Intrinsic value of ASML Holding - ASML

Previous Close

$154.29

  Intrinsic Value

$427.28

stock screener

  Rating & Target

str. buy

+177%

  Value-price divergence*

+168%

Previous close

$154.29

 
Intrinsic value

$427.28

 
Up/down potential

+177%

 
Rating

str. buy

 
Value-price divergence*

+168%

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

We calculate the intrinsic value of ASML 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 66.8

 

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, %
  8.06
  45.80
  41.72
  38.05
  34.74
  31.77
  29.09
  26.68
  24.51
  22.56
  20.81
  19.23
  17.80
  16.52
  15.37
  14.33
  13.40
  12.56
  11.80
  11.12
  10.51
  9.96
  9.46
  9.02
  8.62
  8.25
  7.93
  7.64
  7.37
  7.14
  6.92
Revenue, $m
  7,171
  10,455
  14,817
  20,455
  27,562
  36,318
  46,883
  59,393
  73,953
  90,639
  109,498
  130,550
  153,793
  179,204
  206,749
  236,384
  268,060
  301,729
  337,346
  374,872
  414,277
  455,540
  498,654
  543,622
  590,461
  639,200
  689,882
  742,563
  797,308
  854,198
  913,323
Variable operating expenses, $m
 
  7,616
  10,579
  14,409
  19,236
  25,184
  32,361
  40,858
  50,748
  62,082
  74,893
  88,678
  104,466
  121,727
  140,438
  160,568
  182,084
  204,955
  229,148
  254,638
  281,404
  309,433
  338,719
  369,264
  401,080
  434,187
  468,614
  504,398
  541,585
  580,228
  620,390
Fixed operating expenses, $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
Total operating expenses, $m
  5,422
  7,616
  10,579
  14,409
  19,236
  25,184
  32,361
  40,858
  50,748
  62,082
  74,893
  88,678
  104,466
  121,727
  140,438
  160,568
  182,084
  204,955
  229,148
  254,638
  281,404
  309,433
  338,719
  369,264
  401,080
  434,187
  468,614
  504,398
  541,585
  580,228
  620,390
Operating income, $m
  1,750
  2,839
  4,238
  6,046
  8,326
  11,134
  14,523
  18,535
  23,205
  28,557
  34,605
  41,872
  49,326
  57,477
  66,311
  75,816
  85,976
  96,775
  108,198
  120,234
  132,872
  146,107
  159,935
  174,358
  189,380
  205,013
  221,268
  238,165
  255,723
  273,970
  292,933
EBITDA, $m
  2,127
  3,583
  5,078
  7,009
  9,445
  12,445
  16,066
  20,353
  25,342
  31,060
  37,523
  44,737
  52,701
  61,409
  70,848
  81,003
  91,858
  103,396
  115,601
  128,460
  141,963
  156,104
  170,878
  186,287
  202,338
  219,040
  236,407
  254,460
  273,220
  292,715
  312,976
Interest expense (income), $m
  59
  113
  234
  394
  602
  863
  1,185
  1,573
  2,033
  2,568
  3,182
  3,875
  4,649
  5,503
  6,437
  7,450
  8,539
  9,704
  10,941
  12,251
  13,630
  15,079
  16,596
  18,180
  19,833
  21,555
  23,347
  25,210
  27,146
  29,159
  31,250
Earnings before tax, $m
  1,785
  2,725
  4,004
  5,652
  7,724
  10,271
  13,338
  16,962
  21,172
  25,988
  31,424
  37,997
  44,678
  51,973
  59,874
  68,366
  77,437
  87,071
  97,257
  107,983
  119,242
  131,028
  143,339
  156,177
  169,547
  183,458
  197,921
  212,955
  228,577
  244,811
  261,683
Tax expense, $m
  232
  736
  1,081
  1,526
  2,085
  2,773
  3,601
  4,580
  5,716
  7,017
  8,484
  10,259
  12,063
  14,033
  16,166
  18,459
  20,908
  23,509
  26,259
  29,156
  32,195
  35,378
  38,702
  42,168
  45,778
  49,534
  53,439
  57,498
  61,716
  66,099
  70,654
Net income, $m
  1,553
  1,990
  2,923
  4,126
  5,638
  7,498
  9,737
  12,382
  15,455
  18,971
  22,939
  27,738
  32,615
  37,941
  43,708
  49,907
  56,529
  63,562
  70,997
  78,828
  87,047
  95,651
  104,638
  114,009
  123,769
  133,924
  144,483
  155,457
  166,861
  178,712
  191,029

