SentinelOne, Intel's Mobileye IPO, Exxon Mobil And Oracle
In this episode, we're diving into SentielOne. Plus, Vladimir Dimitrov joins us to break down the Intel Mobileye IPO and discuss Exxon Mobil and Oracle.
SentinelOne, Intel's Mobileye IPO, Exxon Mobil And Oracle
Summary
- We're diving into SentinelOne, a well-funded cybersecurity stock that is taking over the mid-market share.
- Vladimir Dimitrov joins us to break down the Intel Mobileye IPO, thoughts on Exxon Mobil and Oracle.
- We play bullish or bearish with breaking headlines for the week.
Editor's Note: This is the transcript version of the previously recorded show. This transcript is only a part of the entire episode. Due to time and audio constraints, transcription may not be perfect.
We encourage you to listen to the podcast embedded above or on the go via Apple Podcasts.
View more of Vladimir's research at The Roundabout Investor.
Grab your free 14-day trial of Austin's service Cash Flow Freaks now.
Now look, we're going to go and play the guest stock because I love this. You looked out a stock that you want to communicate to our audience here about why you think that it might be a good buying opportunity. Honestly, I’ve never heard about this stock until you brought it to my attention. I think it's an interesting one as well. So, we're going to play a quick game, guess the stock. Obviously, I'll give you these couple of hints.
If you think you know what it is, jump into the chat, let us know you can do a ticker symbol, you can let us know the company name. And let's get into it. So, number first up. This is a cybersecurity stock, which you might have seen. It is based out of Mountain View, California. Hello with Silicon Valley. It IPO-ed on June 30, 2021. So just last year, added $1.3 billion valuation. It’s the official secure -- cybersecurity sponsor of Aston Martin's Cognizant, sorry, F1 team.
So if you're an F1 fan, maybe that gives you a little hint. Dan Loeb's Third Point Capital, which we mentioned earlier, a nice hedge fund that was in our Disney episode because we took a big stick. He owns 20 million shares of the stock with an average buy price of $42.78 according to his last 13F filing in July. But the fund did sell $1 million shares of the stock during that quarter. Interesting. The company's competitors\other competing services in the market include CrowdStrike, Bitdefender, Sophos, and Microsoft Defender.
And we've got a couple of guesses. We got Okta. We got CrowdStrike. CrowdStrike. No. Not CrowdStrike. No. Shack not Fire Iron. All right. So, you want to know what it is? This company was formerly known as Sentinel Labs Incorporated, but today we know it as SentinelOne (NYSE:S). Alright, Austin. So, what's the rundown on this?
Let's talk about SentinelOne. Okay. So, to your point, you know, who is this company? What's going on? I think a lot of people might not be familiar. So, here's the deal. They know, just last week, we talked about on the Wall Street Journal. I think it was part of our bullish and bearish banter. That there was an article claiming that 2,200 chief information technology officers across multi-billion-dollar company's biggest focus for 2023. It was ramping up their cybersecurity efforts.
And it's criminal, in my opinion, to drop such a cool headline like that to our listeners and not have some sort of stock idea that could benefit from a -- from such a clear secular growth trend. Right? And that's what we're going to be doing today. So, I'm -- let's talk about SentinelOne, a cybersecurity provider for endpoint, cloud, and identity protection. Austin, what is end point protection? How -- what does it even mean? How is it understood? How does it fit into a company's ledger cybersecurity stock?
Good question. Think about it like this, Daniel. Let's say you're a company with hundreds or even thousands of employees. All of your employees are using laptops and smartphones to complete work, communicate with one another and access private data. The actual device itself like the laptop, the smartphone, the tablet, that is the endpoint device. That's the last point of contact with the company's network outside of a firewall. You guys follow me here, end point device outside the firewall. This is why our bosses always tell us, you know, don't do personal stuff on your work computer. Don't download those personal apps on your work phone. Don't do that stuff on our computers. So let's now pretend one of those endpoint devices that your employee is in possession with has been compromised, if this was a phishing email, if they downloaded a weird file, whatever, but it's compromised by a hacker. Since this device can access all the company's private data, so can now the hacker. And having an endpoint protection strategy in place is essential for every single company that uses technology if you just think about it right, to do work because every endpoint device can be a point of attack from hackers.
And with the number of endpoint devices increasing exponentially because of remote work, the risk of cybersecurity and cyberattacks increases as well. So the large part -- I'm sorry, the hard part about all of this is these attacks are taking place at the intersection between humans and devices, humans and machines. Right? So there's a bunch of room for error with humans. We're always making mistakes. We're clicking links. We're downloading stuff.
