Intrinsic value of Amkor Technology - AMKR

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$11.73

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$11.73

 
Intrinsic value

$310.13

 
Up/down potential

+999%

 
Rating

str. buy

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AMKR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  34.97
  52.30
  47.57
  43.31
  39.48
  36.03
  32.93
  30.14
  27.62
  25.36
  23.32
  21.49
  19.84
  18.36
  17.02
  15.82
  14.74
  13.76
  12.89
  12.10
  11.39
  10.75
  10.18
  9.66
  9.19
  8.77
  8.40
  8.06
  7.75
  7.48
  7.23
Revenue, $m
  3,894
  5,931
  8,752
  12,542
  17,494
  23,798
  31,635
  41,169
  52,541
  65,866
  81,229
  98,687
  118,270
  139,983
  163,813
  189,729
  217,692
  247,657
  279,576
  313,403
  349,099
  386,629
  425,970
  467,110
  510,048
  554,794
  601,373
  649,820
  700,184
  752,526
  806,917
Variable operating expenses, $m
 
  5,034
  7,427
  10,643
  14,844
  20,192
  26,841
  34,929
  44,577
  55,882
  68,916
  83,725
  100,338
  118,759
  138,976
  160,963
  184,687
  210,108
  237,188
  265,886
  296,169
  328,009
  361,386
  396,289
  432,716
  470,678
  510,195
  551,296
  594,025
  638,430
  684,575
Fixed operating expenses, $m
 
  308
  315
  323
  331
  339
  348
  357
  366
  375
  384
  394
  403
  414
  424
  434
  445
  456
  468
  480
  492
  504
  516
  529
  543
  556
  570
  584
  599
  614
  629
Total operating expenses, $m
  3,600
  5,342
  7,742
  10,966
  15,175
  20,531
  27,189
  35,286
  44,943
  56,257
  69,300
  84,119
  100,741
  119,173
  139,400
  161,397
  185,132
  210,564
  237,656
  266,366
  296,661
  328,513
  361,902
  396,818
  433,259
  471,234
  510,765
  551,880
  594,624
  639,044
  685,204
Operating income, $m
  294
  589
  1,009
  1,576
  2,319
  3,266
  4,446
  5,883
  7,598
  9,609
  11,929
  14,569
  17,528
  20,810
  24,413
  28,332
  32,560
  37,092
  41,920
  47,037
  52,437
  58,115
  64,068
  70,292
  76,789
  83,560
  90,608
  97,939
  105,560
  113,481
  121,713
EBITDA, $m
  849
  1,375
  2,167
  3,234
  4,631
  6,410
  8,624
  11,320
  14,536
  18,306
  22,654
  27,596
  33,140
  39,288
  46,036
  53,376
  61,296
  69,783
  78,824
  88,407
  98,518
  109,150
  120,296
  131,951
  144,115
  156,792
  169,989
  183,715
  197,985
  212,815
  228,226
Interest expense (income), $m
  87
  82
  162
  272
  421
  615
  862
  1,168
  1,542
  1,987
  2,509
  3,111
  3,794
  4,561
  5,411
  6,344
  7,359
  8,454
  9,628
  10,877
  12,202
  13,600
  15,069
  16,610
  18,221
  19,902
  21,655
  23,478
  25,376
  27,348
  29,397
Earnings before tax, $m
  215
  507
  847
  1,304
  1,898
  2,652
  3,584
  4,714
  6,056
  7,622
  9,420
  11,458
  13,734
  16,249
  19,002
  21,987
  25,201
  28,638
  32,293
  36,160
  40,235
  44,516
  48,998
  53,682
  58,568
  63,657
  68,953
  74,460
  80,185
  86,134
  92,315
Tax expense, $m
  48
  137
  229
  352
  512
  716
  968
  1,273
  1,635
  2,058
  2,543
  3,094
  3,708
  4,387
  5,130
  5,937
  6,804
  7,732
  8,719
  9,763
  10,864
  12,019
  13,229
  14,494
  15,813
  17,187
  18,617
  20,104
  21,650
  23,256
  24,925
Net income, $m
  164
  370
  619
  952
  1,386
  1,936
  2,617
  3,441
  4,421
  5,564
  6,877
  8,365
  10,026
  11,862
  13,871
  16,051
  18,397
  20,906
  23,574
  26,397
  29,372
  32,496
  35,769
  39,188
  42,755
  46,470
  50,336
  54,356
  58,535
  62,877
  67,390

