How To Value Information?

How to value information seems to be one of the most important questions of our time. 

Artificial intelligence, AI is taking the world by storm and data 📈 information is the fuel for the AI models.

Marc Andreeesen proposed to value every software engineer that works for a technology company at 1 million USD. This could be applicable for an AI engineer as well, but the figure could be 1.2 million USD for each artificial intelligence engineer.

Some companies like Tesla can viably be valued on the software engineers, AI engineers, financiers they employ. Since Tesla without the tax credits and other subsidies is inherently unprofitable.

In addition, Alphabet, Google’s owner, Meta Platforms, Facebook’s owner possess treasure chests of users information, which could be even better modelled via AI algorithms and even better monetized.

Each set of eyeballs could be set a price. 350 USD for example, so Meta Platforms’ user base could fetch a 1.150 trillion USD valuation for Meta Platforms. Google, part of Alphabet’s 6.2 billion set of eyeballs could bring in 2.2 trillion USD valuation for Alphabet, not far away from Alphabet’s current market valuation.

Of course, the set of eyeballs could be differently weighed according to engagement.

AI Is Overvalued Short-Term. Undervalued Long-Term

 

AI is overvalued short-term on too optimistic investors and analysts' expectations and undervalued long-Term on AI's disruption potential, according to Wolfteam Ltd.'s projections and estimates.

The forecasts and projections of Wall Street equity research analysts for revenue and growth of the main AI companies, the so called Magnificent 7 Apple, Microsoft, NVIDIA, Alphabet, Amazon, Meta and Tesla are too optimistic both on past performance and future possible revenue and profitability, even with most outlandish forecasts, in Wolfteam Ltd.'s view.

Investors also are playing the inertia more than looking at the possible intrinsic values of the AI companies and the AI transformation potential. In short, investors have too optimistic estimates for AI.

Base Metals Are Undervalued

Base metals like iron, cobalt, copper etc. are undervalued, according to Wolfteam Ltd.'s projections and estimates.

Mainly on electric vehicles production. Electric cars utilize great amount of ferrous, base metals, which could drive base metals prices higher.

In addition, global military encounters also support base metals prices.

Electric vehicles is the most potent emerging demand driver for base metals.

GE Vernova Valuation

 

GE Vernova, the former General Electric's energy businesses is undervalued, according to Wolfteam Ltd.'s projections and estimates.

With 7.26 billion USD in revenue for the first quarter of 2024, growing at 6.42 % with negative profit margin of -1.79 %, GE Vernova's intrinsic value is 91 billion USD compared with GE Vernova's current market capitalization of 48.66 billion USD, in Wolfteam Ltd.'s view.

Here is an excerpt from GE Vernova's first quarter 2024 earnings presentation:

Financial snapshot
1Q’23 -a) 1Q’24 Y/Y-b)
Orders 9.7 9.7 (1)%
Revenue 6.8 7.3 5%*
Adjusted EBITDA* (0.2) 0.2 0.3
Adjusted EBITDA
Margin* (2.7)% 2.6% 470bps
Free cash flow* (0.8) (0.7) 0.2

Dynamics:

Orders: lower Wind & Electrification more than offset
Power strength; services grew, equipment decreased
• Revenue: growth driven by Electrification & Power;
growth across services & equipment
• Adj. EBITDA margin*: expansion from price,
productivity, cost reductions & volume
• FCF*: improved, with positive adj. EBITDA* partially
offset by working capital

Amphenol Corporation Valuation. 1st Quarter 2024 Results

 

Amphenol Corporation, the US producer of electronic and fiber optic connectors and coaxial cables is overvalued.

With 12.55 billion USD revenue, declining at -0.54 % and net profit margin of 15.36 % for 2023, the intrinsic value of Amphenol Corporation is 72 billion USD compared with its market capitalization of 82.56 billion USD.

