Transcription
A turbulent week ends with Nvidia, Microsoft, or Amazon having fallen significantly. Even Apple lost 6%. And we had the IPO of Space 6X which, I almost want to say, went unusually well given the valuation levels. The company is up 22% on the day. So well done to all the traders who played this on the upside. We'll see now what that will lead to in the long term. So we'll talk about it quickly. We will also talk about Adobe's earnings which gave the results and despite the fact that they beat all expectations, uh it's not great, great and it's not for nothing that it's falling today. And we will obviously rank some companies because we've had a nice drop for a few weeks, now almost a month and there are potentially opportunities to look for them. So we're going to rank them, do a little tier list of interesting opportunities right now. So to start with SpaceX, it's up +22% at the moment I'm recording the video, almost let's say more than that. I think it will close between 15 and 20% on the day for a company. Okay? Which today is valued at 2000 billion dollars. Elon Musk, I believe he is officially, there it is, the first trillionaire in the world. Okay, I think he's worth, he weighs 900 billion just with uh just with SpaceX if I'm not mistaken. So it's quite impressive. And behind that, we have a company that makes 18 billion in revenue for 2000 billion in market capitalization. To give you an idea, Google a year ago was around uh 1000-2000 billion in market capitalization for 130 billion in net profit, not revenue, net profit. So the valuations are completely ridiculous here. Yes, there is business with space and so on, as you wish, but it's just that there is very, very little margin of safety for investing. So we'll have to be careful about that. You can imagine that I don't have it in the tier list here, but if we put it in the tier list, it would go in the trash at the very bottom because these are excessive valuation levels. Now, I'm not saying it's a bad company, okay? Maybe SpaceX is a very good company with a bright future, but the only thing to say is that today, we are at completely crazy levels to pay, to pay more than 100 times revenue. It makes absolutely no sense, no logic. You should know that the business, even if it doubles next year, so we're at 40 billion, it means we're still paying 50 times revenue if it doubles. And next year, they estimate that it should be around 25 billion in revenue. So we'll have to be careful. Many people, I think, will get trapped. Don't get trapped. Just before moving on to Adobe, a quick point, we opened the doors to Margine for this weekend. So until tomorrow, Sunday, June 14th, 11 p.m. Paris time. The doors are open, you can join by clicking on the link in the description. So you will see during the video, this is the site I will use to analyze stocks. You will see here, this is one of the features we have, the AI reports on earnings. You will see how they are developed compared to everything you can see on the market. It's completely different. It's information you wouldn't get elsewhere that you have here. And you also have all the scoring, everything you will see, all the tools you will see as the video progresses. You will also have everything related to screeners, managing your portfolio, following super investors, charting to compare companies on certain metrics. Uh so all of that is included. You have the link in the description. We are closing, we are opening the doors, sorry, until Sunday, June 14th, 11 p.m. So let's move on to Adobe now. We'll look here. They released results that are not bad at all. They are especially in the midst of a strategic shift. Okay. With, well, let's say the new strategy is a bit freemium, meaning we stop increasing prices on everything. That's what they did. They stopped increasing prices on everything to move to a strategy of, well, we'll pay per token, we'll try to get as many people as possible to use it and charge for small uses each time but potentially make them pay for it. For now, we have a revenue growth rate of 11% over 1 year at constant exchange rates. Which is not bad, it's accelerating a bit, but it should be noted that it includes the acquisition of Semrush. If we remove the acquisition of Semrush, we are around, I think, 10.4% growth, which is a slight slowdown compared to last year. We are above 10%, so it remains correct, but a very, very slight slowdown. In addition to that, margins are slightly down as well due to this strategy. So we'll have to be careful. So that's what they say here. For, the management is aggressively pivoting to a freemium model to capture the explosion of traffic generated by AI. To do this, they are deliberately sacrificing short-term organic growth by postponing planned price increases for Creative Cloud and removing paywalls. At the same time, the company faces significant executive instability with the sudden departure of CFO [grunt] Dan Dum, adding to the ongoing transition of CEO Chatanou Narayen. If the long-term logic of capturing hundreds of millions of active users replicates the historical success of Acrobat Reader, the simultaneous managerial void and the masking of the organic slowdown through the acquisition of Semrush requires increased vigilance. So it's not great, great, even though they do a lot of share buybacks. There are still 27 billion in authorization they have. Performance obligations remaining, there are 22 billion. So that's an additional 