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,282
  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
  18,160
  20,223
  28,660
  39,565
  53,311
  70,247
  90,683
  114,880
  143,042
  175,317
  211,795
  252,515
  297,471
  346,623
  399,901
  457,222
  518,492
  583,616
  652,507
  725,091
  801,309
  881,122
  964,514
  1,051,493
  1,142,090
  1,236,364
  1,334,395
  1,436,291
  1,542,182
  1,652,221
  1,766,583
Adjusted assets (=assets-cash), $m
  13,878
  20,223
  28,660
  39,565
  53,311
  70,247
  90,683
  114,880
  143,042
  175,317
  211,795
  252,515
  297,471
  346,623
  399,901
  457,222
  518,492
  583,616
  652,507
  725,091
  801,309
  881,122
  964,514
  1,051,493
  1,142,090
  1,236,364
  1,334,395
  1,436,291
  1,542,182
  1,652,221
  1,766,583
Revenue / Adjusted assets
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
Average production assets, $m
  2,834
  4,130
  5,853
  8,080
  10,887
  14,345
  18,519
  23,460
  29,211
  35,802
  43,252
  51,567
  60,748
  70,786
  81,666
  93,372
  105,884
  119,183
  133,252
  148,075
  163,639
  179,938
  196,968
  214,731
  233,232
  252,484
  272,504
  293,312
  314,937
  337,408
  360,763
Working capital, $m
  5,570
  2,258
  3,201
  4,418
  5,953
  7,845
  10,127
  12,829
  15,974
  19,578
  23,652
  28,199
  33,219
  38,708
  44,658
  51,059
  57,901
  65,174
  72,867
  80,972
  89,484
  98,397
  107,709
  117,422
  127,540
  138,067
  149,015
  160,394
  172,219
  184,507
  197,278
Total debt, $m
  3,503
  6,689
  11,270
  17,192
  24,656
  33,852
  44,949
  58,088
  73,380
  90,905
  110,713
  132,823
  157,235
  183,924
  212,854
  243,980
  277,249
  312,611
  350,020
  389,433
  430,819
  474,157
  519,439
  566,669
  615,863
  667,054
  720,285
  775,614
  833,113
  892,864
  954,963
Total liabilities, $m
  7,795
  10,981
  15,562
  21,484
  28,948
  38,144
  49,241
  62,380
  77,672
  95,197
  115,005
  137,115
  161,527
  188,216
  217,146
  248,272
  281,541
  316,903
  354,312
  393,725
  435,111
  478,449
  523,731
  570,961
  620,155
  671,346
  724,577
  779,906
  837,405
  897,156
  959,255
Total equity, $m
  10,365
  9,242
  13,098
  18,081
  24,363
  32,103
  41,442
  52,500
  65,370
  80,120
  96,790
  115,399
  135,944
  158,407
  182,755
  208,951
  236,951
  266,712
  298,196
  331,367
  366,198
  402,673
  440,783
  480,532
  521,935
  565,018
  609,819
  656,385
  704,777
  755,065
  807,329
Total liabilities and equity, $m
  18,160
  20,223
  28,660
  39,565
  53,311
  70,247
  90,683
  114,880
  143,042
  175,317
  211,795
  252,514
  297,471
  346,623
  399,901
  457,223
  518,492
  583,615
  652,508
  725,092
  801,309
  881,122
  964,514
  1,051,493
  1,142,090
  1,236,364
  1,334,396
  1,436,291
  1,542,182
  1,652,221
  1,766,584
Debt-to-equity ratio
  0.338
  0.720
  0.860
  0.950
  1.010
  1.050
  1.080
  1.110
  1.120
  1.130
  1.140
  1.150
  1.160
  1.160
  1.160
  1.170
  1.170
  1.170
  1.170
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
Adjusted equity ratio
  0.438
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,553
  1,990
  2,923
  4,126
  5,638
  7,498
  9,737
  12,382
  15,455
  18,971
  22,939
  27,738
  32,615
  37,941
  43,708
  49,907
  56,529
  63,562
  70,997
  78,828
  87,047
  95,651
  104,638
  114,009
  123,769
  133,924
  144,483
  155,457
  166,861
  178,712
  191,029
Depreciation, amort., depletion, $m
  377
  744
  840
  963
  1,119
  1,311
  1,543
  1,818
  2,137
  2,503
  2,917
  2,865
  3,375
  3,933
  4,537
  5,187
  5,882
  6,621
  7,403
  8,226
  9,091
  9,997
  10,943