Here is an excerpt from Amphenol Corporation's first quarter 2024 results:

Amphenol News Release
World Headquarters
358 Hall Avenue
Wallingford, CT 06492
Telephone (203) 265-8900
AMPHENOL REPORTS FIRST QUARTER 2024 RESULTS AND
ANNOUNCES NEW STOCK REPURCHASE PROGRAM
First Quarter 2024 Highlights:
• Sales of $3.26 billion, up 9% in U.S. dollars and 6% organically compared to the first
quarter of 2023
• GAAP Diluted EPS of $0.87, up 23% compared to prior year
• Adjusted Diluted EPS of $0.80, up 16% compared to prior year
• GAAP and Adjusted Operating Margin of 21.0%
• Operating and Free Cash Flow of $599 million and $506 million, respectively
• Announces a new three-year, $2 billion open market stock repurchase program

 

W.W. Grainger Valuation

 

W.W. Grainger, Inc., the industrial supply company is undervalued, according to Wolfteam Ltd.'s projections and estimates.

With 16.48 billion USD in revenue growing at 8.21 % and net profit margin of 11.10 % for 2023, W.W. Grainger's intrinsic value is 72 billion USD, compared with its current market capitalization of 45.36 billion USD.

Here is an excerpt from W.W. Grainger's first quarter 2024 earnings presentation:

Commentary vs. Prior Year

Sales increased 5.1% (reported and daily)
• 5.5% sales growth on a daily, organic constant currency
basis
• Generated growth in both segments
Gross profit margin declined 50 bps
• Slight margin contraction in both segments
Operating margin expanded 80 bps
• Strong SG&A leverage aided by lap of one-time items in
prior year
Diluted EPS of $8.33, up 16.7% versus prior year
($ in millions)

 

Summary Results (Adjusted) 

Q4 2023 Q4 2022
% vs. PY
Fav/(Unfav)
Sales $ 3,997 $ 3,802 5.1%
Daily Sales 63.5 60.3 5.1%
GP 1,563 1,506 3.8%
SG&A 980 983 0.3%
Op Earnings $ 583 $ 523 11.5%
EPS (diluted) $ 8.33 $ 7.14 16.7%
(% of sales)
Q4 2023 Q4 2022
bps vs. PY
Fav/(Unfav)
GP Margin 39.1 % 39.6 % (50)
SG&A 24.5 % 25.8 % 130
Op Margin 14.6 % 13.8 % 80

T-Mobile Valuation

 

T-Mobile, the American wireless network carrier is slightly undervalued, according to Wolfteam Ltd.'s projections and estimates.

With 78.56 billion USD in revenue declining at 1.27 % and net profit margin of 10.59 % for 2023, T-Mobile's intrinsic value is 243 billion USD, compared to T-Mobile's current market capitalization of 206.23 billion USD, in Wolfteam Ltd.'s view.

Recently, T-mobile announced a new dividend distribution.

Here is an excerpt from T-Mobile's first quarter 2024 earnings release:

Industry-Leading Customer Growth Fueled by Best Network and Best Value Combination ⁽¹⁾

• Postpaid net account additions of 218 thousand, best in industry
• Postpaid net customer additions of 1.2 million, best in industry
• Postpaid phone net customer additions of 532 thousand, best in industry and higher share of industry net adds year-over-year
• Postpaid phone churn of 0.86%, matches record low for Q1
• High Speed Internet net customer additions of 405 thousand, best in industry, passing 5 million customers

Translating Industry-Leading Customer Growth Into Industry-Leading Financial Performance

• Service revenues of $16.1 billion grew 4% year-over-year, best in industry growth
• Postpaid service revenues of $12.6 billion grew 6% year-over-year, best in industry growth
• Net income of $2.4 billion grew 22% year-over-year, best in industry growth
• Diluted earnings per share (“EPS”) of $2.00 grew 27% year-over-year, best in industry growth
• Core Adjusted EBITDA⁽²⁾ of $7.6 billion grew 8% year-over-year, best in industry growth
• Net cash provided by operating activities of $5.1 billion grew 25% year-over-year, record high for Q1
• Adjusted Free Cash Flow⁽²⁾ of $3.3 billion grew 39% year-over-year, record high for Q1
• Returned $4.3 billion to stockholders in Q1 2024, including repurchases of $3.6 billion of common stock and its second quarterly dividend payment of $769 million

T-Mobile Strengthens Largest, Fastest and Most Advanced 5G Network with Additional Mid-Band Spectrum

• Nearly 95% of 5G network traffic on mid-band spectrum given the expansive breadth and depth of deployment
• 85% of 5G traffic carried on sites with all three spectrum layers, delivering an incredibly consistent network experience 

 

Meta Platforms Is Undervalued On AI. Long-term

 

Meta Platforms, Facebook's owner is undervalued long-term on AI.