13% over one year, which is not bad at all. Okay. Non-GAAP net income up 18% over one year, which is also not bad at all. But, but, but you just have to be careful about this. Guidance revised upwards between 20.5 and 20.6 billion, which is a good thing. EPS revised upwards between 24.35 and 2445 and total ARR growth for 2026 maintained at 10.2%. This objective now includes the acquisition of Semrush, effectively masking a downward revision of organic ARR expectations due to the freemium shift and the postponement of price increases. So this also needs to be taken into account in all the estimates we've made so far. Nothing was planned with Semrush. Now it's planned with Semrush. So there's a slight slowdown in organic growth and I think that's why the stock has been collapsing for a few days. In 5 days, it has lost -22% in 5 days. Okay? So a big, big, big drop. So we'll have to be careful about that. What we'll also need to observe for the next ones. So we'll look at the management's comments. So we have the current CEO. AI is accelerating customer behavior at an unprecedented speed. The immediate opportunity for Adobe is to accelerate the acquisition of new users and lifetime value. through a freemium offering. Basically, the strategy here is simple: there's a lot of demand, so we're trying to provide as much as possible. We don't care too much about profitability now. We just want as many users as possible to go on our platforms, to get used to using us because they will stay in the future and that way it will allow us to upsell them later, to make money from them later, even if we don't make much money now. It's better to secure them in the ecosystem. That's what will bring us money. That's a bit of the mentality. Uh regarding prices, we have made the decision to postpone the Creative Cloud pricing optimizations previously planned for the second half of the year. So this will be pushed back, perhaps to next year, it wasn't very, very clear. Uh David Wadwani, the demand for these new AI commerce experiences for LLM conversions, finally LLM conversations and intent-based searches. It is therefore preferable to respond to them with frictionless experiences. This change will be at the expense of short-term ARR. And then we have the company's design president. AI is changing the behavior of companies that are increasingly internalizing their marketing capabilities. AI-first solutions for customer experience orchestration have quadrupled year-on-year, which is generally good. Management has kept its promises on AI monetization. Okay. Tripled year-on-year to exceed $500 million. However, the promise from the previous quarter that premium MAUs would start converting to ARR has been modified. They are redoubling their efforts at the top of the funnel, pushing monetization to later. Is this the right strategy or not? Uh it all depends on the confidence we have in Adobe's ability to retain users because there's also a scenario where for now people are going there because, well, there are lots of free, cool things, it's cheap, etc. But as soon as they start asking for money, no one will convert, no one will want it. So we'll have to be careful about that. We'll see how it evolves. But it's a bit of a double-edged sword strategy: either it gets people into the ecosystem and makes it impossible to leave. That means the switching cost will become too high. Or the opposite happens, which is that, well, we're on Adobe as long as it's free. But if we find an equivalent, cheaper solution elsewhere, we'll go for the cheaper one elsewhere, we won't have a problem leaving. For the segments, for large companies, apparently, that should be good. For smaller segments, it might be a bit more complicated. What will also need to be checked for the future is, first of all, who will replace the CEO, who will replace the CFO, how it will be done, when it will be done, if we can get information on the why and how, although it's likely to be complicated, I doubt there will be a huge scandal that breaks out or that the media will manage to tell us why the two of them left. But it stinks, frankly, it's not great, great. Uh the verified commitments will be the appointment of a permanent, high-caliber CEO and CFO, the potential reintroduction of Creative Cloud pricing optimizations. The ARR threshold is organic ARR growth falling below 8%. Firefly ARR stagnating below $400 million by the end of the year and a prolonged delay of more than two quarters in appointing a permanent CEO. So, we'll have to monitor all of that. If we value this, we would have a company, we'll take the current free cash flow. So we have a free cash flow, where is it here, of 10 billion 280 million. If we have a free cash flow growth of only 10% per year with a price to free cash flow of 15, we would make 24% per year. The market literally expects this: 5% growth in free cash flow per share per year and 12 for the same on free cash flow in 5 years. This is what the market expects. The momentum is clearly bad for the company, but the valuations are so, so, so low. So today for Adobe, it's a middle ground. That is to say, either you estimate that if you consider it okay for the management to leave like this, that they will find much better people to relaunch it, and that organic growth will not collapse completely, that margins will slightly increase, and that they will manage to monetize their freemium strategy well. In that case, it's literally a steal. It's really, really