We get phished in emails. It happens. But traditionally speaking, when an endpoint device is compromised, it takes a very well-trained cybersecurity professional to not just recognize that the attack is taking place, but to also isolate the endpoint device from the broader network to make sure that more damage isn't done. And when I say damage, I want to remind everyone cybersecurity tax costs over $8 million in the US. So now you understand endpoint security, why it's important? How it impacts all of us if we're working remotely, working from home.
What is SentinelOne? How are they working in this space? So through artificial intelligence, SentinelOne is able to detect, investigate, and respond to a cyberattack. There's a bunch of reasons in my opinion, to be excited about SentinelOne. We'll talk about the reasons to be excited and reasons you might want to be on the sidelines. And then I'll let, obviously, we'll have one chime in and give their own feedback. So the first reason to be excited is their earnings. Right?
The company in my opinion is crushing it. Annual recurring revenue grew a 122% to $439 million with revenue captured during the most recent quarter being over a $103 million up 124%. They added a record number of customers during the quarter, 1100 customers sequentially quarter over quarter. That's insane. Total customer crowd count grew 60% year-over-year to over 8600 customers. Customers with annual recurring revenue of a $100,000 or more, right, so these big paying customers grew by a 117% to 755, and they're customer wide, so every customer. It’s not just the high paying ones.
Dollar based net retention rate hit an all-time high of a 137% land and expand. Right? Their gross profit margins came in at 65% up 6% year-over-year with those non-GAAP margins hovering around that 72% up 10% year-over-year. Operating margins increased 42% year-over-year. However, there's still an unprofitable company. And a wonderful thing which we'll talk about soon. Well, the, I guess, operating margin expansion being a wonderful thing that is. So finally, their balance sheet is strong as ever, $1.2 billion.
No debt, which I think is great considering where we are headed toward a looming recession if we're not able to run right now. I don't think this is a type of company that's probably going to thrive during macroeconomic uncertainty, but it’s so good to have no debt. And now looking toward the next quarter, $111 million in revenue, love it, similar operating margins, similar gross profit margins. Second reason to be excited back to what we're talking about with those operating margins is the operating leverage, right?
As a percent of total revenue, the research and development, sales and marketing and general administrative costs all came down year-over-year as a percent of revenue. Right? Operating leverage, they're seeing that it's great. 32% decrease in cost as a percent of revenue when compared to the quarter last year. They're not only growing exponentially as a company, but the economies of scale are beginning to kick in. The last reason I think someone would be excited is a lot of these really cool stuff at Bank of America (BAC) recently published about them, CrowdStrike and Microsoft specifically this quote about endpoint security.
So as you guys know, I think, you know, these big banks go around that, these little check-ins with the companies in the coverage universe. And after their check-in, Bank of America came out and said, end point security spending remains resilient despite macro pressures. And partners noted that August and September were two of the strongest month of sales since COVID began. Our check suggests that SentinelOne's sweet spot is still the mid-sized enterprises.
SentinelOne benefits from co-selling with vendors like Zscaler (ZS), and it also tends to have more partner friendly culture than its peers. So those are the reasons to get excited, reasons not to get excited, reasons you might stay on the sidelines for the cybersecurity company. The first one, is cybersecurity is very fragmented. Right? So I'd imagine if SentinelOne wants to continue to grow and become one of these massive decabillion dollar enterprises, they need to continue doing this merger and acquisition stuff.
They just bought a company recently. A lot of acquisitions, I think, are on the table here. Two, they're unprofitable. They're very unprofitable. They're not making any money. They have not laid out a path to profitability yet. Three, the valuation is very steep in my opinion. It's still trading around twelve times forward revenue, which is a high price to pay considering the current, you know, macroeconomic environment we're in with raising interest rates and the fact that they're still unprofitable.
And finally, their stock based compensation expense continues to rise, which is only prolonging that eventual flip toward profitability. So if you're a growth investor, you might be drooling right now. If you're not a growth investor, you might think this is crazy. Daniel, what are your thoughts on SentinelOne after I've laid it all out here for us?
That was a great, absolutely great layout that you just ran us through. The first thing I like to do, obviously as you -- if you watch the show, you know, is we're going to go look at the Seeking Alpha factor grades and the rating summary. So, Josh, let's go ahead and throw up that first slide, so everybody can see that the Seeking Alpha authors on this stock currently have a buy rating. The Wall Street analyst also have a buy rating, but our quant system here at Seeking Alpha has a hold.
Let's go into the next slide and look at the factor grades that compartmentalize into what creates the Quant system. So valuation is a B minus, growth is a C, profitability is a C minus, momentum is a C, and the revisions are a B minus. Obviously, the grades you can see three months ago, when they first started by the Quant, just so you guys know that Quant doesn't start looking at the grades and so we have a full year of data on the company from their earnings reports when it starts to compare all the metrics.