Meta Platforms has gathered tremendous amount of information, which if analyzed and modeled correctly could be monetized handsomely. 

In addition, Meta Platforms recently announced quarterly dividend distributions, which makes it a mature technology company, which is still growing revenue at 27.26 %  year on year for the first quarter of 2024.

Meta Platforms' intrinsic value is 3.2 trillion USD long-term in the next 10-12 years on AI fruition, according to Wolfteam Ltd.'s projections and estimates.

Alphabet Inc, Google's owner is also undervalued on AI. Long-term.

This compares to Meta Platforms' current market capitalization of 1.28 trillion USD.

Here is an excerpt from Meta Platform's first quarter 2024 earnings report:

 

irst Quarter 2024 Financial Highlights

			Three Months Ended March 31,				% Change
In millions, except percentages and per share amounts			2024		2023
Revenue			$               36,455		$               28,645		27 %
Costs and expenses			22,637		21,418		6 %
Income from operations			$               13,818		$                 7,227		91 %
Operating margin			38 %		25 %
Provision for income taxes			$                 1,814		$                 1,598		14 %
Effective tax rate			13 %		22 %
Net income			$               12,369		$                 5,709		117 %
Diluted earnings per share (EPS)			$                   4.71		$                   2.20		114 %

 

First Quarter 2024 Operational and Other Financial Highlights

• Family daily active people (DAP) – DAP was 3.24 billion on average for March 2024, an increase of 7% year-over-year.
• Ad impressions – Ad impressions delivered across our Family of Apps increased by 20% year-over-year.
• Average price per ad – Average price per ad increased by 6% year-over-year.
• Revenue – Total revenue and revenue on a constant currency basis were $36.46 billion and $36.35 billion, respectively, both of which increased by 27% year-over-year.
• Costs and expenses – Total costs and expenses were $22.64 billion, an increase of 6% year-over-year.
• Capital expenditures – Capital expenditures, including principal payments on finance leases, were $6.72 billion.
• Capital return program – Share repurchases were $14.64 billion of our Class A common stock and dividends payments were $1.27 billion.
• Cash, cash equivalents, and marketable securities – Cash, cash equivalents, and marketable securities were $58.12 billion as of March 31, 2024. Free cash flow was $12.53 billion.
• Headcount – Headcount was 69,329 as of March 31, 2024, a decrease of 10% year-over-year

Gartner Valuation

Gartner Inc, the American technology research and consulting firm is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Gartner Inc with 5.91 billion USD revenue, growing at 7.87 % and net profit margin of 14.94 % for the 2023 calendar year has an intrinsic value of 43 billion USD, compared with Gartner's current market capitalization of 33.55 billion USD. Gartner's revenue growth is very fast and it supports a higher market capitalization than currently. In addition, Garner Inc is very profitable.

Here is an excerpt from Gartner's first quarter 2024 earnings:

Gartner Reports First Quarter 2024 Financial Results

Contract Value $4.9 billion, +6.9% YoY FX Neutral
FIRST QUARTER 2024 HIGHLIGHTS

• Revenues: $1.5 billion, +4.5% as reported; +4.6% FX neutral.
• Net income: $211 million, -28.8% as reported; adjusted EBITDA: $382 million, +0.8% as reported, +1.7%
FX neutral.
• Diluted EPS: $2.67, -27.4%; adjusted EPS: $2.93, +1.7%.
• Operating cash flow: $189 million, +14.7%; free cash flow: $166 million, +15.8%.
• Repurchased 0.5 million common shares for $225 million.

Illinois Tools Works Valuation

 

Illinois Tools Works, Inc, the Illinois based manufacturing company is undervalued, according to Wolfteam Ltd.'s projections and estimates.