cheap. Now, if you consider that, the management leaving like this, both the CFO and the CEO leaving from one quarter to the next without really warning anyone, without a plan to come out, maybe it's because it hides something very bad. In that case, it's a D. Okay? It's between the two. It's up to you to do the work here. I'm leaning more towards D. I'm leaning more towards the trash because that's a lot of managerial changes. Margins are down, even if they're not down a lot. Organic growth is no longer really there. What's hard is that it's so cheap. It's so cheap at these prices. So it will depend on how you answer these questions about the managers. Let's move on to Schneider Electric, a company that is highly appreciated in France and by Europeans. We see a score of 57%. Why? We have a growth that is a bit weak. We have predicted an acceleration of growth, for by 2030, but historically 5% is not bad, it's just a bit weak. Uh, personally, my goal is to do better than the indices, I want statistics that are better than the indices. Now, 5% is too little. Generally, an S&P 500, for example, will grow around 5 to 6 to 8% every year. And so this is weaker. To say yes, but compared to the CAC 40 it's very good. Yes, but doing better than the CAC 40, I want to say everyone doesn't care a bit because it's an index that doesn't do much. So it's better to go, especially now that we are in an international environment where it's very easy to access more serious indices like the S&P 500 or even the MSCI World. We won't compare ourselves to the CAC 40. I find it a bit ridiculous. So at the level of revenue growth, it's a bit weak. At the level of earnings per share growth, it's also a bit weak. I aim for at least 10 to 12% per year. And here, we are barely at 10. We are struggling to reach 10. So it will be too weak for me. Free cash flow will be more or less the same. Even if it should be noted that analysts estimate there will be a re-acceleration. Now, how true that is, analysts are often wrong about that. So, be careful. Regarding debt, the company is well managed, there is no real debt. Okay, the debt to EBITDA is 1.63, so that's good. Interest coverage at 12, so there will be no real debt problem for the company. Margins are increasing, that's a good sign. It's above 15%. So that's also a very good sign. Uh profitability will be too low. Here we are below 15%, so for me it won't work, being below 15%. ROCE is increasing and we have passed above 16%. ROE we have also passed above 15%. So it's a bit mixed. It's between the two, actually. It's a bit between the two. Here we are really at the limit. For me, for Schneider, we are at the limit of the limit, we don't have too much capex compared to operating cash flow, so that's okay. So it's not terrible, terrible. Now, where it will be a problem for me is the valuation. You see, we are paying for a company that is at the limit of the limit, 35 times earnings. Now, we can have an acceleration of growth if we want, but it's paid for at 35 times earnings. The median is 19 times earnings. Okay? So it's paid twice as much as it has been historically. Now, I'm willing to accept an acceleration of growth, but even if we hit 18% per year for 5 years, we have to hit it for 5 years on average, it seems really too expensive. Let's value that, huh. Uh, let's take the net income, we have it right here. We are at 4 billion 163 million. If we have 15% growth in net income per share and we aim for a price to net income of 25, that makes 8%. If we aim for 30, we are super generous, we aim for 30, even if the historical median is 19, so 25, I find that very generous, we would be at 12%. So there is no margin of safety here. There is really no margin of safety. 15 can be, let's say the analysts are more or less right. We take a small margin of safety, we put ourselves at 15. 30, I find that really exaggerated. Uh, really exaggerated. Today, a company like, for example, MTA, is paid 20-22 times earnings for growth of almost 25-30%. Here, we are at 15% growth. It leaves too little margin of safety. It's not a very bad company in itself, but it's not good enough. I'm going to put it in C. Let's move on to Safran. Let's see what it looks like. Safran is also well-liked, I believe, if I'm not mistaken, the French government is a shareholder of Safran, which is why I won't like it too much. We [grunt] have a score of 63, which is not bad. Growth is re-accelerating here, which is not bad at all. Okay. Especially in the last five years, we expect it to be around 9%. So that already appeals to me a little, a little better compared to Schneider. So the score is necessarily better. Earnings per share, not bad at all either. Growth of 16% per year. Free cash flow 9% per year. Uh a bit weak, but earnings per share are okay. Debt, it's a company that is not indebted, so that's very good. Margins have decreased, they have been halved. Not great, but 13% is too little for me. It's much, much too little. Profitability is declining and so on. It's a bit weak. Why is it so declining? Let's look at the margins first. It's still quite good in terms of decline. I struggle with all these declining things. So I'm not a big fan of that part. Hop, let's look at the ROCE. We take it relative to free cash flow, which is not bad. It's growing overall, so that's good, but it's just that it's [grunt] going up and down a bit too much, so it will be at the limit. It will be at the limit for me. If we look at it, it's