  11,929
  12,957
  14,027
  15,139
  16,295
  17,496
  18,745
  20,042
Funds from operations, $m
  1,447
  2,733
  3,762
  5,089
  6,758
  8,809
  11,280
  14,200
  17,593
  21,475
  25,856
  30,603
  35,990
  41,873
  48,245
  55,095
  62,411
  70,183
  78,400
  87,054
  96,138
  105,647
  115,580
  125,939
  136,727
  147,951
  159,622
  171,752
  184,358
  197,457
  211,071
Change in working capital, $m
  -311
  709
  942
  1,218
  1,535
  1,891
  2,282
  2,702
  3,145
  3,604
  4,074
  4,547
  5,020
  5,489
  5,950
  6,401
  6,842
  7,273
  7,693
  8,106
  8,511
  8,913
  9,313
  9,713
  10,117
  10,528
  10,947
  11,379
  11,825
  12,288
  12,771
Cash from operations, $m
  1,758
  2,024
  2,820
  3,871
  5,223
  6,918
  8,998
  11,498
  14,448
  17,871
  21,783
  26,055
  30,969
  36,384
  42,295
  48,694
  55,569
  62,911
  70,707
  78,949
  87,627
  96,734
  106,268
  116,226
  126,609
  137,423
  148,674
  160,373
  172,533
  185,169
  198,300
Maintenance CAPEX, $m
  0
  -157
  -229
  -325
  -449
  -605
  -797
  -1,029
  -1,303
  -1,623
  -1,989
  -2,403
  -2,865
  -3,375
  -3,933
  -4,537
  -5,187
  -5,882
  -6,621
  -7,403
  -8,226
  -9,091
  -9,997
  -10,943
  -11,929
  -12,957
  -14,027
  -15,139
  -16,295
  -17,496
  -18,745
New CAPEX, $m
  -343
  -1,296
  -1,723
  -2,227
  -2,807
  -3,459
  -4,173
  -4,941
  -5,751
  -6,591
  -7,449
  -8,316
  -9,181
  -10,037
  -10,880
  -11,706
  -12,512
  -13,299
  -14,069
  -14,823
  -15,565
  -16,299
  -17,030
  -17,762
  -18,501
  -19,252
  -20,020
  -20,809
  -21,624
  -22,472
  -23,354
Cash from investing activities, $m
  -3,365
  -1,453
  -1,952
  -2,552
  -3,256
  -4,064
  -4,970
  -5,970
  -7,054
  -8,214
  -9,438
  -10,719
  -12,046
  -13,412
  -14,813
  -16,243
  -17,699
  -19,181
  -20,690
  -22,226
  -23,791
  -25,390
  -27,027
  -28,705
  -30,430
  -32,209
  -34,047
  -35,948
  -37,919
  -39,968
  -42,099
Free cash flow, $m
  -1,607
  570
  868
  1,319
  1,967
  2,854
  4,027
  5,527
  7,393
  9,657
  12,345
  15,337
  18,924
  22,972
  27,482
  32,451
  37,870
  43,729
  50,017
  56,723
  63,835
  71,344
  79,241
  87,521
  96,179
  105,214
  114,628
  124,425
  134,613
  145,201
  156,201
Issuance/(repayment) of debt, $m
  2,349
  3,447
  4,581
  5,921
  7,464
  9,196
  11,097
  13,139
  15,292
  17,525
  19,807
  22,111
  24,411
  26,689
  28,930
  31,125
  33,269
  35,362
  37,408
  39,413
  41,386
  43,338
  45,282
  47,229
  49,194
  51,191
  53,231
  55,330
  57,499
  59,751
  62,099
Issuance/(repurchase) of shares, $m
  193
  908
  933
  858
  644
  242
  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  
  2,543
  4,355
  5,514
  6,779
  8,108
  9,438
  11,097
  13,139
  15,292
  17,525
  19,807
  22,111
  24,411
  26,689
  28,930
  31,125
  33,269
  35,362
  37,408
  39,413
  41,386
  43,338
  45,282
  47,229
  49,194
  51,191
  53,231
  55,330
  57,499
  59,751
  62,099
Total cash flow (excl. dividends), $m
  944
  4,926
  6,382
  8,098
  10,074
  12,293
  15,124
  18,666
  22,685
  27,182
  32,152
  37,448
  43,335
  49,661
  56,413
  63,576
  71,139
  79,091
  87,425
  96,136
  105,222
  114,683
  124,523
  134,750
  145,373
  156,404
  167,859
  179,755
  192,112
  204,952
  218,299
Retained Cash Flow (-), $m
  -1,511
  -2,898
  -3,856
  -4,983
  -6,282
  -7,740
  -9,339
  -11,058
  -12,870
  -14,750
  -16,670
  -18,609
  -20,545
  -22,462
  -24,348
  -26,196
  -28,000
  -29,762
  -31,484
  -33,171
  -34,832
  -36,475
  -38,110
  -39,749
  -41,403
  -43,083
  -44,800
  -46,566
  -48,392
  -50,288
  -52,264
Prev. year cash balance distribution, $m
 