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  550
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  4,092
  5,396
  7,963
  11,413
  15,918
  21,654
  28,785
  37,460
  47,808
  59,933
  73,912
  89,797
  107,616
  127,373
  149,056
  172,638
  198,082
  225,348
  254,391
  285,171
  317,651
  351,800
  387,598
  425,032
  464,102
  504,817
  547,200
  591,283
  637,110
  684,737
  734,229
Adjusted assets (=assets-cash), $m
  3,542
  5,396
  7,963
  11,413
  15,918
  21,654
  28,785
  37,460
  47,808
  59,933
  73,912
  89,797
  107,616
  127,373
  149,056
  172,638
  198,082
  225,348
  254,391
  285,171
  317,651
  351,800
  387,598
  425,032
  464,102
  504,817
  547,200
  591,283
  637,110
  684,737
  734,229
Revenue / Adjusted assets
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
  1.099
Average production assets, $m
  2,572
  3,914
  5,776
  8,278
  11,546
  15,707
  20,879
  27,171
  34,677
  43,472
  53,611
  65,134
  78,058
  92,389
  108,116
  125,221
  143,677
  163,454
  184,520
  206,846
  230,405
  255,175
  281,140
  308,293
  336,631
  366,164
  396,906
  428,881
  462,121
  496,667
  532,565
Working capital, $m
  404
  -172
  -254
  -364
  -507
  -690
  -917
  -1,194
  -1,524
  -1,910
  -2,356
  -2,862
  -3,430
  -4,060
  -4,751
  -5,502
  -6,313
  -7,182
  -8,108
  -9,089
  -10,124
  -11,212
  -12,353
  -13,546
  -14,791
  -16,089
  -17,440
  -18,845
  -20,305
  -21,823
  -23,401
Total debt, $m
  1,475
  2,841
  4,779
  7,383
  10,785
  15,116
  20,500
  27,049
  34,862
  44,016
  54,570
  66,564
  80,017
  94,934
  111,304
  129,109
  148,319
  168,905
  190,832
  214,071
  238,594
  264,376
  291,403
  319,666
  349,164
  379,904
  411,903
  445,185
  479,785
  515,743
  553,110
Total liabilities, $m
  2,709
  4,074
  6,012
  8,616
  12,018
  16,349
  21,733
  28,282
  36,095
  45,249
  55,803
  67,797
  81,250
  96,167
  112,537
  130,342
  149,552
  170,138
  192,065
  215,304
  239,827
  265,609
  292,636
  320,899
  350,397
  381,137
  413,136
  446,418
  481,018
  516,976
  554,343
Total equity, $m
  1,384
  1,322
  1,951
  2,796
  3,900
  5,305
  7,052
  9,178
  11,713
  14,683
  18,108
  22,000
  26,366
  31,206
  36,519
  42,296
  48,530
  55,210
  62,326
  69,867
  77,825
  86,191
  94,961
  104,133
  113,705
  123,680
  134,064
  144,864
  156,092
  167,760
  179,886
Total liabilities and equity, $m
  4,093
  5,396
  7,963
  11,412
  15,918
  21,654
  28,785
  37,460
  47,808
  59,932
  73,911
  89,797
  107,616
  127,373
  149,056
  172,638
  198,082
  225,348
  254,391
  285,171
  317,652
  351,800
  387,597
  425,032
  464,102
  504,817
  547,200
  591,282
  637,110
  684,736
  734,229
Debt-to-equity ratio
  1.066
  2.150
  2.450
  2.640
  2.770
  2.850
  2.910
  2.950
  2.980
  3.000
  3.010
  3.030
  3.030
  3.040
  3.050
  3.050
  3.060
  3.060
  3.060
  3.060
  3.070
  3.070
  3.070
  3.070
  3.070
  3.070
  3.070
  3.070
  3.070
  3.070
  3.070
Adjusted equity ratio
  0.235
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  164
  370
  619
  952
  1,386
  1,936
  2,617
  3,441
  4,421
  5,564
  6,877
  8,365
  10,026
  11,862
  13,871
  16,051
  18,397
  20,906
  23,574
  26,397
  29,372
  32,496
  35,769
  39,188
  42,755
  46,470
  50,336
  54,356
  58,535
  62,877
  67,390
Depreciation, amort., depletion, $m
  555
  785
  1,158
  1,658
  2,312
  3,144
  4,178
  5,437
  6,938
  8,697
  10,725
  13,027
  15,612
  18,478
  21,623
  25,044
  28,735
  32,691
  36,904
  41,369
  46,081
