Intrinsic value of Cypress Semiconductor - CY

Previous Close

$14.01

  Intrinsic Value

$0.35

stock screener

  Rating & Target

str. sell

-97%

  Value-price divergence*

0%

Previous close

$14.01

 
Intrinsic value

$0.35

 
Up/down potential

-97%

 
Rating

str. sell

 
Value-price divergence*

0%

*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 4.5

 

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
  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
  7.13
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
Revenue, $m
  1,923
  2,265
  2,640
  3,045
  3,482
  3,948
  4,444
  4,968
  5,521
  6,101
  6,709
  7,344
  8,006
  8,695
  9,413
  10,159
  10,935
  11,741
  12,579
  13,450
  14,355
  15,296
  16,275
  17,294
  18,355
  19,460
  20,612
  21,813
  23,066
  24,373
  25,739
Variable operating expenses, $m
 
  2,715
  3,140
  3,601
  4,096
  4,626
  5,188
  5,784
  6,411
  7,070
  7,759
  8,336
  9,088
  9,871
  10,686
  11,533
  12,413
  13,328
  14,279
  15,268
  16,295
  17,363
  18,475
  19,631
  20,836
  22,090
  23,398
  24,761
  26,183
  27,668
  29,218
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
  2,715
  3,140
  3,601
  4,096
  4,626
  5,188
  5,784
  6,411
  7,070
  7,759
  8,336
  9,088
  9,871
  10,686
  11,533
  12,413
  13,328
  14,279
  15,268
  16,295
  17,363
  18,475
  19,631
  20,836
  22,090
  23,398
  24,761
  26,183
  27,668
  29,218
Operating income, $m
  -612
  -450
  -501
  -556
  -615
  -678
  -745
  -815
  -890
  -969
  -1,051
  -993
  -1,082
  -1,175
  -1,272
  -1,373
  -1,478
  -1,587
  -1,700
  -1,818
  -1,940
  -2,068
  -2,200
  -2,338
  -2,481
  -2,630
  -2,786
  -2,948
  -3,118
  -3,295
  -3,479
EBITDA, $m
  -346
  -171
  -199
  -229
  -262
  -298
  -335
  -374
  -416
  -460
  -506
  -553
  -603
  -655
  -709
  -766
  -824
  -885
  -948
  -1,014
  -1,082
  -1,153
  -1,226
  -1,303
  -1,383
  -1,466
  -1,553
  -1,644
  -1,738
  -1,837
  -1,940
Interest expense (income), $m
  33
  42
  54
  67
  82
  97
  114
  131
  150
  169
  190
  212
  234
  258
  282
  308
  334
  362
  390
  420
  451
  483
  516
  551
  587
  625
  664
  705
  747
  792
  838
Earnings before tax, $m
  -667
  -492
  -555
  -623
  -696
  -775
  -858
  -947
  -1,040
  -1,138
  -1,241
  -1,204
  -1,316
  -1,433
  -1,554
  -1,681
  -1,812
  -1,949
  -2,090
  -2,238
  -2,391
  -2,550
  -2,716
  -2,889
  -3,068
  -3,255
  -3,450
  -3,653
  -3,865
  -4,086
  -4,317
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
  -492
  -555
  -623
  -696
  -775
  -858
  -947
  -1,040
  -1,138
  -1,241
  -1,204
  -1,316
  -1,433
  -1,554
  -1,681
  -1,812
  -1,949
  -2,090
  -2,238
  -2,391
  -2,550
  -2,716
  -2,889
  -3,068
  -3,255
  -3,450
  -3,653
  -3,865
  -4,086
  -4,317