trading at 17 times earnings today. It's trading at 28 times free cash flow. Historically, how many times has it traded? Historically, it has traded at 17 times earnings. So, we are more or less at the historical median today, which is a good thing. This means it wouldn't necessarily be too expensive compared to the company's history. We have 7 billion in net income. It has historically traded at 17 times, and we would need 14% annual growth. If we wanted to achieve 13% per year with the company, we would need 14% annual growth. That's not at all what is planned. That's not at all what is planned. Uh, this seems a bit dangerous to me. It would mean a 14% growth seems unlikely. Maybe 10% will be more possible. I find that again, we are in a scenario that leaves not enough margin of safety. I'll put this here. I won't put it in C, it's not necessarily trash. I can understand someone going for it, especially with PEA constraints and so on. But personally, I wouldn't touch it because tax advantage, no tax advantage, it's not, I find it useless and stupid to sacrifice the quality of a company just to benefit from a 13% tax reduction. So it's not very useful. Uh, LVMH, let's see what it looks like. LVMH. I believe it has recently picked up a bit of steam, on one day. We have, hop, there it is, a day at +3%. It's been a while, over 5 days +7%, so that's not bad at all. The score here is not great, but if we adjust with free cash flow, it becomes much better. We see that we have revenue growth of more or less 8% per year, 9% over the last 10 years. Here, it's slowing down significantly. The idea is to see, okay, will it re-accelerate? Earnings per share, 11-12% per year, over the last 10 years, it has really taken a hit recently. And free cash flow, on the other hand, remains a bit more stable, even maintaining 12% last year, so not too bad. Debt is also, it's generally well managed here. Uh, margins, we will have operating margins of 21%, which is generally good. And ROCE above 15%, even if it wasn't great 5 years ago, it's going up again. ROIC is not great, but if we consider it relative to free cash flow, you'll see it's not bad. There's not much capex, so that's a good thing. We have a WACC of 7% okay, cost of capital at 7% to achieve a ROCE which is currently, relative to free cash flow, at 13%. So we are at the limit, we are really at the limit here with LVMH. So that's what's unfortunate with these French companies, we are always more or less at the limit. And I don't like that too much for my portfolio. So it's not necessarily a company I would put in my portfolio. But today, what do we have? It's trading at a price to free cash flow of 16, so we pay 16 times earnings for a luxury brand that is internationally well-known. The median is 23-24, and then we have a free cash flow which is, let's look at the free cash flow. We have a free cash flow of 15 billion. 15 billion to get to 20. We would need a growth of only 8% per year in free cash flow per share to make 13% per year. So the current price of €510 gives us a fair value around €520. We're not bad. We're not bad in terms of valuation here. Now, I find it too much on the edge. So I won't put it in C because the valuation is more interesting, I'll put it in B, but I still think there's much better, much better to be done. Let's move on to Luxottica, a company that is also very appreciated, which I don't quite understand. I think it's more the hype and since it's on the front page of all the media, since everyone is talking about it, well, naturally people are rushing into it. It's false hype. It's the classic as we're used to. Especially since it had risen well some time ago and now it has fallen well. Since the beginning of the year, it has lost 10%, over a year it has lost 25%. So a nice drop from historical highs, but we have a score that is miserable, almost. Overall growth is okay, revenue growth, even if it's slowing down sharply. Earnings per share growth is not great at all, but terrible, I'd say. Free cash flow growth, on the other hand, is not too bad. 10 years ago, it was very good. 5 years ago, it wasn't good at all, and now it's re-accelerating not too badly. On debt, we are on a well-indebted company, so that's okay. We are not at debt levels that are too high. We are at two, it's correct. Okay, it's not optimal, but it's correct. It's not penalizing, let's say. Margins, we have declining free cash flow margins, so not great. Operating margins are decreasing, so that's not good at all. Profitability is terrible. Okay, in addition to declining, it's really bad. So we really have management that are not good capital allocators. They allocate capital poorly. So, yes, there is potentially a competitive advantage for the company, but they don't know what to do with this money. And when a company doesn't know how to reinvest this money properly, well, it won't lead to anything great here. So the stock price has been mainly saved, I think, by the partnership with MTA, the hype it created, ultimately not being something that has given monumental growth to the company. We have acceptable capex. Okay. And on top of that, how many times will we pay for this? We pay 36 times earnings. And free cash flow, it's paid 22 times free cash flow. So 22 times free cash flow for a potential growth of around 10% per year. Let's see what it's worth today. Fundamentally, I don't think it's worth it. 3 billion 7, let's put 3 billion 8. Hop. Okay. So a free cash flow per