  51,035
  56,228
  61,659
  67,326
  73,233
  79,381
  85,776
  92,424
  99,333
  106,513
Funds from operations, $m
  742
  1,155
  1,776
  2,610
  3,697
  5,079
  6,795
  8,878
  11,359
  14,261
  17,601
  21,391
  25,638
  30,340
  35,494
  41,095
  47,132
  53,597
  60,478
  67,766
  75,453
  83,531
  91,997
  100,847
  110,081
  119,703
  129,717
  140,132
  150,959
  162,211
  173,903
Change in working capital, $m
  13
  -59
  -82
  -110
  -144
  -183
  -227
  -276
  -330
  -386
  -446
  -506
  -568
  -630
  -691
  -752
  -811
  -869
  -926
  -981
  -1,035
  -1,088
  -1,141
  -1,193
  -1,245
  -1,298
  -1,351
  -1,405
  -1,461
  -1,518
  -1,577
Cash from operations, $m
  729
  1,207
  1,858
  2,720
  3,841
  5,262
  7,022
  9,155
  11,689
  14,647
  18,047
  21,898
  26,205
  30,969
  36,185
  41,846
  47,943
  54,466
  61,403
  68,747
  76,488
  84,620
  93,138
  102,040
  111,326
  121,000
  131,068
  141,537
  152,420
  163,729
  175,481
Maintenance CAPEX, $m
  0
  -514
  -783
  -1,155
  -1,656
  -2,309
  -3,141
  -4,176
  -5,434
  -6,935
  -8,694
  -10,722
  -13,027
  -15,612
  -18,478
  -21,623
  -25,044
  -28,735
  -32,691
  -36,904
  -41,369
  -46,081
  -51,035
  -56,228
  -61,659
  -67,326
  -73,233
  -79,381
  -85,776
  -92,424
  -99,333
New CAPEX, $m
  -650
  -1,343
  -1,862
  -2,502
  -3,268
  -4,161
  -5,172
  -6,292
  -7,506
  -8,794
  -10,140
  -11,522
  -12,925
  -14,331
  -15,727
  -17,105
  -18,456
  -19,777
  -21,066
  -22,326
  -23,559
  -24,770
  -25,965
  -27,152
  -28,339
  -29,533
  -30,742
  -31,975
  -33,240
  -34,546
  -35,899
Cash from investing activities, $m
  -589
  -1,857
  -2,645
  -3,657
  -4,924
  -6,470
  -8,313
  -10,468
  -12,940
  -15,729
  -18,834
  -22,244
  -25,952
  -29,943
  -34,205
  -38,728
  -43,500
  -48,512
  -53,757
  -59,230
  -64,928
  -70,851
  -77,000
  -83,380
  -89,998
  -96,859
  -103,975
  -111,356
  -119,016
  -126,970
  -135,232
Free cash flow, $m
  140
  -650
  -787
  -937
  -1,083
  -1,208
  -1,292
  -1,314
  -1,251
  -1,083
  -787
  -347
  254
  1,027
  1,980
  3,118
  4,443
  5,953
  7,646
  9,517
  11,560
  13,769
  16,137
  18,659
  21,329
  24,141
  27,093
  30,181
  33,403
  36,759
  40,249
Issuance/(repayment) of debt, $m
  -119
  1,401
  1,938
  2,604
  3,402
  4,331
  5,384
  6,550
  7,813
  9,154
  10,554
  11,994
  13,453
  14,917
  16,370
  17,804
  19,211
  20,586
  21,928
  23,239
  24,522
  25,783
  27,027
  28,263
  29,498
  30,740
  31,999
  33,283
  34,600
  35,958
  37,366
Issuance/(repurchase) of shares, $m
  8
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -112
  1,401
  1,938
  2,604
  3,402
  4,331
  5,384
  6,550
  7,813
  9,154
  10,554
  11,994
  13,453
  14,917
  16,370
  17,804
  19,211
  20,586
  21,928
  23,239
  24,522
  25,783
  27,027
  28,263
  29,498
  30,740
  31,999
  33,283
  34,600
  35,958
  37,366
Total cash flow (excl. dividends), $m
  28
  751
  1,151
  1,667
  2,319
  3,123
  4,092
  5,236
  6,561
  8,072
  9,767
  11,647
  13,707
  15,944
  18,351
  20,923
  23,654
  26,539
  29,574
  32,756
  36,082
  39,552
  43,164
  46,922
  50,826
  54,882
  59,092
  63,464
  68,003
  72,717
  77,615
Retained Cash Flow (-), $m
  -184
  -453
  -629
  -845
  -1,104
  -1,405
  -1,747
  -2,125
  -2,535
  -2,971
  -3,425
  -3,892
  -4,366
  -4,841
  -5,312
  -5,778
  -6,234
  -6,680
  -7,116
  -7,541
  -7,958
  -8,367
  -8,770
  -9,171
  -9,572
  -9,975
  -10,384
  -10,800
  -11,228
  -11,669
  -12,126
Prev. year cash balance distribution, $m
 