With 16.11 billion USD in revenue, growing at 1.10 % with net profit margin of 18.36 % for the calendar 2023, Illionois Tool Works' intrinsic value is 89 billion USD compared with Illinois Tool Works' current market capitalization of 69.86 billion USD, in Wolfteam Ltd.'s view.

This is excerpt from Illinois Tool Works' first quarter 2024 earnings statement:

ITW Reports First Quarter 2024 Results
 Revenue of $4.0 billion, organic growth declined (0.6)% as expected
 Operating income of $1.13 billion, an increase of 16% includes $117 million benefit from a one-time LIFO
accounting change (“item”); ex-item, operating income was $1.01 billion, an increase of 4%
 Operating margin of 28.4%, an increase of 420 bps; 25.4% ex-item, an increase of 120 bps as enterprise
initiatives contributed 140 bps
 GAAP EPS of $2.73, an increase of 17%; EPS of $2.44 ex-item, an increase of 5%
 Reaffirming full-year organic growth guidance of 1 to 3% and raising full-year GAAP EPS guidance by
$0.30 to a range of $10.30 to $10.70 per share

ConocoPhilips Valuation

ConocoPhilips is undervalued according to Wolfteam Ltd.'s projections and estimates.

With 57.86 billion USD revenue declining with 28.19 %, net profit margin of 18.94 %, ConocoPhilips' intrinsic worth is 182 billion USD, compared to ConocoPhilips' market capitalization of 130.7 billion USD, in Wolfteam Ltd.'s view.

Here is an excerpt from ConocoPhilips' first quarter 2024 financial report.

 HOUSTON-May 2, 2024--ConocoPhillips (NYSE: COP) today reported first-quarter 2024 earnings of $2.6 billion,
or $2.15 per share, compared with first-quarter 2023 earnings of $2.9 billion, or $2.38 per share. Excluding
special items, first-quarter 2024 adjusted earnings were $2.4 billion, or $2.03 per share, compared with first-
quarter 2023 adjusted earnings of $2.9 billion, or $2.38 per share. Special items for the current quarter
consisted of a benefit related to an investment tax incentive and a gain on an asset sale.

Newmont Corporation Valuation

 

Newmont Corporation, the American gold mining company is undervalued, according to Wolfteam Ltd.'s projections and estimates.

With 11.81 billion USD in revenue declining with 0.86 % and negative net profit margin of - 21.11 % for the calendar 2023, Newmont Corporation's intrinsic value is 55 billion USD, compared with Newmont's market capitalization of 46.54 billion USD, in Wolfteam Ltd.'s view.

Here is an excerpt from Newmont Mining 1st quarter 2024 results:

 

Q1 2024 Results¹

• Delivered $288 million in dividends to shareholders; declared a dividend of $0.25 per share of common stock for the first quarter of 2024²
• Announced sale of the Lundin Gold stream credit facility and offtake agreement ("Lundin Gold Financing Facilities") for $330 million, further monetizing Newmont’s non-core assets while maintaining its equity interest in Lundin Gold
• Produced 1.7 million attributable gold ounces and 489 thousand gold equivalent ounces (GEOs)³ from copper, silver, lead and zinc; primarily driven by production of 1.4 million gold ounces from Newmont's Tier 1 Portfolio⁴
• Reported gold Costs Applicable to Sales (CAS) per ounce of $1,057 and gold All-In Sustaining Costs (AISC) per ounce of $1,439; Newmont's Tier 1 Portfolio reported CAS of $1,000 per ounce and AISC of $1,378 per ounce⁵
• Generated $776 million of cash from operating activities, net of working capital changes of $(666) million; reported $(74) million in Free Cash Flow net of working capital changes and $850 million of capital reinvestment to sustain current operations and advance high-return projects; excluding the stamp duty payment in connection with the Newcrest transaction, Newmont generated Free Cash Flow of $217 million⁵
• Reported Net Income of $179 million, Adjusted Net Income (ANI) of $0.55 per share and Adjusted EBITDA of $1.7 billion for the quarter⁵
• Delivered $105 million in synergies to date from the Newcrest acquisition; on track to realize $500 million in annual synergies by the end of 2025⁶
• Firmly on track to deliver 2024 guidance for production, costs and capital spend; full-year production expected to be second-half weighted as previously indicated⁷
• Classified six non-core assets and one project as held for sale, resulting in a non-cash impairment of $485 million
• Refinanced approximately $2 billion of debt acquired from the Newcrest acquisition; targeting a $1 billion debt reduction
• Published 20^th Annual Sustainability Report and 3^rd Annual Taxes and Royalties Contribution Report, providing a transparent review of Newmont's ESG performance, tax strategy and economic contributions 

