Intrinsic value of Cypress Semiconductor - CY

Previous Close

$13.12

  Intrinsic Value

$0.35

stock screener

  Rating & Target

str. sell

-97%

  Value-price divergence*

-130%

Previous close

$13.12

 
Intrinsic value

$0.35

 
Up/down potential

-97%

 
Rating

str. sell

 
Value-price divergence*

-130%

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

We calculate the intrinsic value of CY 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 2017), $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 4.3

 

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, %
  19.59
  27.00
  24.80
  22.82
  21.04
  19.43
  17.99
  16.69
  15.52
  14.47
  13.52
  12.67
  11.90
  11.21
  10.59
  10.03
  9.53
  9.08
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
Revenue, $m
  1,923
  2,442
  3,048
  3,743
  4,531
  5,411
  6,385
  7,451
  8,607
  9,853
  11,185
  12,603
  14,103
  15,684
  17,346
  19,086
  20,905
  22,802
  24,779
  26,836
  28,975
  31,199
  33,510
  35,911
  38,407
  41,002
  43,699
  46,505
  49,426
  52,466
  55,633
Variable operating expenses, $m
 
  2,916
  3,604
  4,393
  5,287
  6,287
  7,392
  8,602
  9,915
  11,329
  12,841
  14,306
  16,009
  17,804
  19,690
  21,666
  23,730
  25,884
  28,128
  30,463
  32,892
  35,416
  38,039
  40,766
  43,599
  46,544
  49,606
  52,791
  56,106
  59,558
  63,153
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
  2,535
  2,916
  3,604
  4,393
  5,287
  6,287
  7,392
  8,602
  9,915
  11,329
  12,841
  14,306
  16,009
  17,804
  19,690
  21,666
  23,730
  25,884
  28,128
  30,463
  32,892
  35,416
  38,039
  40,766
  43,599
  46,544
  49,606
  52,791
  56,106
  59,558
  63,153
Operating income, $m
  -612
  -474
  -556
  -650
  -756
  -875
  -1,007
  -1,151
  -1,307
  -1,476
  -1,656
  -1,703
  -1,906
  -2,120
  -2,345
  -2,580
  -2,826
  -3,082
  -3,349
  -3,627
  -3,917
  -4,217
  -4,530
  -4,854
  -5,191
  -5,542
  -5,907
  -6,286
  -6,681
  -7,092
  -7,520
EBITDA, $m
  -346
  -184
  -230
  -282
  -341
  -408
  -481
  -561
  -649
  -743
  -843
  -950
  -1,063
  -1,182
  -1,307
  -1,438
  -1,575
  -1,718
  -1,867
  -2,022
  -2,184
  -2,351
  -2,525
  -2,706
  -2,894
  -3,090
  -3,293
  -3,505
  -3,725
  -3,954
  -4,192
Interest expense (income), $m
  33
  42
  60
  82
  106
  134
  166
  200
  238
  279
  323
  370
  421
  474
  530
  589
  651
  715
  783
  853
  926
  1,002
  1,080
  1,162
  1,248
  1,336
  1,428
  1,524
  1,623
  1,727
  1,835
Earnings before tax, $m
  -667
  -516
  -616
  -732
  -863
  -1,010
  -1,173
  -1,351
  -1,545
  -1,755
  -1,979
  -2,074
  -2,327
  -2,594
  -2,875
  -3,169
  -3,476
  -3,797
  -4,132
  -4,480
  -4,842
  -5,219
  -5,610
  -6,017
  -6,439
  -6,878
  -7,335
  -7,810
  -8,304
  -8,819
  -9,355
Tax expense, $m
  2
  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
Net income, $m
  -686
  -516
  -616
  -732
  -863
  -1,010
  -1,173
  -1,351
  -1,545
  -1,755
  -1,979
  -2,074
  -2,327
  -2,594
  -2,875
  -3,169
  -3,476
  -3,797
  -4,132
  -4,480
  -4,842
  -5,219
  -5,610
  -6,017
  -6,439
  -6,878
  -7,335
  -7,810
  -8,304
  -8,819
  -9,355

