These are good companies but they are far away from being undervalued. How much years Adyen need to grow in the current pace to reach P/E ratio of 10? Assuming no competition and pressure on margins
Hi Roman, good question! Why do you assume Adyen will reach a P/E of 10?
We agree that a lot of future growth is already priced in. However, when you take a long-term view (10+ years), and project Adyen to grow revenues by 15-20% a year and EPS even faster, even this multiple may be justified.
Thanks for the reply. You're right—if Adyen can sustain 15–20% annual growth in revenues and even faster EPS growth for 10+ years, the current valuation might make sense. But that’s a big “if.”
All companies, even great ones, eventually hit a point where growth slows or reverses. No business grows in a straight line forever—competition, market saturation, and margin pressures always kick in.
That’s why I try to evaluate companies not just based on growth assumptions, but also on what they’re worth without growth—looking at normalized earnings, free cash flow, and how resilient the business is in a low- or no-growth scenario. It helps avoid overpaying when optimism is already priced in.
Very interesting selection! Did not know Nedap! I also like Knorr Bremse in Europe in the undervalued camp which has a nice self help story and defensive positioning given the context!
They mostly do brakes for trains and trucks (critical systems) and have a lot of aftermarket sales giving them this defensive aspect. They used to be one of the highest quality cap goods with very high margins when they IPOed in 2018, then had some issues and are now back in shape with increased focus from management on the core business. I put a deep dive on the company if you are interested!
These are good companies but they are far away from being undervalued. How much years Adyen need to grow in the current pace to reach P/E ratio of 10? Assuming no competition and pressure on margins
Hi Roman, good question! Why do you assume Adyen will reach a P/E of 10?
We agree that a lot of future growth is already priced in. However, when you take a long-term view (10+ years), and project Adyen to grow revenues by 15-20% a year and EPS even faster, even this multiple may be justified.
Thanks for the reply. You're right—if Adyen can sustain 15–20% annual growth in revenues and even faster EPS growth for 10+ years, the current valuation might make sense. But that’s a big “if.”
All companies, even great ones, eventually hit a point where growth slows or reverses. No business grows in a straight line forever—competition, market saturation, and margin pressures always kick in.
That’s why I try to evaluate companies not just based on growth assumptions, but also on what they’re worth without growth—looking at normalized earnings, free cash flow, and how resilient the business is in a low- or no-growth scenario. It helps avoid overpaying when optimism is already priced in.
And if that works for you, great! Everybody's style is different.
Very interesting selection! Did not know Nedap! I also like Knorr Bremse in Europe in the undervalued camp which has a nice self help story and defensive positioning given the context!
We're unfamiliar with that one. Could you expand on what they do? And why do you like the business?
They mostly do brakes for trains and trucks (critical systems) and have a lot of aftermarket sales giving them this defensive aspect. They used to be one of the highest quality cap goods with very high margins when they IPOed in 2018, then had some issues and are now back in shape with increased focus from management on the core business. I put a deep dive on the company if you are interested!
Interesting! I'll take a look!
Check out this undervalued EU gem 💎
https://open.substack.com/pub/johnlawxv/p/the-best-smallcap-in-eu-is-hiding?utm_source=app-post-stats-page&r=31luz&utm_medium=ios