Intrinsic value of Alpha&Omega Semiconductor - AOSL

Previous Close

$14.28

  Intrinsic Value

$19.92

stock screener

  Rating & Target

buy

+39%

Previous close

$14.28

 
Intrinsic value

$19.92

 
Up/down potential

+39%

 
Rating

buy

We calculate the intrinsic value of AOSL 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  13.99
  14.20
  13.28
  12.45
  11.71
  11.04
  10.43
  9.89
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
Revenue, $m
  383
  437
  495
  557
  622
  691
  763
  839
  917
  1,000
  1,085
  1,174
  1,267
  1,363
  1,463
  1,567
  1,675
  1,788
  1,904
  2,026
  2,153
  2,284
  2,421
  2,564
  2,714
  2,869
  3,032
  3,201
  3,378
  3,564
  3,757
Variable operating expenses, $m
 
  331
  375
  422
  471
  523
  578
  635
  695
  757
  822
  889
  959
  1,032
  1,108
  1,186
  1,268
  1,353
  1,442
  1,534
  1,629
  1,729
  1,833
  1,941
  2,054
  2,172
  2,295
  2,423
  2,557
  2,698
  2,844
Fixed operating expenses, $m
 
  84
  86
  88
  89
  91
  93
  95
  98
  100
  102
  104
  106
  109
  111
  114
  116
  119
  121
  124
  127
  130
  132
  135
  138
  141
  144
  148
  151
  154
  158
Total operating expenses, $m
  370
  415
  461
  510
  560
  614
  671
  730
  793
  857
  924
  993
  1,065
  1,141
  1,219
  1,300
  1,384
  1,472
  1,563
  1,658
  1,756
  1,859
  1,965
  2,076
  2,192
  2,313
  2,439
  2,571
  2,708
  2,852
  3,002
Operating income, $m
  13
  22
  35
  48
  62
  77
  92
  108
  125
  143
  162
  181
  201
  222
  244
  267
  291
  316
  341
  368
  396
  426
  456
  488
  521
  556
  592
  630
  670
  712
  755
EBITDA, $m
  40
  38
  52
  67
  83
  100
  118
  137
  157
  178
  199
  222
  245
  270
  295
  321
  349
  377
  407
  438
  471
  504
  540
  576
  615
  655
  697
  741
  787
  835
  885
Interest expense (income), $m
  0
  0
  1
  2
  3
  4
  6
  7
  8
  10
  11
  13
  14
  16
  18
  19
  21
  23
  25
  27
  29
  32
  34
  36
  39
  42
  44
  47
  50
  54
  57
Earnings before tax, $m
  13
  22
  34
  46
  59
  72
  86
  101
  117
  134
  151
  169
  187
  207
  227
  248
  270
  293
  316
  341
  367
  394
  422
  451
  482
  514
  548
  583
  620
  658
  699
Tax expense, $m
  4
  6
  9
  12
  16
  19
  23
  27
  32
  36
  41
  46
  51
  56
  61
  67
  73
  79
  85
  92
  99
  106
  114
  122
  130
  139
  148
  157
  167
  178
  189
Net income, $m
  14
  16
  25
  33
  43
  53
  63
  74
  86
  98
  110
  123
  137
  151
  166
  181
  197
  214
  231
  249
  268
  288
  308
  330
  352
  375
  400
  426
  452
  481
  510