So that's why you don't have a six months ago column right there. But from three months ago, obviously, the valuation has improved. the growth has slowed down, profitability has slowed down, or sorry, grew a little bit. Momentum grew a little bit. And EPS revisions from the analysts also has had seen a positive improvement, which is a good sign for us. When we’re talking about, is this a good growth company is a good sign. So let's go to the next slide. I want to break it down. Here's the analyst breakdown of what is going on in Wall Street.
In the last ninety days, nineteen analysts, here's how they break out. Strong buy. There are eleven analysts with a strong buy. Three have a buy rating and five have a hold rating. There are no sell recommendations on the stock. Love seeing that. Let's go ahead and look at the Seeking Alpha authors breakdown on the next slide. You got in the last thirty days, not ninety days, thirty days, seven authors who have given ratings on the stock. There's only one cell, there's one hold, and the other five are buy or strong buy recommendations.
Now the thing that did keep my interests, go to the next slide, Josh, is here's the breakdown of the balance sheet. If you talk about, okay, well, if they're doing stock based compensation, they're delaying all this, they're burning cash, they're not profitable yet, those are all true. Exactly. They just have been created, they've been -- they did two acquisitions, I think, since they've gone public. But they still have $1.22 billion of total cash on the balance sheet. And their debts only is under $30 million.
So obviously, they have a little bit of a run-rate here. They just need to capitalize on it. You've seen the employee headcount increase, maybe that's due to the acquisitions, maybe it's not, maybe it's because of the growth factor that you're talking about and they have momentum on their side and they're actually taking that mid-market share like you're talking about. Josh, we can go ahead and take those off.
Taking a quick look at the chart just so everybody can have an idea of what I see initial thoughts wise on here. Let me go ahead and share my screen or a second one. By the way, ticker symbol is S. If you're listening to this on the podcast or watching after the fact. So obviously, we saw it went public. It got a nice big old boost. The initial question I had, and Austin, maybe you know the answer to this off the top of your head is, why was the stock having a significant pullback from its peak in November of last year before the markets pullback in January. Do you know why that might have been?
Well, didn't well, I think the SPY pulled back in January. Wasn't the Nasdaq peaking in November? Great question.
NASDAQ. No. NASDAQ. Well, it came back a little bit, but it went right back towards its highs.
Good question.
I was trying to do some research on it. I couldn't really figure anything out besides that at this moment in time, there was a hedge fund exiting their position. Now, I don't know if that would cause this steep of a drop. Yeah. It's probably not. No. So I was a little curious about that, maybe a stock-based compensation. I'm not really sure what happened there. I was trying to find some research on it. But obviously, we do know that Dan Loeb started entering -- I think it was around this area here, is when Dan Loeb's third point started taking a stake. And he still has 20 million shares. So something to keep in mind.
Obviously, moving averages are all on a downtrend. The stock has been demolished. It's off of the lows. Will it hold? Hopefully, in cyber security, as we've talked about, we think it's bullish for the long term. But they are competing, like I said, against companies like Microsoft and CrowdStrike (CRWD) and everything else. So they've really got to lean into their partner program, which I from what I understand, they built out really well and try to do, like, a kind of a backdoor business approach of being buddy buddy, getting all their clients, and then probably eventually in the future if they can make that work, they'll flip the switch. Or they'll try to at least.
Yeah. And I think, you know, from what I was reading to online from this Bank of America report is that CrowdStrike remains the EPP, right, endpoint protection provider for these large, large enterprises. Right? If you're a big company, you go with CrowdStrike. But we have a bunch of small and medium sized businesses. And that I think is what's say no one is going after. All this because I think what's interesting is when CrowdStrike shares their earnings. They say these are the companies paying us over a million a year. Whereas SentinelOne says, these are companies paying us over a hundred thousand a year. Right? So much smaller from that perspective.
Yeah. They definitely have an uphill battle. Right? And I love seeing Stephanie in the chat here breaking down EBITDA and the profit margin. And Denise is also pointing out that it might be a good company for the future to be acquired. Oh, she says, maybe Shopify will buy them? That'd be interesting. I don't -- I think it'd be -- I don't know, they have a lot of cash on the balance sheet. If they believe in their mission, they believe in their acquisitions they're making, if they're trying to become a dominant player, they might try to hold their own as long as possible. That's just my initial thoughts. But – and full disclosure, you are a shareholder of this company. Right?
