Numbers analysis: Match Group (MTCH)

Match Group is a provider of online dating products. The firm became public in 2015 and was more than 80% owned by IAC/InterActiveCorp until IAC spun it off in second-quarter 2020. The company has a vast portfolio of different online dating service providers, including Tinder, Match.com, OkCupid, PlentyOfFish, and Meetic. Match Group has more than 45 brands of online dating sites and/or apps, from which it generates user fee revenue (95%) and advertising revenue (5%).

Description from www.nordnet.se

Charts

10 year weekly chart
1 year daily chart showing Cup and Handle pattern

Statistics

The numbers analysis below is the first step in Rule 1 Investing by Phil Town. In his book Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! (no affiliate) he writes about his investing philosophy which centers around four key principles he refers to as the Four M’s: Meaning, Moat, Management and Margin of Safety.

The first requirement is an average annual growth rate of at least 10%, the past 10 years, in the ROIC (Return On Invested Capital), Sales, EPS (Earnings Per Share), Equity and Cash Flow. The average 5 year and 1 year growth rates should also be above 10%. High growth rates suggest a sustainable MOAT.

Next step is to analyse the the Four M’s: Meaning, Moat, Management and Margin of Safety.

The aim is to find a fantastic company, with a great track record, to invest in for at least 10 year. The expected average yearly return is at least 15%. This is used in the calculations. With an investment of 100 USD and a yearly return of 15%, 100 USD will have increased to 405 USD in 10 years time because of interest-on-interest or compound interest.

Year20102011201220132014
ROIC
Sales (MUSD)16372059280130233110
EPS (USD)0.931.851.713.294.68
Equity (MUSD)20501960170817291993
Operational cash flow (MUSD)340707372386354527410961424048
P/E
Year20152016201720182019
ROIC4.4%1.3%26.0%12.3%12.5%
Sales (MUSD)32313140330742634757
EPS (USD)1.33-0.523.186.594.5
Equity (MUSD)22162011294735523898
Operational cash flow (MUSD)405671344238416699988128937939
P/E29.94025.9418.6542.12

ROIC and P/E rates are from gurufocus.com. The rest are from macrotrends.com.

Growth Rates

Yearly average10 year5 year1 year
ROIC11%13%
Sales Growth Rate13%10%12%
EPS Growth Rate19%36%-32%
Equity Growth Rate7%15%10%
Cash Flow Growth Rate12%23%-5%

Price calculations

Growth rates x 2Average P/EMedian P/EAverage between the high and low P/E
P/E36.0023.3325.9430
Calculated future price in 10 years*319207230266
Calculated Price80525766
Margin of Safety (50%)402628.533
* = Calculated EPS in 10 years x P/E
Calculated EPS = Current EPS ( 10 year average historic Equity growth rates ^10 )

Current price: 113 USD

To be considered for further analysis here, as a growth stock, the requirement is that the 10 year yearly average growth rate is at least 5% in all five categories. They are. I will put in price alerts and perhaps dig deeper when the price goes down to fair value.

Fair value range: 52 – 80 USD
Margin of Safety: 26 – 40 USD

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