider it expensive. Trailing PE (44) , EV/EBITDA (25), PB > 5 are a little too high for my liking.
Add that to the level of dilution in shares over the last 5 years makes me not trust how much further they will go that route.
Still like the business fundamentals though (strong revenues, earnings, operating cash, roe, margins) just not willing to buy at this price.
Thanks for the writeup. Do you have any thoughts on the rather high receivables as a % of revenue for GE? Its almost twice revenues in any given quarter and so much higher than any large ( > $1bn in revenues) companies.
Thanks for your comments. My take is that BBY has fallen so much out of favor that it looks really good right now. If you believe in the brand and that they will find the right mix of online/offline presence its a good time to buy.
Thanks for the comments. I did not call out specific segments of their business as I put my assumptions in the dcf analysis. We are in agreement that the stock has tremendous upside.
My only concern is that its an all or nothing strategy with Lumia and Windows 8. And I when I mentioned free-fall I specifically was talking about handset sales. They are down double digits in every quarter.
Cheers