Yes. Full disclosure. I hold stock in this company. I did not get in when Loeb got in, around those 40s. I've been sort of accumulating in, like, this mid-20s high and all around the twenties. So I have been accumulating shares for share. And I think also it's interesting to point out, there is one of those cell publishers or I'm sorry, one of the articles rather on Seeking Alpha from a publisher. And I read it, and it was interesting to me that it wasn't exactly a sell saying, like, here's, like, why the company is bad and since saying it's still trading at a lofty valuation, which I totally agree with.
So I don't know if you have any ideas Daniel or anyone in the chat has to say or maybe even, you know, send us an email. Hey, here are a couple of things that’s racing red flags to me about SentinelOne. Please share because we love the feedback. We like sharing these ideas with you all. And this is -- we're just always having a good time and opening the dialogue in discussion.
Yeah. For sure. Real quick, I want to answer the question from Chris on in the chat. How do I access the recordings of Stock Market Live? You can go to Seeking Alpha and we actually have our own author profile. It has every episode of Stock Market Live. You can find it there. You can leave comments. We interact in the comments all the time. We love talking to you guys. So check us out there. The one thing, you just mentioned red flags.
And I just remember that I did find one red flag about this company that I was a little worried about and I just want to share it real quick before we get to Vladimir. It's almost time to get in with the Intel Mobileye. We got to talk to them. So I was on Seeking Alpha looking through I'm just going to go back to this simple page, so I can show you guys how I found this. So, on the simple page of Seeking Alpha, you can go all the way down here to the bottom where we have the SEC filings.
And I love looking at the statement of changes and beneficial ownership because sometimes they can tell you a lot. They can tell you when people that are up in the c suite are exiting their stock holdings before they know a bad quarter is coming. And this one caught my eye when I was going through. This is the CFO of the company. So definitely knows what is happening with the financials, David. And he was recently had stock converted from common B shares to common A shares.
So I was like, okay. Well, it's a conversion. It's usually a part of a bigger plan. This is what is highlighted in his rule 10b5-1 trading plan. Now the interesting thing about that type of plan is that is how most of the time C Suite executives communicate to the market, that they have a plan to sell stock over time, so that the market doesn't freak out when they go and sell their stock. But the other thing they don't really tell you is, at any time that C suite member can say, wait, I don't want to execute my plan in this quarter.
If they know financials are going to be good. So keep that in the back of your mind. It could go either way. This guy could be taking it, putting it in a trust or using it for elsewhere. But he got his stock shares awarded and then immediately turn around and sell it. That's something I want to keep an eye on is I get as part of your plan, but also there's been plenty of times where an executive has stepped in and said, hey, don't execute on my plan this quarter.
So, I totally agree. And I think as you know, I worked for a publicly traded healthcare company, and I remember one of our c suite execs sold, like, $27 million worth of stock once. And I asked like, hey man like, what's going on? Why did you sell so much stock at our company? What's, you know, what's going back your head? And he's, like, oh, no reason. I just I got, like, three houses, and I wanted to just pay off my mortgages on them. So, I - that's what I had so I sold them. And I was like, okay. And the stock went up another, you know, 100% over the next couple of years. So, it's just -- it's interesting to me…
Yeah.
But from that I think it's totally valid. But also, like, I think, you know, people sell stock for any reason, but they only buy it for one reason. Right? So I always like to try and get more emphasis to who's buying the stock versus like who's selling it? I don't know.
No. It's a great point. And I'm glad you brought it up for everybody because that is the other side of the coin. Right? It is always great to go in and look at those beneficial ownership to see who is acquiring stock before the quarter earnings and everything else. And obviously, you're right. 100% right. Could be for any reason whatsoever I always just like to keep a little eye on it because sometimes…
Oh, yeah.
…my people and you're like, hold on. Red flag. All right. Put it in a put order. Put it in a call order. Like, whatever it might be. And that's where you really find that Alpha R trade. Now, we take away too much time. Thank you so much for bringing that Sentinel stock to us. I mean, I had no idea this company existed, so I appreciate all the effort you put into that. I'm sure everybody here does as well. But we got to get over to Vladimir who is joining us today.
He is a Seeking Alpha Marketplace Author, you can find them the roundabout investor. Vladimir, why don't you go ahead and jump onscreen here with us? Thank you so much. If you guys don't know, he’s joining us from the other side of the planet right now. So it's obviously nighttime. We appreciate him taking the extra time in his day to join us. Vladimir, why don't you go ahead and just take a quick second introduce yourself as well as the service and what you're all about.
Okay. Hi, Daniel, and thank you for having. Basically, I'm a full time Seeking Alpha Author for like 2 years now. I recently launched a service called The Roundabout Investor, where I focus on finding high quality businesses that are really long term oriented. It's sort of do not succumb to this short termism within the markets. Yeah. It's kind of a unique service and it's a bit hard to understand by most people because what do you mean by high quality businesses, there are no competitive advantages.