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  120
  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
  3,872
  4,761
  5,941
  7,297
  8,832
  10,549
  12,447
  14,524
  16,779
  19,206
  21,804
  24,567
  27,491
  30,574
  33,812
  37,204
  40,750
  44,448
  48,302
  52,312
  56,482
  60,817
  65,322
  70,003
  74,868
  79,925
  85,184
  90,654
  96,346
  102,273
  108,446
Adjusted assets (=assets-cash), $m
  3,752
  4,761
  5,941
  7,297
  8,832
  10,549
  12,447
  14,524
  16,779
  19,206
  21,804
  24,567
  27,491
  30,574
  33,812
  37,204
  40,750
  44,448
  48,302
  52,312
  56,482
  60,817
  65,322
  70,003
  74,868
  79,925
  85,184
  90,654
  96,346
  102,273
  108,446
Revenue / Adjusted assets
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
Average production assets, $m
  1,209
  1,534
  1,914
  2,351
  2,845
  3,398
  4,010
  4,679
  5,405
  6,188
  7,024
  7,914
  8,857
  9,850
  10,893
  11,986
  13,128
  14,320
  15,561
  16,853
  18,196
  19,593
  21,044
  22,552
  24,120
  25,749
  27,443
  29,205
  31,039
  32,949
  34,937
Working capital, $m
  192
  129
  162
  198
  240
  287
  338
  395
  456
  522
  593
  668
  747
  831
  919
  1,012
  1,108
  1,209
  1,313
  1,422
  1,536
  1,654
  1,776
  1,903
  2,036
  2,173
  2,316
  2,465
  2,620
  2,781
  2,949
Total debt, $m
  1,225
  1,721
  2,334
  3,039
  3,838
  4,730
  5,717
  6,798
  7,970
  9,232
  10,583
  12,020
  13,540
  15,143
  16,827
  18,591
  20,435
  22,358
  24,362
  26,447
  28,616
  30,870
  33,212
  35,646
  38,176
  40,806
  43,541
  46,385
  49,345
  52,427
  55,637
Total liabilities, $m
  1,980
  2,476
  3,089
  3,794
  4,593
  5,485
  6,472
  7,553
  8,725
  9,987
  11,338
  12,775
  14,295
  15,898
  17,582
  19,346
  21,190
  23,113
  25,117
  27,202
  29,371
  31,625
  33,967
  36,401
  38,931
  41,561
  44,296
  47,140
  50,100
  53,182
  56,392
Total equity, $m
  1,892
  2,285
  2,852
  3,503
  4,239
  5,063
  5,974
  6,972
  8,054
  9,219
  10,466
  11,792
  13,196
  14,675
  16,230
  17,858
  19,560
  21,335
  23,185
  25,110
  27,111
  29,192
  31,354
  33,601
  35,937
  38,364
  40,888
  43,514
  46,246
  49,091
  52,054
Total liabilities and equity, $m
  3,872
  4,761
  5,941
  7,297
  8,832
  10,548
  12,446
  14,525
  16,779
  19,206
  21,804
  24,567
  27,491
  30,573
  33,812
  37,204
  40,750
  44,448
  48,302
  52,312
  56,482
  60,817
  65,321
  70,002
  74,868
  79,925
  85,184
  90,654
  96,346
  102,273
  108,446
Debt-to-equity ratio
  0.647
  0.750
  0.820
  0.870
  0.910
  0.930
  0.960
  0.980
  0.990
  1.000
  1.010
  1.020
  1.030
  1.030
  1.040
  1.040
  1.040
  1.050
  1.050
  1.050
  1.060
  1.060
  1.060
  1.060
  1.060
  1.060
  1.060
  1.070
  1.070
  1.070
  1.070
Adjusted equity ratio
  0.472
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -686
  -516
  -616
  -732
  -863
  -1,010
  -1,173
  -1,351
  -1,545
  -1,755
  -1,979
  -2,074
  -2,327
  -2,594
  -2,875
  -3,169
  -3,476
  -3,797
  -4,132
  -4,480
  -4,842
  -5,219
  -5,610
  -6,017
  -6,439
  -6,878
  -7,335
  -7,810
  -8,304
  -8,819
  -9,355
Depreciation, amort., depletion, $m
  266
  290
  326
  368
  415
  468
  526
  590
  659
  733
  813
  754
  843
  938
  1,037
  1,142
  1,250
  1,364
  1,482
  1,605
  1,733
  1,866
  2,004
  2,148
  2,297
  2,452
  2,614
  2,781
  2,956
  3,138
  3,327