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  116
  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
  398
  430
  488
  548
  613
  680
  751
  825
  903
  984
  1,068
  1,156
  1,247
  1,342
  1,440
  1,543
  1,649
  1,760
  1,875
  1,994
  2,119
  2,248
  2,383
  2,524
  2,671
  2,824
  2,984
  3,151
  3,325
  3,507
  3,698
Adjusted assets (=assets-cash), $m
  282
  430
  488
  548
  613
  680
  751
  825
  903
  984
  1,068
  1,156
  1,247
  1,342
  1,440
  1,543
  1,649
  1,760
  1,875
  1,994
  2,119
  2,248
  2,383
  2,524
  2,671
  2,824
  2,984
  3,151
  3,325
  3,507
  3,698
Revenue / Adjusted assets
  1.358
  1.016
  1.014
  1.016
  1.015
  1.016
  1.016
  1.017
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.015
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
Average production assets, $m
  132
  151
  171
  192
  215
  238
  263
  289
  317
  345
  374
  405
  437
  470
  505
  541
  578
  617
  657
  699
  743
  788
  835
  885
  936
  990
  1,046
  1,104
  1,166
  1,229
  1,296
Working capital, $m
  130
  15
  17
  19
  21
  23
  26
  29
  31
  34
  37
  40
  43
  46
  50
  53
  57
  61
  65
  69
  73
  78
  82
  87
  92
  98
  103
  109
  115
  121
  128
Total debt, $m
  2
  19
  38
  59
  80
  103
  127
  152
  178
  205
  233
  263
  293
  325
  358
  393
  428
  465
  504
  544
  586
  630
  675
  722
  772
  823
  877
  933
  992
  1,053
  1,117
Total liabilities, $m
  128
  145
  164
  184
  206
  229
  252
  277
  303
  331
  359
  388
  419
  451
  484
  518
  554
  591
  630
  670
  712
  755
  801
  848
  897
  949
  1,003
  1,059
  1,117
  1,178
  1,243
Total equity, $m
  271
  286
  324
  364
  407
  452
  499
  548
  600
  653
  709
  768
  828
  891
  956
  1,024
  1,095
  1,168
  1,245
  1,324
  1,407
  1,493
  1,582
  1,676
  1,773
  1,875
  1,981
  2,092
  2,208
  2,329
  2,455
Total liabilities and equity, $m
  399
  431
  488
  548
  613
  681
  751
  825
  903
  984
  1,068
  1,156
  1,247
  1,342
  1,440
  1,542
  1,649
  1,759
  1,875
  1,994
  2,119
  2,248
  2,383
  2,524
  2,670
  2,824
  2,984
  3,151
  3,325
  3,507
  3,698
Debt-to-equity ratio
  0.007
  0.070
  0.120
  0.160
  0.200
  0.230
  0.250
  0.280
  0.300
  0.310
  0.330
  0.340
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.410
  0.410
  0.420
  0.420
  0.430
  0.430
  0.440
  0.440
  0.440
  0.450
  0.450
  0.450
  0.450
Adjusted equity ratio
  0.550
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  16
  25
  33
  43
  53
  63
  74
  86
  98
  110
  123
  137
  151
  166
  181
  197
  214
  231
  249
  268
  288
  308
  330
  352
  375
  400
  426
  452
  481
  510
Depreciation, amort., depletion, $m
  27
  15
  17
  19
  21
  24
  26
  29
  32
  34
  37
  41
  44
  47
  50
  54
  58
  62
  66
  70
  74
  79
  84
  88
  94
  99
  105
  110
  117
  123
  130
Funds from operations, $m
  36
  31
  42
  53
  64
  77
  89
  103
  117
  132
  147
  164
  180
  198
  216
  235
  255
  275
  297
  319
  342
  366
  392
  418
  446
  474
  505
  536
  569
  603
  640
Change in working capital, $m
  -7
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
Cash from operations, $m
  43
  30
  40
  51
  62
  74
  87
  100
  115
  129
  145
  161
  177
  195
  213
  231
  251
  271
  293
  315
  338
  362
  387
  413
  441
  469
  499
  530
  563
  597
  633
Maintenance CAPEX, $m
  0
  -13
  -15
  -17
  -19
  -21
  -24
  -26
  -29
  -32
  -34
  -37
  -41
  -44
  -47
  -50
  -54
  -58
  -62
  -66
  -70
  -74
  -79
  -84
  -88
  -94
  -99
  -105
  -110
  -117
  -123
New CAPEX, $m
  -56
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -61
  -64
  -67
Cash from investing activities, $m
  -56
  -32
  -35
  -38
  -42
  -45
  -49
  -52
  -56
  -60
  -64
  -68
  -73
  -77
  -82
  -86
  -91
  -97
  -102
  -108
  -114
  -119
  -126
  -133
  -139
  -148
  -155
  -164
  -171
  -181
  -190
Free cash flow, $m
  -13
  -2
  5
  12
  20
  29
  38
  48
  58
  69
  81
  92
  105
  118
  131
  145
  160
  175
  191
  207
  224
  242
  261
  280
  301
  322
  344
  367
  391
  417
  443
Issuance/(repayment) of debt, $m
  -1
  18
  19
  20
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  54
  56
  59
  61
  64
Issuance/(repurchase) of shares, $m
  11
  19
  13
  7
  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  
  41
  37
  32
  27
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  54
  56
  59
  61
  64
Total cash flow (excl. dividends), $m
  28
  35
  37
  39
  42
  52
  62
  73
  84
  96
  109
  122
  135
  150
  164
  180
  195
  212
  229
  247
  266
  286
  306
  328
  350
  373
  398
  423
  450
  478
  507
Retained Cash Flow (-), $m
  -29
  -35
  -38
  -40
  -43
  -45
  -47
  -49
  -52
  -54
  -56
  -58
  -61
  -63
  -65
  -68
  -71
  -73
  -76
  -79
  -83
  -86
  -90
  -93
  -97
  -102
  -106
  -111
  -116
  -121
  -127
Prev. year cash balance distribution, $m
 
  20
  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
 
  7
  7
  8
  9
  11
  12
  13
  14
  16
  17
  18
  20
  22
  23
  25
  27
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  54
  57
  61
Cash available for distribution, $m
 
  20
  -1
  -1
  -1
  7
  15
  24
  33
  43
  53
  64
  75
  87
  99
  112
  125
  139
  153
  168
  183
  200
  217
  234
  252
  272
  292
  312
  334
  357
  381
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
 