But to be honest, it's kind of like, it's really easy finding out all these businesses that do not really go into managing the business on a quarter-to-quarter basis. And yeah, my background is basically in finance. Prior to Seeking Alpha, I was a strategy consultant in the city of London for a number of years. And yeah, now I'm a full time Seeking Alpha Author.
Man, we really love having you part of the family here, man. Like, you -- I've been reading your recent articles and we're going to dive into it. Let's just go ahead. Why am I waiting? Well, let's go ahead and get into it. Obviously, the big-ticket item on the table today is you wrote -- you recently wrote about Intel Mobileye.
Yeah.
And obviously, they're going public. They just started trading a little while ago. We're seeing a big upside. I'm not sure where it is right now. It was at 30% and pulled down 26%. But like, it has seen a massive move, why don't you go ahead and just kind of give us your initial thoughts on? Is this positive for Intel as a company? Or is it kind of worrisome that they're doing this IPO in a down year where IPOs are pretty much tried up and the valuation has dramatically reduced similar to almost similar to what happened with Wework (WE). Right? What is -- what are your thoughts?
Yeah. I think most of the people really sort of getting too much out of it. Because at the end of the day, Intel is only selling a tiny proportion of the business. Most of the people don't really realize that it's not the whole business that they're selling. They're selling only around 5%. And that's not really, in my opinion, that's not really a sort of detail giving up on the -- on the whole thing.
So why are they doing the IPO now, though? I mean that's -- do they need the cash? Like, that's I think one of the speculations that's been going on is, you know, Intel is spending so much on capital expenditures. They want a bigger presence in Europe. They want to have their Ohio foundry bill. Are they just strapped for cash? I mean, this is the easiest method for them to race?
I mean, to be honest, they -- Intel will really need some cash in the -- over the coming years, as they’re being on the business and the foundry business. But this is not -- this doesn't have anything to do with sort of needing the capital. First of all, it's a really tiny amount. I think there is around 800 million to 900 million over it. When Intel actually spends $25 billion a year right now and they slowly need to run this up over the coming years. So, yeah, I don't think it's really -- I don't think they're really for the cash out of it.
They in my view, they really want to get their, sort of, their foot in the door, get sort of get the message out there. This is the company and get probably a few quarters or years of sort of SEC filings, get investors familiar with the business. And then I would expect for them to seek some deals with outside investors probably.
There you go. All right. And so just to I mean, Austin and I were a little confused earlier way.
Yeah. I’m not going to lie down. I know what Intel does. The idea that that Daniel kind of painted for me and gave the picture there. I kind of get it. But what IPO-ing? How are they making money? How much money are they making? What's going on here with this stock?
Well, basically, they're the leader in ADAS. ADAS basically is all these advanced driving assistance systems within the cars. So what they do? They purchase the semiconductors. They create this system on the chip. And then they sell it to sort of out of parts manufacturers or auto OEMs that eventually retrofit into the cars. But now with the autonomous vehicles, this field is sort of changing.
Now you need huge investments in software. You also need sort of CPUs and GPUs working in tandem for the whole autonomous driving experience. You also need all these feeds to sort of get data out of and create the software around it. So, the field is changing quite drastically.
So you're saying that they're selling these to be retrofitted. Right? Who's buying these? Who are buying these? They're -- who's buying their products, their software? And what kind of cars are kind of taking this? You said it was ADAD, a d a s?
Yes.
Yeah. Real quick.
That stands for Advanced Driver Assistance System, just for everybody to know.
Yeah. and that's completely different from what Tesla's doing. That's completely different from what Toyota's doing. Right?
Actually, it's similar. Okay. If you think about it.
Yeah. Good time, I have no idea about EVs or self-driving cars. This is just so it's a new world for me right now.
Yeah. It's just about doing sort of with the others. They're coming from a bit of different parts of the market into the whole AV space. And their customers are actually not very well known. They're sort of companies [Ziet and Palio]. These are, like, auto parts within the supply chain, auto parts manufacturer that basically get auto parts and get it to the supply chain to the OEMs. A big client of this is these uptick. They are public-traded, and they are sort of one of the leaders within the AD space. So they own the fleets and they're planning to launch the service?
We got a quick question here in the chat, Vladimir from Christian. He's kind of wondering how does Mobileye differ from Waymo? Do you have some insight that you could share with him?
Yeah. Yeah. I mean, they're different in a way that Waymo owns the fleet. The impact of Google really helps them to when they're launching their robotaxi’s, they own the fleet and basically deal within house. Mobileye, does not plan to own the fleets. They're planning to get the technology, get the software, and then sell it to third parties. Having said that, though, it's worth mentioning that they actually need some fleet to get the data. So, because when you're building all these complex software for the AVs, you do need fleet on the streets to gather data, analyze it, and then create data.