share growing 15% per year. And we will aim for around 20 here. What is the median? The median price to free cash flow is 25, so let's be nice and give it a 25 here as the median. This means it would potentially be undervalued. But given that one of my most important criteria, let's say, is ROIC, and it's too low, even with adjustments and all that, we always find something that's not great, even if we look, we'll check them just in case, but if we take the price, the ROCE based on free cash flow, it's still not great. It's really not good. I'm putting it in the trash here. It's a company I won't touch. Regardless of the price, I won't touch it. Now, of course, with a P/E or P/CF of 5, maybe there's a value bet to be made, but here I think there are much better opportunities on the market right now than to go for Essilor at these prices. Let's move on to Twilio, which I've been asked about a lot, I've been solicited a lot about this company, given the drop they've had since the beginning of the year, they are down -39% since the beginning of the year, over 1 year -65%, over 3 years they are even down, whereas it's a company that was generally doing very, very well. So let's value that afterwards. Growth, very, very good growth above 15%. Net income per share also above 15%, that's very good. Free cash flow, very, very good, almost above 20%. It's a company that is very little indebted, so that's good. Operating margins are generally stable and good. Free cash flow margins are growing and very, very good too. Profitability, slight growth compared to 5 years ago, but we are at the high end, we are more or less well around 18% ROCE, 15% ROIC. We have a lot of SBC, stock-based compensation, that's huge, especially for a company that isn't that innovative. If it were a much more innovative company that needed to attract top talent to survive, etc., here we have a company that is very little innovative, which also doesn't need that much talent to operate, and which is also in full restructuring, saying they are laying off people. So that will potentially reduce stock-based compensation. However, the problem is that we are on a company that is, it's abusive, 30% for a company of this type is abusive. It's not like MTA, it's not Google, it's not Microsoft, it's not Amazon where there is constant innovation, where you really need the biggest brains, the best engineers in the world to move forward. That's not the case for this company. So the 30% is a bit, it's quite abusive. Here, it's trading today at a price to free cash flow of 9, of 9. And if we adjust for SBC, I think it should be trading around 13-14. So it's not bad. It's not bad. The median is 33 at the maximum. The median is 18. Let's take a median of 18. What is the current free cash flow? The current free cash flow for the company is 7.7 billion. 7.7 billion. Yes. You see, here we can put it at 15. Here, even if it drops to 5, we are still, we are clearly undervalued. We are on a company that is clearly undervalued. There is no real debate here. Uh, I will put it now, it will depend on one thing, I won't put it in S. Why? Because for me, it's not a company that convinces me. It's a company that needs acquisitions to grow. So far, it has grown mainly through acquisitions. And on top of that, they have some pretty bad acquisitions that come along regularly where it dilutes, it doesn't dilute shareholders, but it dilutes capital, it dilutes capital allocation. So not great, great. So I'm going to put it, I'm putting it between, I'm putting it in A because it's really, really undervalued, but I'm not putting it in S because I find the acquisitions too questionable for me to be interested. Let's move on to Meta. Meta, which is starting to be at increasingly interesting prices, which has fallen back below, which has fallen back below $600. We are currently at, let's see what's happening today. It's continuing to lose another 2%, we are at $570. Uh, it's becoming really not expensive at all, Meta. Uh, we have generally good growth, over 20% per year, and it's even re-accelerating and is projected at almost 30% per year for 2026. Earnings per share above 10% per year. Now, there was a drop because there were many events and adjustments to be made. There were adjustments related to taxes they paid and so on. And here, for free cash flow, well, they were spending a lot on capex. So that significantly reduced it. Now, the entire investment thesis on Meta, Amazon, Google, etc., is that once the capex is spent, it will reduce, and there won't always be a need to spend so much capex, and it will be ultra profitable. So we'll see how profitable it will be. Debt is generally good, there is none. Margins are quite stable, they are slightly down compared to 10 years ago, but they remain quite stable, especially with all the investments they are making. Free cash flow margins are also down significantly because free cash flow has taken a big hit with all the investments. ROCE remains very good, and here we see capex rising to 60% of operating cash flow. So it's starting to get high. We'll see how far it can go. Here, for example, a lot of SBC as well. Today, it's trading at 11 times operating cash flow. Amazon, Microsoft, I think we are at 15-16 times operating cash flow. So it's trading much cheaper than the others. The median is 15 over 30 years, the median is 20. So we are on a company today that would have a fair value around 700. If we, if we estimate 13 price to operating.