Juniper Networks Valuation

 

Juniper Networks, Inc, the US producer of switches, routers, networking equipment is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Juniper Networks' intrinsic value is 25 billion USD, compared with Juniper Networks' current market capitalization of 11.55 billion USD.

With revenue of 5.56 billion USD growing at 4.97 %, net profit margin of 5.57 % for 2023 Juniper Networks in undervalued in Wolfteam Ltd.'s view.

 Here is Juniper Networks's fourth quarter 2023 results excerpt: 

 

 

AI Is A Big Bubble

 

AI is a big bubble, according to Wolfteam Ltd.'s projections and estimates. Juts take a look at a chart of NVIDIA, the poster stock of the AI boom. It is basically parabolic.

The stock prices of the magnificent 7 AI stocks Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA, Tesla, outside Tesla, have been rising almost constantly.

AI expectations have gotten ahead of themselves.

Crypto Stocks Are Undervalued

 

Cryptocurrencies stocks as Coinbase, Robinhood Markets, Microstrategy, Block, etc. are undervalued, according to Wolfteam Ltd.'s projections and estimates.

Bitcoin's price could reach 100 000 USD in 2024, dragging higher Ethereum, Ripple, Monero etc. cryptocurrencies, in Wolfteam Ltd.'s view, along with Crypto stocks.

GameStop Meme Stocks Mania

 

The GameStop mania, which came alive  again 2 weeks ago is set to continue, in Wolfteam Ltd.'s view.

The stocks of GameStop, AMC and BlackBerry stand to gain a lot from speculative mania driven by retail investors, according to Wolfteam Ltd.'s projections and estimates.

Retail investors will show their strength again and drive up the stocks of  GameStop, AMC and BlackBerry, a classic stocks bubble mania, witnessed so many times in history from the tulips mania to the Dot Com boom.

A classic case of dynamic valuation.

Oil Stocks Are Undervalued

 

Oil majors like Exxon Mobil, Chevron, BP, Shell, Total are undervalued, as well as mid sized oil producers like Occidental Petroleum, Chesapeake, Devon Energy, etc. in Wolfteam Ltd.’s view.

Exxon Mobil’s intrinsic value, for example is 1.1 trillion USDs, according to Wolfteam Ltd.’s projections and estimates.

The world economy is still growing and the price of oil has remain stagnant. ESG solar and wind are not ready yet to replenish significant part of the oil consumption!

Silver Stocks Are Undervalued

 

Silver stocks are undervalued both on industrial demand and safe haven demand on geopolitical conflicts. 

Gold can benefit from military encounters and silver is a leveraged play on gold due to its lower liquidity. 

In addition, industrial demand, mainly from solar panels for silver is increasing and supporting silver's price.

Silver's intrinsic value is 43 USD a troy ounce, in Wolfteam Ltd.'s view.

Facebook Is Undervalued

 

Meta Platforms, Facebook's owner is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Meta's intrinsic worth is 2.2 trillion USD, compared to Meta Platform's current market capitalization of 1.19 trillion USD.

Meta, Facebook's owner has very high revenue of 134.90 billion USD and net profit of 39.10 for 2023 and both Meta's financials and strategy and execution point to a higher intrinsic value for Meta Platforms, Facebook's owner than its current market capitalization. Meta platforms is arguably the most visited site on the planet after Google and Meta, Facebook's owner holds tremendous amount of unlocked value, also via its stored data which AI could unlock further, in Wolfteam Ltd.'s view.