Funds from operations, $m
  237
  -226
  -290
  -364
  -448
  -542
  -647
  -762
  -887
  -1,021
  -1,166
  -1,320
  -1,483
  -1,656
  -1,837
  -2,027
  -2,226
  -2,434
  -2,650
  -2,875
  -3,109
  -3,353
  -3,606
  -3,869
  -4,142
  -4,426
  -4,721
  -5,029
  -5,348
  -5,681
  -6,027
Change in working capital, $m
  20
  28
  32
  37
  42
  47
  52
  56
  61
  66
  71
  75
  80
  84
  88
  92
  96
  101
  105
  109
  113
  118
  122
  127
  132
  138
  143
  149
  155
  161
  168
Cash from operations, $m
  217
  -253
  -322
  -401
  -490
  -589
  -698
  -818
  -948
  -1,087
  -1,237
  -1,395
  -1,563
  -1,740
  -1,925
  -2,119
  -2,322
  -2,534
  -2,755
  -2,984
  -3,223
  -3,471
  -3,728
  -3,996
  -4,274
  -4,564
  -4,864
  -5,177
  -5,503
  -5,842
  -6,195
Maintenance CAPEX, $m
  0
  -115
  -146
  -182
  -224
  -271
  -324
  -382
  -446
  -515
  -589
  -669
  -754
  -843
  -938
  -1,037
  -1,142
  -1,250
  -1,364
  -1,482
  -1,605
  -1,733
  -1,866
  -2,004
  -2,148
  -2,297
  -2,452
  -2,614
  -2,781
  -2,956
  -3,138
New CAPEX, $m
  -57
  -325
  -380
  -437
  -495
  -553
  -611
  -669
  -726
  -782
  -837
  -890
  -942
  -993
  -1,043
  -1,093
  -1,142
  -1,192
  -1,241
  -1,292
  -1,343
  -1,397
  -1,451
  -1,508
  -1,567
  -1,629
  -1,694
  -1,762
  -1,834
  -1,909
  -1,989
Cash from investing activities, $m
  -613
  -440
  -526
  -619
  -719
  -824
  -935
  -1,051
  -1,172
  -1,297
  -1,426
  -1,559
  -1,696
  -1,836
  -1,981
  -2,130
  -2,284
  -2,442
  -2,605
  -2,774
  -2,948
  -3,130
  -3,317
  -3,512
  -3,715
  -3,926
  -4,146
  -4,376
  -4,615
  -4,865
  -5,127
Free cash flow, $m
  -396
  -694
  -848
  -1,020
  -1,208
  -1,413
  -1,633
  -1,869
  -2,120
  -2,384
  -2,663
  -2,954
  -3,259
  -3,576
  -3,907
  -4,250
  -4,606
  -4,976
  -5,360
  -5,758
  -6,171
  -6,600
  -7,045
  -7,508
  -7,989
  -8,490
  -9,011
  -9,553
  -10,118
  -10,707
  -11,322
Issuance/(repayment) of debt, $m
  599
  526
  614
  705
  798
  893
  987
  1,080
  1,172
  1,263
  1,351
  1,437
  1,521
  1,603
  1,684
  1,764
  1,844
  1,923
  2,004
  2,085
  2,169
  2,254
  2,343
  2,434
  2,530
  2,630
  2,734
  2,844
  2,960
  3,082
  3,210
Issuance/(repurchase) of shares, $m
  -132
  999
  1,183
  1,382
  1,600
  1,834
  2,083
  2,348
  2,627
  2,920
  3,226
  3,400
  3,731
  4,074
  4,429
  4,797
  5,178
  5,573
  5,981
  6,405
  6,844
  7,299
  7,772
  8,264
  8,774
  9,306
  9,859
  10,436
  11,037
  11,664
  12,318
Cash from financing (excl. dividends), $m  
  431
  1,525
  1,797
  2,087
  2,398
  2,727
  3,070
  3,428
  3,799
  4,183
  4,577
  4,837
  5,252
  5,677
  6,113
  6,561
  7,022
  7,496
  7,985
  8,490
  9,013
  9,553
  10,115
  10,698
  11,304
  11,936
  12,593
  13,280
  13,997
  14,746
  15,528
Total cash flow (excl. dividends), $m
  34
  831
  948
  1,068
  1,190
  1,313
  1,437
  1,559
  1,680
  1,798
  1,914
  1,882
  1,992
  2,100
  2,206
  2,311
  2,416
  2,520
  2,625
  2,732
  2,841
  2,953
  3,069
  3,189
  3,315
  3,446
  3,583
  3,727
  3,878
  4,038
  4,206
Retained Cash Flow (-), $m
  829
  -999
  -1,183
  -1,382
  -1,600
  -1,834
  -2,083
  -2,348
  -2,627
  -2,920
  -3,226
  -3,400
  -3,731
  -4,074
  -4,429
  -4,797
  -5,178
  -5,573
  -5,981
  -6,405
  -6,844
  -7,299
  -7,772
  -8,264
  -8,774
  -9,306
  -9,859
  -10,436
  -11,037
  -11,664
  -12,318
Prev. year cash balance distribution, $m
 