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
  4,416
  5,145
  5,936
  6,787
  7,696
  8,662
  9,685
  10,762
  11,893
  13,078
  14,315
  15,606
  16,950
  18,349
  19,804
  21,316
  22,888
  24,521
  26,218
  27,982
  29,816
  31,725
  33,711
  35,779
  37,933
  40,178
  42,520
  44,962
  47,511
  50,173
Adjusted assets (=assets-cash), $m
  3,752
  4,416
  5,145
  5,936
  6,787
  7,696
  8,662
  9,685
  10,762
  11,893
  13,078
  14,315
  15,606
  16,950
  18,349
  19,804
  21,316
  22,888
  24,521
  26,218
  27,982
  29,816
  31,725
  33,711
  35,779
  37,933
  40,178
  42,520
  44,962
  47,511
  50,173
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
  1,423
  1,658
  1,912
  2,186
  2,479
  2,791
  3,120
  3,467
  3,832
  4,213
  4,612
  5,028
  5,461
  5,911
  6,380
  6,867
  7,374
  7,900
  8,446
  9,015
  9,606
  10,221
  10,860
  11,527
  12,221
  12,944
  13,698
  14,485
  15,306
  16,164
Working capital, $m
  192
  120
  140
  161
  185
  209
  236
  263
  293
  323
  356
  389
  424
  461
  499
  538
  580
  622
  667
  713
  761
  811
  863
  917
  973
  1,031
  1,092
  1,156
  1,222
  1,292
  1,364
Total debt, $m
  1,225
  1,541
  1,921
  2,332
  2,774
  3,247
  3,749
  4,281
  4,841
  5,429
  6,045
  6,689
  7,360
  8,059
  8,787
  9,543
  10,329
  11,147
  11,996
  12,878
  13,796
  14,750
  15,742
  16,775
  17,850
  18,970
  20,138
  21,355
  22,625
  23,951
  25,335
Total liabilities, $m
  1,980
  2,296
  2,676
  3,087
  3,529
  4,002
  4,504
  5,036
  5,596
  6,184
  6,800
  7,444
  8,115
  8,814
  9,542
  10,298
  11,084
  11,902
  12,751
  13,633
  14,551
  15,505
  16,497
  17,530
  18,605
  19,725
  20,893
  22,110
  23,380
  24,706
  26,090
Total equity, $m
  1,892
  2,120
  2,470
  2,849
  3,258
  3,694
  4,158
  4,649
  5,166
  5,709
  6,277
  6,871
  7,491
  8,136
  8,808
  9,506
  10,232
  10,986
  11,770
  12,584
  13,431
  14,312
  15,228
  16,181
  17,174
  18,208
  19,286
  20,409
  21,582
  22,805
  24,083
Total liabilities and equity, $m
  3,872
  4,416
  5,146
  5,936
  6,787
  7,696
  8,662
  9,685
  10,762
  11,893
  13,077
  14,315
  15,606
  16,950
  18,350
  19,804
  21,316
  22,888
  24,521
  26,217
  27,982
  29,817
  31,725
  33,711
  35,779
  37,933
  40,179
  42,519
  44,962
  47,511
  50,173
Debt-to-equity ratio
  0.647
  0.730
  0.780
  0.820
  0.850
  0.880
  0.900
  0.920
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.000
  1.010
  1.010
  1.020
  1.020
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.050
  1.050
  1.050
  1.050
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
  -492
  -555
  -623
  -696
  -775
  -858
  -947
  -1,040
  -1,138
  -1,241
  -1,204
  -1,316
  -1,433
  -1,554
  -1,681
  -1,812
  -1,949
  -2,090
  -2,238
  -2,391
  -2,550
  -2,716
  -2,889
  -3,068
  -3,255
  -3,450
  -3,653
  -3,865
  -4,086
  -4,317
Depreciation, amort., depletion, $m
  266
  279
  302
  326
  352
  380
  410
  441
  474
  509
  545
  439
  479
  520
  563
  608
  654
  702
  752
  804
  859
  915
  973
  1,034
  1,098
  1,164
  1,233
  1,305
  1,380
  1,458
  1,539
Funds from operations, $m
  237
  -213
  -253
  -297
  -344
  -395
  -449
  -506
  -566
  -629
  -696
  -765
  -837
  -913
  -991
  -1,073
  -1,158
  -1,246
  -1,338
  -1,433
  -1,532
  -1,636
  -1,743
  -1,854
  -1,970
  -2,091
  -2,217
  -2,349
  -2,486
  -2,629
  -2,778
Change in working capital, $m
  20
  18
  20
  21
  23
  25
  26
  28
  29
  31
  32
  34
  35
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  66
  69
  72
Cash from operations, $m
  217
  -236
  -273
  -318
  -367
  -419
  -475
  -533
  -595
  -660
  -728
  -799
  -873
  -949
  -1,029
  -1,113
  -1,199
  -1,289
  -1,382
  -1,480
  -1,580
  -1,685
  -1,795
  -1,908
  -2,027
  -2,150
  -2,278
  -2,412
  -2,552
  -2,698
  -2,850
Maintenance CAPEX, $m
  0
  -115
  -135
  -158
  -182
  -208
  -236
  -266
  -297
  -330
  -365
  -401
  -439
  -479
  -520
  -563
  -608
  -654
  -702
  -752
  -804
  -859
  -915
  -973
  -1,034
  -1,098
  -1,164
  -1,233
  -1,305
  -1,380
  -1,458
New CAPEX, $m
  -57
  -214
  -235
  -255
  -274
  -293
  -311
  -329
  -347
  -364
  -382
  -399
  -416
  -433
  -451
  -469
  -487
  -506
  -526
  -547
  -568
  -591
  -615
  -640
  -666
  -694
  -723
  -754
  -787
  -821
  -858
Cash from investing activities, $m
  -613
  -329
  -370
  -413
  -456
  -501
  -547
  -595
  -644
  -694
  -747
  -800
  -855
  -912
  -971
  -1,032
  -1,095
  -1,160
  -1,228
  -1,299
  -1,372
  -1,450
  -1,530
  -1,613
  -1,700
  -1,792
  -1,887
  -1,987
  -2,092
  -2,201
  -2,316
Free cash flow, $m
  -396
  -565
  -643
  -731
  -823
  -921
  -1,022
  -1,129
  -1,239
  -1,355
  -1,474
  -1,599
  -1,728
  -1,861
  -2,000
  -2,144
  -2,294
  -2,449
  -2,611
  -2,779
  -2,953
  -3,135
  -3,324
  -3,521
  -3,727
  -3,942
  -4,165
  -4,399
  -4,644
  -4,899
  -5,166
Issuance/(repayment) of debt, $m
  599
  346
  379
  411
  442
  473
  503
  532
  560
  588
  616
  644
  671
  699
  727
  756
  786
  817
  849
  883
  917
  954
  992
  1,033
  1,075
  1,120
  1,168
  1,217
  1,270
  1,326
  1,384
Issuance/(repurchase) of shares, $m
  -132
  447
  614
  699
  789
  884
  984
  1,088
  1,196
  1,309
  1,427
  1,549
  1,676
  1,808
  1,944
  2,086
  2,233
  2,386
  2,545
  2,711
  2,883
  3,062
  3,248
  3,442
  3,644
  3,855
  4,076
  4,306
  4,546
  4,797
  5,059
Cash from financing (excl. dividends), $m  
  431
  793
  993
  1,110
  1,231
  1,357
  1,487
  1,620
  1,756
  1,897
  2,043
  2,193
  2,347
  2,507
  2,671
  2,842
  3,019
  3,203
  3,394
  3,594
  3,800
  4,016
  4,240
  4,475
  4,719
  4,975
  5,244
  5,523
  5,816
  6,123
  6,443
Total cash flow (excl. dividends), $m
  34
  -219
  -264
  -320
  -381
  -448
  -520
  -597
  -679
  -766
  -858
  -955
  -1,056
  -1,162
  -1,273
  -1,388
  -1,508
  -1,632
  -1,762
  -1,896
  -2,036
  -2,181
  -2,332
  -2,489
  -2,652
  -2,821
  -2,998
  -3,182
  -3,373
  -3,573
  -3,781
Retained Cash Flow (-), $m
  829
  -318
  -350
  -380
  -408
  -436
  -464
  -491
  -517
  -543
  -569
  -594
  -620
  -645
  -672
  -698
  -726
  -754
  -784
  -815
  -847
  -881
  -916
  -953
  -993
  -1,034
  -1,078
  -1,124
  -1,172
  -1,224
  -1,278
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
 