  4,021
  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
 
  6,049
  2,526
  3,115
  3,792
  4,553
  5,785
  7,608
  9,815
  12,432
  15,482
  18,839
  22,790
  27,199
  32,064
  37,380
  43,139
  49,329
  55,942
  62,965
  70,390
  78,208
  86,413
  95,001
  103,970
  113,321
  123,059
  133,188
  143,720
  154,664
  166,036
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
 
  5,799
  2,313
  2,711
  3,123
  3,529
  4,198
  5,140
  6,135
  7,142
  8,116
  8,946
  9,725
  10,342
  10,765
  10,974
  10,962
  10,733
  10,302
  9,695
  8,944
  8,089
  7,170
  6,226
  5,295
  4,408
  3,590
  2,859
  2,224
  1,688
  1,250
Current shareholders' claim on cash, %
  100
  97.8
  96.3
  95.3
  94.8
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7
  94.7

ASML Holding N.V. develops, produces, markets, sells, and services advanced semiconductor equipment systems with a focus on lithography related systems primarily in the Netherlands, the United States, and Asia. The company offers TWINSCAN systems, which are equipped with i-line, krypton fluoride, and argon fluoride light sources for processing wafers for manufacturing environments for which imaging at a small resolution is required. Its TWINSCAN systems also include immersion lithography systems that place water between the wafer and a system’s projection lens to enhance focus and enable circuit line width to shrink to smaller dimensions. In addition, the company provides TWINSCAN NXT platform, which enables improved imaging and overlay; and NXE system, an optical technology that utilizes reflective mirrors, as well as installed base products and services. Further, it produces dual-stage design lithography systems. ASML Holding N.V. markets and sells its products through its direct sales force. The company was formerly known as ASM Lithography Holding N.V. and changed its name to ASML Holding N.V. in 2001. ASML Holding N.V. was founded in 1984 and is headquartered in Veldhoven, the Netherlands.

FINANCIAL RATIOS  of  ASML Holding (ASML)

Valuation Ratios
P/E Ratio 42.7
Price to Sales 9.3
Price to Book 6.4
Price to Tangible Book
Price to Cash Flow 37.7
Price to Free Cash Flow 46.9
Growth Rates
Sales Growth Rate 8.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -12.9%
Cap. Spend. - 3 Yr. Gr. Rate 8.6%
Financial Strength
Quick Ratio 16
Current Ratio 0.1
LT Debt to Equity 31.3%
Total Debt to Equity 33.8%
Interest Coverage 31
Management Effectiveness
Return On Assets 10%
Ret/ On Assets - 3 Yr. Avg. 10.5%
Return On Total Capital 13%
Ret/ On T. Cap. - 3 Yr. Avg. 14.2%
Return On Equity 16.2%
Return On Equity - 3 Yr. Avg. 16.7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 44.8%
Gross Margin - 3 Yr. Avg. 45.1%
EBITDA Margin 31%
EBITDA Margin - 3 Yr. Avg. 29.3%
Operating Margin 24.4%
Oper. Margin - 3 Yr. Avg. 23.7%
Pre-Tax Margin 24.9%
Pre-Tax Margin - 3 Yr. Avg. 23.8%
Net Profit Margin 21.7%
Net Profit Margin - 3 Yr. Avg. 21.4%
Effective Tax Rate 13%
Eff/ Tax Rate - 3 Yr. Avg. 9.8%
Payout Ratio 30.3%

ASML stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ASML stock intrinsic value calculation we used $7171 million for the last fiscal year's total revenue generated by ASML Holding. The default revenue input number comes from 2016 income statement of ASML Holding. 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 ASML stock valuation model: a) initial revenue growth rate of 45.8% 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 ASML is calculated based on our internal credit rating of ASML Holding, 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 ASML Holding.
    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 ASML stock the variable cost ratio is equal to 75.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ASML 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 3.5% for ASML Holding.