  90
  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
 
  -78
  -235
  -315
  -410
  -520
  -647
  -789
  -947
  -1,122
  -1,312
  -1,518
  -1,738
  -1,973
  -2,223
  -2,486
  -2,763
  -3,053
  -3,356
  -3,673
  -4,003
  -4,346
  -4,703
  -5,074
  -5,460
  -5,860
  -6,276
  -6,709
  -7,158
  -7,626
  -8,112
Discount rate, %
 
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
 
  -73
  -203
  -252
  -300
  -346
  -387
  -421
  -447
  -463
  -468
  -463
  -447
  -423
  -392
  -355
  -314
  -272
  -230
  -191
  -154
  -121
  -93
  -70
  -51
  -36
  -25
  -17
  -11
  -7
  -4
Current shareholders' claim on cash, %
  100
  80.3
  65.4
  53.9
  44.8
  37.6
  31.9
  27.1
  23.3
  20.1
  17.4
  15.2
  13.3
  11.7
  10.4
  9.2
  8.1
  7.2
  6.4
  5.7
  5.1
  4.6
  4.1
  3.7
  3.3
  2.9
  2.6
  2.4
  2.1
  1.9
  1.7

Cypress Semiconductor Corporation designs, develops, manufactures, markets, and sells mixed-signal programmable solutions worldwide. The company’s Programmable Solutions division designs and develops programmable solutions, including Traveo automotive microcontrollers; programmable system-on-chip products; ARM Cortex-M4, -M3, and -M0+ microcontrollers; R4 CPUs; analog power management integrated circuits; CapSense capacitive-sensing controllers; TrueTouch touchscreen and fingerprint reader products; and Bluetooth low energy solutions for the Internet of things. Its Memory Products division designs and manufactures NOR and NAND flash memories, static random access memory (SRAM) products, HyperRAm, synchronous and asynchronous SRAMs, nvSRAMs, F-RAM ferroelectric memory devices, dual port memories, first-in first-out memories, RoboClock buffers, and programmable clocks. The company’s Data Communications division provides universal serial bus (USB) controllers; Bluetooth low energy and wirelessUSB solutions; module solutions, such as trackpads and Bluetooth low energy modules; and controllers for the new USB type-C standards. Its Emerging Technology division provides wafer level chip scale packaging solutions and foundry services, as well as other development stage activities. The company serves various markets, including automotive, industrial, communications, consumer, computation, data communications, mobile handsets, and military markets. It sells its semiconductor products through distributors and manufacturing representative firms, as well as through sales force to direct original equipment manufacturers and their suppliers. The company has a strategic foundry partnership with HuaHong Grace Semiconductor Manufacturing Corporation and United Microelectronics Corporation. Cypress Semiconductor Corporation was founded in 1982 and is headquartered in San Jose, California.

FINANCIAL RATIOS  of  Cypress Semiconductor (CY)

Valuation Ratios
P/E Ratio -6.2
Price to Sales 2.2
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 19.6
Price to Free Cash Flow 26.5
Growth Rates
Sales Growth Rate 19.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 21.3%
Cap. Spend. - 3 Yr. Gr. Rate 9%
Financial Strength
Quick Ratio 4
Current Ratio 0.1
LT Debt to Equity 63.2%
Total Debt to Equity 64.7%
Interest Coverage -19
Management Effectiveness
Return On Assets -16.6%
Ret/ On Assets - 3 Yr. Avg. -9.9%
Return On Total Capital -21%
Ret/ On T. Cap. - 3 Yr. Avg. -12.2%
Return On Equity -29.7%
Return On Equity - 3 Yr. Avg. -15.4%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 35.6%
Gross Margin - 3 Yr. Avg. 36.9%
EBITDA Margin -19.1%
EBITDA Margin - 3 Yr. Avg. -5.5%
Operating Margin -31.8%
Oper. Margin - 3 Yr. Avg. -16.5%
Pre-Tax Margin -34.7%
Pre-Tax Margin - 3 Yr. Avg. -18%
Net Profit Margin -35.7%
Net Profit Margin - 3 Yr. Avg. -18.9%
Effective Tax Rate -0.3%
Eff/ Tax Rate - 3 Yr. Avg. -5%
Payout Ratio -20.6%

