What's the highest quality company with a network effect?
What's the highest quality company with a network effect?
Here's the list:
- Revenue growth higher than FCF growth, suggesting that FCF margin has shrunk.
- FCF/share growth not linear over recent years. Of course we expected that with their high CAPEX investments in recent years.
- Low return on capital. Only 10% currently. ROC has been quite volatile.
- Share count has increased by 5% over the last 5 years due to a 21% SBC/OFC ratio.
Hope that helps. Not saying it's not a quality company, just reporting the ratios as I see and calculate them.
I put through my list of network companies through my quality filter. $MasterCard(MA)$ rose to the top.
$Adobe(ADBE)$ $Autodesk(ADSK)$ $Microsoft(MSFT)$ $Visa(V)$ $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Meta Platforms, Inc.(META)$ $American Express(AXP)$ $ServiceNow(NOW)$ $Copart(CPRT)$ $Etsy(ETSY)$ $Salesforce.com(CRM)$ $SAP SE(SAP)$ $AT&T Inc(T)$ $Lyft, Inc.(LYFT)$ $Shopify(SHOP)$ $eBay(EBAY)$ $Alibaba(BABA)$ $Intercontinental Exchange(ICE)$ $Uber(UBER)$ $PayPal(PYPL)$ $Verizon(VZ)$ $Amazon.com(AMZN)$ $Oracle(ORCL)$ $Block(SQ)$
What would you add?
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