cash flow. So we are very conservative here, 15% per year growth in operating earnings. Well, that gives us a fair value of almost $700. That means a P/E of 17. So Meta, I really want to put it in S. Now, again, it's up to you to decide if you think the P/E will continue or not. Another point also, there are rumors that it risks diluting shareholders. Google again diluting shareholders. Why not? They did a lot of share buybacks when they were around $2 trillion in valuation. Now that they are at $4 trillion in valuation with a P/E of 30 or 35. Especially since there are adjustments to be made to this P/E. So in reality, the P/E is rather around 40-45. Why not? It's not that bad. It's rather smart to buy back its shares cheaply to sell them higher and dilute shareholders at a higher price. Google doing that, I don't find it too stupid. Now, if they do it at the valuation levels they are currently at. There, I find that it hurts shareholders much more and I find that it's much less nice. Uh, there, for that matter, at 20 times earnings, I find it more uh Ah, it's less, it's less interesting. So if they do this share dilution, I would put it more in A or B. If they don't do it, I put it in S. I think S will be good.
We move on to S&P Global, it's SPGI the ticker S&P Global which since the beginning of the year has done -2% for us, so more or less standing still. For now, we are trading around $400. We have growth that is quite correct, even if it is slowing down now because they are doing fewer acquisitions and on top of that they are divesting from their acquisitions. On the other hand, earnings per share are growing nicely. This has been cyclical again because of the acquisitions they are still making, and I have a problem with these repeated acquisitions. The debt is very well managed. OK, the margins are generally good. They are slightly down, but that's normal, it's with the acquisitions and all that, it's more or less normal. ROCE down, ROIC down, same, it's still because of these acquisitions made at prices that are not necessarily the best and on top of that, they are not integrated in a very interesting way each time. So that's what causes big drops each time. If you look at ROCE compared to free cash flow, it's a bit better, but again, there are big drops that come, so that's a problem for me. Now, we have very little capex, very little stock-based compensation. So that's something I appreciate, that I appreciate. Sorry. If we are to value this, we will focus on free cash flow. Free cash flow is currently $5.5 billion. Oops. There. So we would need growth in free cash flow, for example, of 12.5% per year. We'll put it at 13 and a price to free cash flow of 23 to make 13% per year. Is that feasible? Yes, I think it's feasible. Does it leave a lot of margin of safety? It does. It leaves a lot. I wouldn't say a lot, but it leaves some, it doesn't seem too bad at all. The median is at 22-23, so we are more or less at the median today. Uh, so it seems quite, quite reasonable. Achieving 13% annual growth in free cash flow per share. It's possible. OK, it's been a while since they've achieved it, but it's possible because they've divested from certain acquisitions. Now, of course, if there's a macroeconomic headwind, it will be more complicated, but it seems feasible. Now, I much prefer MSCI, even if MSCI doesn't have the rating segment, but I prefer MSCI. But uh, these are correct valuation levels. I'll put it in A. S&P Global, I'll put it in A. It's not the deal of the century to buy this now, but it's a perfectly correct valuation. But again, I prefer, I prefer MSCI. So I'll put it in B because I would put MSCI in A, let's say. So that's how I'll classify it.