The data. So Vladimir, I'm going to ask you, as of right now, knowing that the spin-off is happening, is this -- would you be invest, I mean, it's only you said what five or six percent of the entire company actually be an IPO. Is that investable right now?
I think so. It probably won't be as liquid as for pension funds and large hedge funds. But for retails, investor hours, team saw. Although, personally, I wouldn't really go for it right now. I mean it's, first of all, it's an IPO. It's a really dynamic market. Most of the peers operate as part of bigger entities. So for me personally, it's not really worth jumping on the train right now before the dust has settled from the whole IPO. And to that point I said…
So that’s exactly what I was going to ask. Right? So you're saying it's not exactly the time. But will you think it's like -- it could be like a retail thing, not exactly hedge funds because it's only 5%. As the dust settles, what are some perhaps like catalysts that would get a retail investor more excited to maybe make the make the jump there? Is it maybe a patent? Is it a technology? Is it like maybe new fleets to test this technology on? What would be a catalyst or two that would get people excited about this?
Likely, it would be a partnership deal, is what I expect. My opinion is that, they're trying to get up some partner involve whether that's a company like Apple, whether it's an auto manufacturer, it's not yet known, but they're definitely looking for outside investors and partnerships.
Yeah. I was wondering about the catalyst too. I want to move off from Mobileye real quick and let's go back to the parent company. Like Intel, do you -- with seeing how much intel is pulled back and hearing the story of what's going on with America and the semiconductors and everything else, do you think Intel as a company would be investable then?
Yeah. It definitely looks attractive at this level. It's a little similar story here for me. I mean, semiconductors are now in the eye of the storm if I should say. We did within this bear market, I mean, there is huge momentum trade that was going on within the semiconductor space. that is now fading with liquidity being withdrawn. There is also slowing growth within the sector. There are huge geopolitical risks within the field. So I would say definitely, there is one of my favorites, but not right now. I'm still sort of taking the wait and see approach on that.
Yeah. Josh, can you throw up that chart that I snagged from Vladimir's article actually between Intel, NVIDIA, and AMD? Because you made this chart, you had it in the article and I thought it was too great to not share with everybody. Meaning, the semiconductor sector has been just completely demolished this year with everything that's happening. And real quick, actually, while we're at it, I think we have a couple slides about Intel as well. Let's go ahead and run through those just so everybody's aware of what's going on with the ratings.
Let's go to the next slide. So Intel from the Seeking Alpha authors have a buy rating. The Wall Street analysts are a hold on Intel. The Quant system is a hold on Intel. Next slide, Josh. And looking at the factor grades, we see that valuation actually is an A plus and profitability is an A plus, which is pretty interesting to me. Growth is a complete F. Momentum and revisions are both D's kind of struggling at these levels, but it does pay a dividend. Right? So we pull up the dividend grades here.
Next slide, Josh, dividend is a B minus for safety, C for growth, A plus for yield and A for consistency. So it looks like the dividend seems to be safe here. So that as a, you know, as a value investor long term play, that the story you're telling me about Mobileye and Intel as a company I agree with you. I think these levels are starting to look a little attractive, personally.
I will personally be a bit careful with the dividend. because Intel building their foundry business right now, they have huge capital, it would have huge capital needs over the coming years. And given the huge opportunity in front of them this dividend might be at risk in the coming years, but that will be certainly be for the greater good in my view over the long term.
Aren't they getting a lot of company from or a lot of funds from the government to build this foundry, though?
Yeah. They also rely on the chipset product. But obviously, they will need internal capital as well.
Got you. Josh, you can go ahead. I'm jumping over here to Intel on Seeking Alpha, but I'm seeing a forward yield of 5.5%.
That's very risky in this sector. Because the semiconductor space that’s very risky.
Right? Share price was down and yield goes up.
Yeah. Totally. Totally. But while that's…
So he makes a good point of, like, dividend, you know, that would be the first thing to cut if they do need to spend a ton on capital. The CapEx. Good point. Any other questions Austin for you about Intel and Mobileye? I had one more thing I wanted to ask, but just want to check.
No. I think that’s all right. The catalysts partnership ideas. Okay. That makes a lot of sense. So yeah. No. I just got -- I'm excited to keep my eye on this one. This is really interesting. I really appreciate you sharing this with us, Vladimir.
Denise has a good say, she's over here in the chat says insurance companies across the world want the type of data that Mobileye has to help with their loss models, pricing premium and policy inclusions exclusions. So, Intel slowed out for us at Mobileye will help fund the dividend rather than paying from operating profits. A lot of your thoughts on that because that is actually, I mean..