CY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CY stock intrinsic value calculation we used $1923 million for the last fiscal year's total revenue generated by Cypress Semiconductor. The default revenue input number comes from 2017 income statement of Cypress 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 CY stock valuation model: a) initial revenue growth rate of 27% 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 7%, whose default value for CY is calculated based on our internal credit rating of Cypress 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 Cypress 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 CY stock the variable cost ratio is equal to 121%.

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 CY 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 Cypress Semiconductor.

Corporate tax rate of 27% is the nominal tax rate for Cypress 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 CY 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 CY are equal to 62.8%.

Life of production assets of 10.5 years is the average useful life of capital assets used in Cypress 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 CY is equal to 5.3%. 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 - $1892 million for Cypress 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 326.637 million for Cypress 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 Cypress Semiconductor at the current share price and the inputted number of shares is $4.3 billion.

RELATED COMPANIES Price Int.Val. Rating
TXN Texas Instrume 79.97 77.91  hold
IDTI Integrated Dev 23.36 15.66  sell
MCHP Microchip Tech 81.58 583.35  str.buy
SLAB Silicon Labora 73.40 92.01  buy
MXIM Maxim Integrat 43.87 15.99  str.sell
INTC Intel 35.01 37.95  hold
MOSY MoSys 0.870 0.07  str.sell

COMPANY NEWS

▶ 3 Stocks to Buy With Dividends Yielding More Than 3%   [Aug-14-17 07:50PM  Motley Fool]
▶ 3 "Internet of Things" Stocks to Buy Now   [Aug-07-17 03:15PM  Zacks]
▶ Cypress Announces Quarterly Cash Dividend   [08:00AM  Business Wire]
▶ Cypress Semiconductor Shows More Price Strength   [Aug-02-17 12:17PM  TheStreet.com]
▶ What Price Ratios Say about Cypresss Growth Potential   [Jul-31-17 09:05AM  Market Realist]
▶ Cypress Semiconductor Enjoys Broad-Based Growth   [Jul-28-17 06:49PM  Motley Fool]
▶ Cypress Semiconductor, Intel, Microsemi Touted Post-Earnings   [04:26PM  Investor's Business Daily]
▶ Trade of the Day: Cypress Semiconductor (CY)   [09:24AM  InvestorPlace]
▶ Cypress reports 2Q loss   [12:35AM  Associated Press]
▶ Chip Giant Intel Beats Second-Quarter Sales, Earnings Targets   [Jul-27-17 06:44PM  Investor's Business Daily]
▶ Cypress Reports Second Quarter 2017 Results   [04:05PM  Business Wire]
▶ How Has Cypresss Memory Business Performed?   [09:08AM  Market Realist]
▶ An Update on Cypresss Gross Margin Expansion Strategy   [Jul-25-17 10:42AM  Market Realist]
▶ 3 Stocks That Know How to Beat Earnings   [Jul-19-17 03:50PM  Zacks]
▶ Better Buy: NVIDIA Corporation vs. Cypress Semiconductor   [Jul-18-17 11:15AM  Motley Fool]
▶ Cypress to Announce Second Quarter 2017 Results on July 27   [Jul-13-17 08:00AM  Business Wire]
▶ 3 "Internet of Things" Stocks to Buy Now   [Jul-06-17 06:27PM  Zacks]
▶ Top 5 Earnings Growth Stocks to Buy Right Away   [Jun-30-17 09:55AM  Zacks]
▶ As Nvidia, Broadcom Stumble, Can This Chip Stock Build A New Base?   [Jun-29-17 04:12PM  Investor's Business Daily]
Stock chart of CY Financial statements of CY
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

VALUATION THEORY       ASSET ALLOCATION

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

Copyright © X-FIN.com 2005-2017. All rigths reserved.