We move on to Visa. Visa which uh gave super good results uh which since the beginning of the year has done nothing much, +4% so it's calm. -12% over 1 year. You see we have almost one of the best possible margin ratings. More than 11% per year growth in earnings per, well, revenue. It's stable. 17% per year growth in earnings per share. 17% per year growth in free cash flow. So it's very stable. There are no real surprises every time we get the company's earnings. Very little debt, very good margins, also stable, very good profitability and moreover, increasing, little capex, little stock-based compensation. Today, it's trading at a P/E of 27, OK, a price to free cash flow of 29. So it's not the lowest P/E level in history, but these are correct P/E levels. The median is 27, we are more or less at the median. I find that today Mastercard has a much better deal than Visa, but Visa remains not bad. So if we were to value this, we have a net profit of $22 billion. OK. We would need 13% per year growth in net earnings per share to reach a price-to-earnings ratio of 27. So we are at 12% per year. It's, it's acceptable. OK, we're not getting the best deal here, but it's acceptable. So I'll put it in A. For the quality of the company, it goes in A. Today, I find that Mastercard is a much better deal. I find that Mastercard, I prefer Mastercard now. Visa is not a bad company. It's not because I prefer Mastercard that Visa is suddenly a bad company. Everything isn't necessarily black and white, etc. But here, I find that Mastercard offers me a better, a better deal than Visa.
We move on to Adyen. Adyen is asking for more and more. OK, we see that the score is very good, 76%. Very, very good revenue growth, very good earnings per share growth, even if it's slowing down significantly and management repeatedly says they are slowing down. They are having trouble getting out of it recently. Moreover, free cash flow, well, not great at all. Debt, the company is not indebted, so that's very good. Margins are very good but they have been massacred. Free cash flow margin also down significantly. Profitability is a bit low, especially this year. There's a big, big drop. We'll see if it's something more or less normal, but I don't really like the way management handles all this. I have a bit of trouble with management. Now, they are honest, for that matter. They are honest, so that's very good, but I have the impression that they are a bit too optimistic about certain things and that they have trouble seeing certain points. Now, it shows, but look, it's going down over the last 20 years. It started well, then went down. It's a problem for me, it's going down. We'll see what happens in the future, but for me, this is the little red flag for the company. Capex and stock-based compensation are good. If we are to value this. We will value it with net earnings. We are at $1 billion in net earnings and in free cash flow, we have how much? OK, we have negative free cash flow at the moment. We'll focus on $1 billion in net earnings. We would need 15% annual growth and earnings per share and a price-to-earnings ratio of 25 to have something. Now, I think there must be adjustments to be made to the free cash flow because it seems abnormally low this year. Yes. And again, it's been a bit of a descent into hell here. So they must have made a lot of investments and all that. Uh, so the 15% growth in net earnings per share. It's largely feasible, I agree. Price to earnings of 25 is also feasible. If it grows by 15%, a price to earnings ratio of 25, it could be good. That means they wouldn't change their price to earnings ratio. Uh, I don't think it's that good a deal. I think it's an acceptable deal, but not that good. I'll put it in, I'll leave it in B. I don't think it's, I don't know why everyone is talking about it being the deal of the century and so on, but I don't think it's, I'm not a big fan. Especially the business sector, payment terminals and all that. It's true, there's a big friction at the exit. OK. Uh, switching costs are high, but the market is so segmented, there's so much competition in this market, the barrier to entry is so low, and on top of that, there's this price war. And they are, they are rather in the app. Now, we won't want to engage in this price war. But yeah, I'm not convinced. I haven't been convinced by what I've seen of the company, by what I've read. I think there are better deals potentially in geographical areas that can have more growth and are more interesting. I invite you to look a bit at what's happening with which, in my opinion, if we want to get into this, would potentially be a better deal. But not a fan, not a fan of this sector overall. I don't have this in my portfolio at all, so I'm not a big fan.