Big brain.
Definitely a fair point. What I must say is, I have another personal favorite within the field that's I'll keep in secret because it's within my service.
Oh, come on tell them.
But it's -- the question here really is, how do you want to operate this whole business? Do you want to operate it in house with all the other auto related businesses, insurance, and all that kind of stuff. Or do you want to have it separate? This is still not -- still not certain in my view. How should the field settle in over the coming years? Will it be better to be independent? Will it be better to be as part of a bigger entity. That's still the bigger norm.
So do you -- does it rhyme with the Test of My Love.
No.
That I can say.
Oh, okay. Alright. We'll get it from another time. Save it for the service, obviously. So as I mentioned, I was going through all your articles. And I got to ask you this. Moving on from Intel is you wrote an excellent piece about what's going on with Exxon Mobil (NYSE:XOM). And I've said everybody before, I am a shareholder of Exxon Mobil. I have been for a long time. I've seen it go up to the nineties. I wrote it down to the forties, the thirties. I'm back over a hundreds.
But I couldn't help. I have the same question for you as one of the users on Seeking Alpha left on that article. And it's, the article sounded very bullish. You came across very, very bullish about why Exxon Mobil is standing out from its peers. Yet you gave it a hold rating for the stock. Just kind of curious why is that?
Yeah. Definitely long term. The bullish thesis still holds. The problem with this sector is that it's really cyclical and when investor sentiment can really drive the stock price up and down around the fair value. So, seeing this back I first talked about Exxon Mobil back in 2020, when the sentiment around the stock was to the bottom. Seeing this huge investor – swing in investor sentiment is what I don't really like within the company. And it's like fundamental CRD could change quarter by quarter basis and being so kind of up on these quarterly results, the investors is something I don't really like about it. But definitely yeah.
Definitely. I mean, probably investors, readers should not be reading that much into all these ratings if they plan to hold let's say, for next ten years. I'm just putting this rating with the minded people who might be buying or selling for, let's say, the next few months.
Got you. Okay. I'm glad I asked you because I was I'm just looking for clarification because Austin and I on this show, we ask each other all time. What about oil? Where's oil going? You're bullish of bears. Like, we're trying to figure this out. Obviously, it's been the sector that dominated this year, but we know that's not going to continue to happen every single Right? So that's where I had asked. I was like, what is the time frame here, which we always talk about is what's your time frame.
So I'm glad you bought it. Okay. And you also have the huge politicals because when the administration sees all these huge profits, you know, what usually happens. In the UK, they're trying to introduce this tax on profits. So yeah…
And what I just saw on Seeking Alpha’s website, but I didn't know and maybe this is me, just not giving up with oil as well as I should. Exxon Mobil is a $450 billion company now. Oh my gosh. Wow.
They're heavily focused in R&D of other things outside of oil now too, like the hydrocarbons and everything else. Like, they're trying to help lead the charge in that regard, but then also as I think in the news I saw this morning was that they found more oil patches around -- where was that? Got to look it up. One second.
Guyana. I mean, Guyana, I heard that that they just bought some new Guyana. There it is. Two new offshore Guyana discoveries. I mean, they’ve got discovery. They do it across the board. And actually, this was a company put on my radar by my grandfather. And he's been invested in it for a lot longer than I have. So yeah. Interesting company. Yeah, it’s kind of like was under the radar. Everybody wanted to get the props to Chevron. And I was like, there that’s – that’s my warrant kind of the same amount of hype.
Definitely. Definitely. And that should price really well with my sort of philosophy roundabout investments. Because they scored excellent. They continued to reinvest and given us – given us however negative all the prices collapsed, they continue to reinvest in these projects that basically take decades to build and managing this business for quarter by quarter, it's still not working well if you want to secure a lot of your long-term competitive advantage. So, yes.
So, I'm seeing Vladimir on your author page. You publish a lot of content. You are publishing analysis nearly, I'd say, every week, every other week.
I try to.
I mean, I'm sitting right. Very good stuff. That's incredible. One thing I noticed though is, a lot of well at least more recently, a lot of seldom buy ratings. Right? So I guess what I'm trying to say is, I'm only seeing a couple. And Oracle (NYSE:ORCL) is on that list. And I'm not -- I don't mean to blindside you here on some Oracle questions. But isn't Oracle doing this, like, big turnaround? Isn't, like, cloud computing like a big thing for them now? Aren't they like, super focused on growth? It's, like, just this whole secular growth turnaround in Cloud.
Walk me a little bit through maybe Oracle or the next thing you mentioned, like, from a short-term perspective. Perhaps walk me through Oracle for the next maybe six to nine months. Maybe some of the biggest focuses, perhaps maybe some headwinds that they might be facing?
