$UNH 2025 EPS estimates: 3 months ago: 29.75 Today: 22.42 Nearly a 25% drop in expectations in 3 months, stock down 38% over that time. Even "safe" businesses can change quickly and unexpectedly. Be cautious when you hear things like, "Stock X is trading at only 20x 2027 EPS."

Was looking at the most recent Howmet $HWM earnings call transcript and found this section interesting. Makes me wonder about those additional opportunities for the company. How much more room is there to improve process controls (and yields) for additional margin expansion?

Maybe a controversial opinion, but I'm not really interested in AI features for an iPhone or Mac. I'd rather practical new features like a copy/paste clipboard and a better default calculator. I'd rather use targeted, specialized agents/software for AI, depending on the task.

A rough mental model I try to keep in mind is the drag multiple compression has on long-term returns. A 50% drop in P/E requires 18% EPS CAGR to get double-digit returns in 10 years. I think this risk is greatest in names like Cintas (CTAS) where you'll never see 18% EPS growth.

Almost time for the pendulum to swing back to private cloud?

I'm late to the party on this one but highly recommend giving it a listen, even if not interested in Lindt or consumer staples. Lots of great conversation about branding, pricing/volume dynamics, and advantages to taking the long view when running (or investing in) a business.

Anyone have any examples of stocks that experienced multiple contraction, the business continued performing well, but the multiple remained depressed due to execution/disruption/terminal fears? I guess tobacco companies like $MO probably qualify... Any other names?

Tuesday morning thoughts... Pharmaceutical companies have a relatively short market exclusive period for selling their drugs. Combined with the constant churn and unpredictability of future drug R&D, does it *really* make sense to ever classify these companies as "wide" moat?

There are great companies, good companies, mediocre companies and bad companies. I think it's more important to avoid the mediocre and bad companies than it is to find the great ones. Obviously great is still the goal, but it's not the end of the world to own a "good" company.

There are mainly 2 things that matter for $GOOG long-term (imo): 1. Effective marketing and distribution of AI solutions 2. The profit margins on their non-search business segments. Everyone loves to say, "But YouTube, but Waymo" but those are much lower margin than search ads.

Found this interesting from $CSW. They issued shares when the stock was trading at ~44x earnings to pay down all debt. Interest expense was 10% of pretax income in 2024, now 0. Balance sheet now at $155m of net cash. Stock currently trades at 32x, $281 vs the $285 offering price.

The holdings of the recently launched Rainwater ETF $RW. Looks like a very high-quality fund, one you could just buy and forget about for the next 20 years. Short (and even medium) term performance will be interesting though given the high valuations on a lot of these names.

Outside of the obvious names $DHR and $TMO, are there any good companies in the healthcare space whose revenue is predominantly recurring?

I love slides like the first one below. Is it really so hard for companies to show a breakdown of their sales like that? Side note but apparently Fortive, a former Danaher spin-off, is spinning off their precision technologies segment into a new business, Ralliant. $FTV

AI has come a long way in the past few years, but if these numbers are real, perhaps it suggests that whatever Salesforce does isn't very special or complex and would be easy to replicate. The best software/tech is the stuff that AI isn't close to replacing yet. Just my $0.02.

Almost 5 years of no returns for rails. $CNI flat since Aug 2020 $CSX flat since Dec 2020 $NSC flat since Jan 2021 $CP flat since Apr 2021 $UNP flat since Apr 2021

Some numbers to think about as we look forward.

Last year's (I'm late) Merck $MRK episode of Business Breakdowns is probably one of my favorite episodes, even though I'm not interested in investing in pharma companies. Great guest, lots of great conversation, learned a lot on a rather complex industry. joincolossus.com/episode/merck-…