Corporate tax rate of 27% is the nominal tax rate for ASML Holding. 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 ASML 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 ASML are equal to 39.5%.

Life of production assets of 18 years is the average useful life of capital assets used in ASML Holding 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 ASML is equal to 21.6%. 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 - $10365 million for ASML Holding - 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 432.899 million for ASML Holding 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 ASML Holding at the current share price and the inputted number of shares is $66.8 billion.

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COMPANY NEWS

▶ ASML beats 2Q profit forecasts   [Jul-19-17 08:09PM  Associated Press]
▶ Chip-Gear Maker ASML Jumps To Record High On Q2 Beat   [12:22PM  Investor's Business Daily]
▶ Chip Equipment Maker ASML Jumps On Earnings   [05:37AM  Investor's Business Daily]
▶ Qualcomm, ASML To Kick Off Chip Earnings: Investing Action Plan   [Jul-18-17 04:47PM  Investor's Business Daily]
▶ These 6 Big-Cap Stocks Are Within 1% Of Buy Points   [Jul-14-17 12:43AM  Investor's Business Daily]
▶ Beating the Benchmark   [Jul-13-17 04:04PM  GuruFocus.com]
▶ Futures Rise Before Yellen: 3 Chip Stocks Near Buy Zone   [Jul-12-17 07:03AM  Investor's Business Daily]
▶ Indexes Mostly Revive; 3 FAANGs Consolidate, And ASML Nears An Entry   [Jul-11-17 09:58AM  Investor's Business Daily]
▶ Chip Plays Rally As Nasdaq Pulls Ahead; This Hot Sector Cools   [Jun-23-17 02:45PM  Investor's Business Daily]
▶ Three Petrobras Workers Die After Offshore Explosion   [Jun-12-17 01:13PM  TheStreet.com]
▶ Lam Surges, ASML Falls, But Chip Equipment Market Shines   [Apr-19-17 07:10PM  Barrons.com]
▶ Chip Gear Stocks Soared Today: Here's Why   [04:39PM  Investor's Business Daily]
▶ ASML tops Street 1Q forecasts   [05:28AM  Associated Press]
▶ ETFs with exposure to ASML Holding NV : April 5, 2017   [Apr-05-17 04:20PM  Capital Cube]
▶ ASML Earns Membership In 95-Plus Composite Rating Club   [Mar-13-17 03:30PM  Investor's Business Daily]
▶ Chip Gear Stocks Rocking As Investors Come Knocking   [Mar-10-17 04:45PM  Investor's Business Daily]
▶ ASML publishes 2016 annual reports   [02:01AM  GlobeNewswire]
▶ [$$] The Risks and Rewards in ASML and Applied Materials   [Jan-21-17 12:01AM  at Barrons.com]
▶ ASML etches 'remarkable' 2016 profit   [Jan-17-17 07:37PM  AFP]
▶ Is ASML Holding NV (ADR) (ASML) A Good Stock To Buy?   [Dec-12-16 10:59PM  at Insider Monkey]
▶ Should You Invest In Graphene Stocks?   [Dec-08-16 12:34PM  at Motley Fool]
▶ Do Hedge Funds Love Westlake Chemical Corporation (WLK)?   [Dec-07-16 10:54AM  at Insider Monkey]
▶ ASML completes acquisition of HMI   [Nov-22-16 02:01AM  GlobeNewswire]
▶ ASML affirms 2020 growth opportunity   [Oct-31-16 03:02AM  GlobeNewswire]
▶ ASML obtains regulatory approvals for acquisition of HMI   [Oct-26-16 05:16AM  GlobeNewswire]
▶ [$$] ASML Steps Up to Chip-Industry Challenge   [Oct-03-16 02:41PM  at The Wall Street Journal]
▶ [$$] Can This Little-Known Chip Company Preserve Moores Law?   [12:25AM  at The Wall Street Journal]
▶ Samsung Sells Stake In Four Firms To Pay For Galaxy Recall   [Sep-19-16 02:56PM  at Investopedia]
▶ Samsung sold shares in four companies   [Sep-17-16 09:58PM  AAP]
Stock chart of ASML Financial statements of ASML Annual reports of ASML
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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