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![realroseceline Avatar](https://lunarcrush.com/gi/w:24/cr:twitter::1304847419163639808.png) Rose Celine Investments 🌹 [@realroseceline](/creator/twitter/realroseceline) on x 8002 followers
Created: 2025-07-26 15:48:34 UTC

I was talking with my friend @carmo_analyse about how to best value $VEEV.

The issue? Its income is artificially inflated by interest income.

Why? Because $VEEV has a huge cash position on its balance sheet.

For example, $ABC has $X billion in cash, with interest rates around 5%, that adds $XX million to earnings.

Those aren’t “high quality” earnings because if the Fed cuts rates to 3%, they drop to $XX million, meaning the same company earns $XX million less.

That’s why my friend suggested using EV/NOPAT instead.

What’s EV/NOPAT? 👇

EV/NOPAT = Enterprise Value / Net Operating Profit After Tax

It strips out the effect of cash and interest income then you’re valuing the core business, not the balance sheet.

In $VEEV’s case, that means focusing on the operating profit from its software business, not the returns it earns from parking cash in T-bills.

It’s a cleaner way to see if you’re paying a fair price for the actual business and it’s especially mportant in a world where interest rates might not stay this high.

Example Company: $ABC

-Enterprise Value (EV): $X billion

-NOPAT (Net Operating Profit After Tax): $XXX million

-EV/NOPAT: 10x (you are paying XX times core after tax operating earnings)

Now suppose:

-Free Cash Flow (FCF): $XX million (because $30M goes toward capex and working capital)

-Dividend policy: Company pays XX% of FCF to shareholders (same as $DLO btw)

-That means they’ll pay out $XX million per year as dividends

What You Learn from This:

X. How cheap is the stock?

-10x EV/NOPAT means a XX% yield on core operating earnings

-But FCF is only $70M, so your real yield is X%

X. What is your real cash yield?

-XX% of $70M = $21M paid to you

-$21M Ă· $1B EV = XXX% yield on EV

-This is your actual tangible cash return from dividends

Why It’s Useful:

-EV/NOPAT gives you a clean view of operating efficiency, useful for comparing businesses

-The XX% FCF payout shows you how much of that efficiency is actually returned to shareholders

-It helps you balance growth reinvestment (70% retained) with shareholder return (30% paid)

Bonus Insight:

If they grow NOPAT XX% per year and keep payout ratio stable, both FCF and dividends grow over time, giving you compounding cash returns on top of potential stock price gains.

🌹

If you enjoyed those article please consider liking, commenting, sharing and following.


XXXXX engagements

![Engagements Line Chart](https://lunarcrush.com/gi/w:600/p:tweet::1949134757469765650/c:line.svg)

**Related Topics**
[veev](/topic/veev)
[rates](/topic/rates)
[$abc](/topic/$abc)
[balance sheet](/topic/balance-sheet)
[federal reserve](/topic/federal-reserve)
[$veev](/topic/$veev)
[celine](/topic/celine)
[veeva systems inc](/topic/veeva-systems-inc)

[Post Link](https://x.com/realroseceline/status/1949134757469765650)

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realroseceline Avatar Rose Celine Investments 🌹 @realroseceline on x 8002 followers Created: 2025-07-26 15:48:34 UTC

I was talking with my friend @carmo_analyse about how to best value $VEEV.

The issue? Its income is artificially inflated by interest income.

Why? Because $VEEV has a huge cash position on its balance sheet.

For example, $ABC has $X billion in cash, with interest rates around 5%, that adds $XX million to earnings.

Those aren’t “high quality” earnings because if the Fed cuts rates to 3%, they drop to $XX million, meaning the same company earns $XX million less.

That’s why my friend suggested using EV/NOPAT instead.

What’s EV/NOPAT? 👇

EV/NOPAT = Enterprise Value / Net Operating Profit After Tax

It strips out the effect of cash and interest income then you’re valuing the core business, not the balance sheet.

In $VEEV’s case, that means focusing on the operating profit from its software business, not the returns it earns from parking cash in T-bills.

It’s a cleaner way to see if you’re paying a fair price for the actual business and it’s especially mportant in a world where interest rates might not stay this high.

Example Company: $ABC

-Enterprise Value (EV): $X billion

-NOPAT (Net Operating Profit After Tax): $XXX million

-EV/NOPAT: 10x (you are paying XX times core after tax operating earnings)

Now suppose:

-Free Cash Flow (FCF): $XX million (because $30M goes toward capex and working capital)

-Dividend policy: Company pays XX% of FCF to shareholders (same as $DLO btw)

-That means they’ll pay out $XX million per year as dividends

What You Learn from This:

X. How cheap is the stock?

-10x EV/NOPAT means a XX% yield on core operating earnings

-But FCF is only $70M, so your real yield is X%

X. What is your real cash yield?

-XX% of $70M = $21M paid to you

-$21M Ă· $1B EV = XXX% yield on EV

-This is your actual tangible cash return from dividends

Why It’s Useful:

-EV/NOPAT gives you a clean view of operating efficiency, useful for comparing businesses

-The XX% FCF payout shows you how much of that efficiency is actually returned to shareholders

-It helps you balance growth reinvestment (70% retained) with shareholder return (30% paid)

Bonus Insight:

If they grow NOPAT XX% per year and keep payout ratio stable, both FCF and dividends grow over time, giving you compounding cash returns on top of potential stock price gains.

🌹

If you enjoyed those article please consider liking, commenting, sharing and following.

XXXXX engagements

Engagements Line Chart

Related Topics veev rates $abc balance sheet federal reserve $veev celine veeva systems inc

Post Link

post/tweet::1949134757469765650
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