  515
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  813
  522
  822
  1,215
  1,718
  2,345
  3,111
  4,026
  5,101
  6,342
  7,755
  9,342
  11,103
  13,038
  15,145
  17,420
  19,859
  22,458
  25,215
  28,125
  31,185
  34,394
  37,750
  41,254
  44,906
  48,708
  52,663
  56,775
  61,049
  65,490
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  780
  478
  715
  1,000
  1,332
  1,702
  2,102
  2,516
  2,930
  3,325
  3,683
  3,986
  4,222
  4,377
  4,446
  4,427
  4,321
  4,136
  3,882
  3,574
  3,226
  2,854
  2,474
  2,101
  1,747
  1,421
  1,130
  878
  666
  493
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Amkor Technology, Inc. provides outsourced semiconductor packaging and test services in the United States and internationally. The company offers turnkey packaging and test services, including semiconductor wafer bumps, wafer probes, wafer backgrinds, package design, packaging, and test and drop shipment services. Its packages employ wirebond, flip chip, and copper clip interconnect technologies. The company also provides semiconductor testing services, such as wafer testing or probe, and final test services; flip chip chip scale package products for use in smartphones, tablets, and other mobile consumer electronic devices; flip chip stacked chip scale packages that are used to stack memory, and as applications processors in mobile devices; flip chip ball grid array (BGA) products for various networking, storage, computing, and consumer applications; and flip chip molded BGA packages. In addition, it offers leadframe packages that are used in electronic devices for low to medium pin count applications; substrate-based wirebond packages that are used to connect a die to a substrate; micro-electro-mechanical systems packages that are miniaturized mechanical and electro-mechanical devices; and system-in-package modules, which are used in RF and front end modules, baseband processing, connectivity, fingerprint sensors, display and touch screen drivers, sensors and MEMS, and NAND memory and solid state drives. The company primarily serves integrated device manufacturers, fabless semiconductor companies, and contract foundries, as well as communications, consumer, networking, computing, and automotive and industrial markets. Amkor Technology, Inc. was founded in 1968 and is headquartered in Tempe, Arizona.