Six to nine months is probably they're basically getting more to the infrastructure space. So…
Got it. Got it.
…usually, they're really strong in the ERP space in the software powered with SAS. But many years they've been sort of a niche player in the deep cloud infrastructure space. And now as the growth slows down, I think we saw an article today about Google in their problems, like the whole growth is kind of slowing down, cooling off a bit after the boom of the post-pandemic recovery.
And Oracle is really trying to sort of get a -- is sort of a premium player in that space, right, if I could say. So, six to nine months, I would expect them to sort of continue doing their growth path, probably accelerate a bit, but to be uncertain. I mean, it's I'm a bit more on the long-term side for that.
Okay. So long term with the work goal, I'm over here looking at their stock chart. They kind of have this long consolidation phase between I want to say, call it 2014 and 2017, 2018. And then during the pandemic, you know, they saw a lot of momentum heading higher. And so, from a long-term perspective, I'm seeing they're paying a little bit of a dividend. What I guess is getting you excited most about Oracle maybe for the next couple of years?
Yeah. I mean, as I said, they're really trying to sort of transition and even their cloud ERP segment is growing at 20%, 30% over the past few years. But since they have lots of legacy business with sort of on premise. They have all these database on premise and transitioning from this slower growth business that's been dominating Oracle for years to the high growth space in the clouds. Takes time. But once you look on the needle surface, you see the huge exponential in these areas.
I love it. I love it.
That’s awesome. Guys – Vladimir, first off, thank you so much for taking this extra time today. We love having you on here. Obviously, Austin had a great point. I was just scrolling down further down your page. I mean, you're talking about you write on IBM (IBM), Mondelez (MDLZ), General Mills (GIS), NVIDIA, IBM, does it say IBM for Amazon (AMZN)? Or I mean, all the companies, it seems like everybody wants to know about your writing about it. So I personally would recommend everybody go check you out on Seeking Alpha.
Your author page are blown up with articles like Austin pointed out. We loved having you on today. Love the thesis. Love the breakdown. Thanks for answering our questions. Besides Seeking Alpha, are you on Twitter as well? Where else can we find you?
Yes. Yeah. Twitter and LinkedIn as well. I'm on – marketing both pages. So, basically, going on my profile, I think there's a link to my profile.
Man, that's crazy. Vladimir. Thanks for taking the time today. Awesome.
Listen, man. You just earned yourself a follower on Twitter, LinkedIn, and Seeking Alpha. You're a rock star. I really appreciate all the constant analysis. 253 posts. This is incredible. I can't wait to read more.
In two years.
Thank you so much.
Thank you for having me again.
In two weeks. Two years. Two years. Oh, two years. Two years. Two years. Two years. Two years. Oh, no.
Awesome. You guys set your game up? No. That's no.
Thank you for having me, guys, and have a good one.
Hey, you too. Oh, awesome. What a guy? Josh, let's go ahead and throw up that last slide. We got to start rocking and rolling. Vida as well says, thanks Vladimir. Thank you to everybody hanging out with us today. Obviously, if you want to give us some stock ideas for future episodes, we continue to take those week over week. Email us at stockmarketlive@seekingalpha.com. You can find myself on LinkedIn. I'm there posting stuff all the time. Austin's Seeking Alpha, LinkedIn, Twitter and TikTok.
And TikTok.
I'm always on TikTok. Maybe you -- if you're -- I don't know if any of you are on TikTok. But if you're on TikTok, check me out. Big TikTok guy. Big TikTok guy.
He is a big TikTok guy, and he's crushing it over there. Vladimir Demistrov – Dimitrov, sorry, at The Roundabout Investor on Seeking Alpha. You can also just go check out his author profile, all those articles. He broke it down. And he's a CFA, by the way. So, he likes looking numbers. Let's be honest. All right. Awesome. Anything else from you, man?
Nothing from me, but I do want to throw a name in the hat for next week for our stock idea, Academy Sports. Academy Sports. We've seen a lot about them. Their stock is up 200% since they IPO-ed during the pandemic. It hasn't really seen too much of a pullback. We got a lot of catalysts as it relates to -- it's a very interesting stock. So, I'm going to throw that in the hat please. You know, we got John talking about Dick's. If you have any ideas, just email us.
They've got some good partnership deals. On it. You guys let us know. What do you think about Academy Sports? Should we cover it? Yes, or no? We've obviously got a ton of other stocks that we still got to get to. But obviously, we're building it up. We're going through them week after week. Bringing you the analysis. Thanks for hanging out with us on your lunch hour, your evening, wherever you are. We appreciate it. Thanks for listening.
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