We move on to Charter Communications. Here, I've been asked about it several times, it's not the first time we've seen it. Well, the margin score is a bit pathetic. Growth is too low and on top of that, it's slowing down. It's expected to slow down in the future. Net earnings per share are also too light and also slowing down. Free cash flow, there wasn't any before, and now it's OK. Debt is high. Debt is really high. More than four times earnings, almost four times EBITDA, close to 5. That's too much. That's a red flag for me. Margins are growing, that's not bad for operating margins. Profitability, well, it's mediocre, it's growing so that's not bad but it remains not great. Phew! A lot of capex, and moreover, growing, that goes in the trash. No need to even value it. It goes in the trash, and it would be very, very funny if, on top of that, it traded at 30 or 40 times earnings. That would be very, very funny. And it trades, no, it trades at three times earnings, so at least it's not expensive. I think this is potentially a significant value bet to try. It's not the value bet I would try because I don't think the company is of good enough quality. If there were a value bet to try, I would prefer to try Adobe here rather than trying the value bet on Charter Communications. Now, it's up to you. It's certainly not expensive. The market expects absolutely nothing by putting such a low price-to-earnings ratio for the company. But I won't, I won't touch it. I won't touch that.
We move on to Broadcom. Hop hop hop Broadcom. So just before moving on to Broadcom, remember, link in the description, you can use, well, join the tool I'm presenting, that I've been using since the beginning of the video, which is called Margine. You'll find it in the description. Uh, well, everything is open until Sunday, June 14th, 11 PM. So Broadcom, a score of 70%, that's not bad. It has very good growth, and moreover, it's accelerating. They had a good quarter, actually, it's just that the market punished them because their guidance was not revised upwards. So too bad, uh, and especially because at these valuation levels, the market doesn't forgive you. So -14% in one week. So very good for growth. Debt is also good. Margins are growing, that's very good. Free cash flow margin, slight decrease compared to 5 years ago, but overall it's good. Profitability, OK, growing compared to 5 years ago, back above 15. We'll see if these spikes happen often, a bit randomly, or if it was just here that it wasn't great. We'll look at that. OK. Yes, spikes happen often, a bit up and down. I'm not a big fan. And let's look at free cash flow, if we take ROC compared to free cash flow, there are quite a few spikes often, so that's not great, even if the median remains around 16-17, so that's not bad, but these spikes, I'm not a big fan. Little capex, stock-based compensation is a bit high, but here I can understand it better. There's still a need for brains to manage the competitive advantage and all that, so this one bothers me a little less. We will have a free cash flow today of $32 billion. Free cash flow per share, which also has very good growth of more than 22% per year since 2006. So very, very good. So free cash flow $32.7 billion and net income $29 billion. We will value this with the free cash flow. So we would need growth here today of So I won't go above 30. Here, I won't go above 30, you should know, because above that, I find it too dangerous, it becomes too speculative. But here, the market expects exactly 30% annual growth in free cash flow per share over the next five years. Apparently, analysts estimate the same for earnings per share. Uh, I'm not comfortable with that. I'm not comfortable with that. That means a big, big, real acceleration of free cash flow growth. I'm not saying it's not possible. Attention, I'm not saying it's not possible. It's just that I'm not comfortable. I think there's too much, too much demand for growth, and growth can slow down for x or y reason. We're not immune to an event that comes along and slows down this growth, that changes this a bit. So I'm not comfortable with that. Since I'm not comfortable, I'll put it here in B. I'll put it in B because it remains a very high-quality company that has proven itself, that is good, that has a strong competitive advantage. Now, if you are convinced that it will grow by more than 13% per year, it deserves an A. OK? It deserves an A. I'm not convinced. I think it leaves too little margin of safety, and the basis of investing, especially if you want to outperform the indices, is to have good margins of safety. Here, we don't have enough margin of safety, so I'll prefer to pass on it and put it here in B. So, tell me in the comments what you think of this ranking. What would you have done differently? I'd be very curious to read you. Also tell me in the comments the next companies you'd like to see in these tier lists, which I still enjoy making so much. Don't forget, until Sunday, so tomorrow 11 PM, link in the description, you can join Margine. So it's the tool I use to analyze stocks in all my videos. You have lifetime access. OK? We don't offer subscriptions or anything, it's directly lifetime access to all these features, over 30 years of history, data, etc. You have everything that is written in the by clicking on the link, you can see the full presentation and everything that's inside. So you have until Sunday 11 PM for those who want to join us. If you like this video, remember to give it a thumbs up, subscribe by activating the little bell so you don't miss any future videos, and I'll see you very soon for a new episode.