  19
  -1
  -1
  -1
  5
  11
  16
  21
  25
  28
  30
  32
  33
  33
  33
  32
  30
  28
  26
  23
  21
  18
  15
  13
  11
  9
  7
  5
  4
  3
Current shareholders' claim on cash, %
  100
  94.4
  91.1
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6

Alpha and Omega Semiconductor Limited is a designer, developer and global supplier of power semiconductors. The Company's portfolio of power semiconductors includes approximately 1,600 products, as of June 30, 2016. The Company's product portfolio consists of two categories: power discretes and power integrated circuits (ICs). The Company's portfolio of products focuses high-volume applications, including personal computers, flat panel televisions, light-emitting diode (LED) lighting, smart phones, battery packs, consumer and industrial motor controls and power supplies for television, computers, servers and telecommunications equipment. The Company sells its products primarily to distributors in the Asia Pacific region, who in turn sell these products to end customers. The Company conducts its operations primarily in the United States, Hong Kong, China, Taiwan, Korea and Japan. Its products are applicable in desktop and tablet personal computers, flat panel displays and televisions.

FINANCIAL RATIOS  of  Alpha&Omega Semiconductor (AOSL)

Valuation Ratios
P/E Ratio 24.5
Price to Sales 0.9
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 8
Price to Free Cash Flow -26.4
Growth Rates
Sales Growth Rate 14%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 154.5%
Cap. Spend. - 3 Yr. Gr. Rate 44.1%
Financial Strength
Quick Ratio 116
Current Ratio 0.1
LT Debt to Equity 0.4%
Total Debt to Equity 0.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 5.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.5%
Return On Equity 5.5%
Return On Equity - 3 Yr. Avg. 0.5%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 24%
Gross Margin - 3 Yr. Avg. 20.7%
EBITDA Margin 10.4%
EBITDA Margin - 3 Yr. Avg. 8.7%
Operating Margin 3.4%
Oper. Margin - 3 Yr. Avg. 0.9%
Pre-Tax Margin 3.4%
Pre-Tax Margin - 3 Yr. Avg. 0.8%
Net Profit Margin 3.7%
Net Profit Margin - 3 Yr. Avg. 0.1%
Effective Tax Rate 30.8%
Eff/ Tax Rate - 3 Yr. Avg. 110.3%
Payout Ratio 0%

AOSL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AOSL stock intrinsic value calculation we used $383 million for the last fiscal year's total revenue generated by Alpha&Omega Semiconductor. The default revenue input number comes from 2017 income statement of Alpha&Omega Semiconductor. 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 AOSL stock valuation model: a) initial revenue growth rate of 14.2% 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 AOSL is calculated based on our internal credit rating of Alpha&Omega Semiconductor, 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 Alpha&Omega Semiconductor.
    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 AOSL stock the variable cost ratio is equal to 75.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $82 million in the base year in the intrinsic value calculation for AOSL 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 5.4% for Alpha&Omega Semiconductor.

Corporate tax rate of 27% is the nominal tax rate for Alpha&Omega Semiconductor. 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 AOSL stock is equal to 1.7%.

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 AOSL are equal to 34.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Alpha&Omega Semiconductor 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 AOSL is equal to 3.4%. 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 - $271 million for Alpha&Omega Semiconductor - 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 24 million for Alpha&Omega Semiconductor 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 Alpha&Omega Semiconductor at the current share price and the inputted number of shares is $0.3 billion.

RELATED COMPANIES Price Int.Val. Rating
ON ON Semiconduct 24.04 202.61  str.buy
DIOD Diodes 38.07 51.85  str.buy
SMTC Semtech 51.00 18.59  str.sell
MPWR Monolithic Pow 140.72 53.09  str.sell
TXN Texas Instrume 115.00 144.87  buy
VSH Vishay Interte 25.25 135.72  str.buy
STM STMicroelectro 23.50 84.46  str.buy

COMPANY NEWS

▶ Alpha and Omega: Fiscal 3Q Earnings Snapshot   [May-02-18 06:24PM  Associated Press]
▶ Alpha and Omega beats Street 2Q forecasts   [Feb-07-18 07:31PM  Associated Press]
▶ Alpha and Omega misses 1Q profit forecasts   [Nov-06-17 05:37AM  Associated Press]
▶ Alpha and Omega beats Street 4Q forecasts   [Aug-09-17 10:22PM  Associated Press]
▶ New Strong Buy Stocks for May 26th   [May-26-17 11:07AM  Zacks]
▶ New Strong Buy Stocks for May 17th   [May-17-17 10:24AM  Zacks]
▶ Alpha and Omega beats Street 3Q forecasts   [May-03-17 06:39PM  Associated Press]
▶ Alpha and Omega tops Street 2Q forecasts   [Feb-08-17 06:11PM  Associated Press]
Financial statements of AOSL
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.