  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
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
 
  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
Current shareholders' claim on cash, %
  100
  90.6
  80.8
  72.2
  64.7
  58.1
  52.3
  47.1
  42.6
  38.5
  34.8
  31.6
  28.6
  26.0
  23.7
  21.5
  19.6
  17.9
  16.3
  14.8
  13.5
  12.4
  11.3
  10.3
  9.4
  8.6
  7.9
  7.2
  6.6
  6.0
  5.5

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 -6.6
Price to Sales 2.4
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 20.9
Price to Free Cash Flow 28.3
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 17.8% 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 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 322.674 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 $4.5 billion.

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COMPANY NEWS

▶ Cramer: These Are Hard Times for Hardware   [Apr-28-17 07:01PM  TheStreet.com]
▶ Cypress reports 1Q loss   [06:18PM  Associated Press]
▶ Behind Cypresss Product Strategy for NOR Flash   [Apr-17-17 09:05AM  Market Realist]
▶ Cypress USB-C in 2H17: Key Drivers   [Apr-14-17 10:35AM  Market Realist]
▶ Whats Going On with Cypress Management?   [07:35AM  Market Realist]
▶ What Makes Cypresss IoT Portfolio Stand Out?   [Apr-13-17 10:36AM  Market Realist]
▶ Whats Cypress Want with ADAS?   [Apr-12-17 10:37AM  Market Realist]
▶ Why Cypress Is Targeting Instrument Clusters   [07:38AM  Market Realist]
▶ Inside Cypresss Strategy to Rule the Embedded Market   [Apr-11-17 05:53PM  Market Realist]
▶ MaxLinear, Cypress Semiconductor Earn Price-Target Hikes   [Mar-30-17 04:37PM  Investor's Business Daily]
▶ Cypress Semi: P/E Trap or Screaming Buy?   [09:19AM  Investopedia]
▶ Cypress Semi: P/E Trap or Screaming Buy?   [09:19AM  at Investopedia]
▶ Analysts Upbeat On Cypress Semiconductor, Cautious On Intel   [Mar-29-17 04:40PM  Investor's Business Daily]
▶ How Cypress Semiconductor Could Benefit From the Next iPhone   [Mar-17-17 07:29AM  at Motley Fool]
▶ Why Cypress Semiconductor Corp. Rose 12.5% in February   [Mar-10-17 02:27PM  at Motley Fool]
▶ 3 Winners From the Nintendo Switch Teardown   [01:00PM  at Motley Fool]
▶ Cypress to Host Analyst Day Event on March 28   [Mar-06-17 08:00AM  PR Newswire]
▶ No USB-C Connector on iPhone 8: Analyst   [Mar-02-17 12:56PM  24/7 Wall St.]
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.

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