FINANCIAL RATIOS  of  Amkor Technology (AMKR)

Valuation Ratios
P/E Ratio 17.1
Price to Sales 0.7
Price to Book 2
Price to Tangible Book
Price to Cash Flow 3.8
Price to Free Cash Flow 35.4
Growth Rates
Sales Growth Rate 35%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20.8%
Cap. Spend. - 3 Yr. Gr. Rate 2.8%
Financial Strength
Quick Ratio 16
Current Ratio 0
LT Debt to Equity 104%
Total Debt to Equity 106.6%
Interest Coverage 3
Management Effectiveness
Return On Assets 5.7%
Ret/ On Assets - 3 Yr. Avg. 4.8%
Return On Total Capital 5.8%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 12.7%
Return On Equity - 3 Yr. Avg. 9.9%
Asset Turnover 1
Profitability Ratios
Gross Margin 17.8%
Gross Margin - 3 Yr. Avg. 17.4%
EBITDA Margin 22%
EBITDA Margin - 3 Yr. Avg. 22.4%
Operating Margin 7.6%
Oper. Margin - 3 Yr. Avg. 6.6%
Pre-Tax Margin 5.5%
Pre-Tax Margin - 3 Yr. Avg. 4.1%
Net Profit Margin 4.2%
Net Profit Margin - 3 Yr. Avg. 3.4%
Effective Tax Rate 22.3%
Eff/ Tax Rate - 3 Yr. Avg. 29.5%
Payout Ratio 0%

AMKR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMKR stock intrinsic value calculation we used $3894 million for the last fiscal year's total revenue generated by Amkor Technology. The default revenue input number comes from 2016 income statement of Amkor Technology. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AMKR stock valuation model: a) initial revenue growth rate of 52.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AMKR is calculated based on our internal credit rating of Amkor Technology, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Amkor Technology.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AMKR stock the variable cost ratio is equal to 84.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $300 million in the base year in the intrinsic value calculation for AMKR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.7% for Amkor Technology.

Corporate tax rate of 27% is the nominal tax rate for Amkor Technology. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AMKR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AMKR are equal to 66%.

Life of production assets of 4.7 years is the average useful life of capital assets used in Amkor Technology operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AMKR is equal to -2.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1384 million for Amkor Technology - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 245.039 million for Amkor Technology is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Amkor Technology at the current share price and the inputted number of shares is $2.9 billion.


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COMPANY NEWS

▶ Post Earnings Coverage as Amkor Revenue Soared 52%   [Feb-21-17 08:15AM  Accesswire]
▶ Amkor Technology posts 4Q profit   [Feb-13-17 05:56PM  Associated Press]
▶ NANIUM   [12:03PM  Business Wire]
▶ NANIUM   [11:56AM  Business Wire]
▶ Amkor buying Portuguese semiconductor packaging solutions company   [Feb-02-17 01:25PM  at bizjournals.com]
▶ Amkor Technology to Acquire NANIUM   [09:00AM  Business Wire]
▶ 3 of the Best Tech Stocks You've Never Heard Of   [Jan-04-17 08:40AM  at Kiplinger]
▶ Is La Quinta Holdings Inc (LQ) A Good Stock To Buy?   [Dec-06-16 12:22AM  at Insider Monkey]
▶ Is 2U Inc (TWOU) A Good Stock To Buy?   [Dec-04-16 11:02PM  at Insider Monkey]
▶ 4 stocks to watch   [Nov-23-16 09:30AM  at MarketWatch]
▶ Amkor Technology to Present at Upcoming Conferences   [Nov-03-16 05:45PM  Business Wire]
▶ Why Amkor Technology, Inc. Stock Jumped   [Nov-01-16 02:06PM  at Motley Fool]
▶ Amkor Announces Appointment of New Chief Financial Officer   [Sep-12-16 04:05PM  Business Wire]
▶ Amkor Technology to Present at Upcoming Conferences   [Aug-30-16 08:30PM  Business Wire]
Stock chart of AMKR Financial statements of AMKR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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