Intrinsic value of Data I/O - DAIO

Previous Close

$8.13

  Intrinsic Value

$9.91

stock screener

  Rating & Target

buy

+22%

  Value-price divergence*

-139%

Previous close

$8.13

 
Intrinsic value

$9.91

 
Up/down potential

+22%

 
Rating

buy

 
Value-price divergence*

-139%

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

We calculate the intrinsic value of DAIO 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 0.1

 

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, %
  4.55
  40.00
  36.50
  33.35
  30.52
  27.96
  25.67
  23.60
  21.74
  20.07
  18.56
  17.20
  15.98
  14.89
  13.90
  13.01
  12.21
  11.49
  10.84
  10.25
  9.73
  9.26
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.04
  6.83
  6.65
Revenue, $m
  23
  32
  44
  59
  76
  98
  123
  152
  185
  222
  263
  309
  358
  411
  469
  530
  594
  663
  734
  810
  888
  971
  1,056
  1,146
  1,238
  1,335
  1,435
  1,539
  1,648
  1,760
  1,877
Variable operating expenses, $m
 
  31
  42
  56
  73
  94
  118
  146
  177
  213
  252
  296
  343
  394
  449
  507
  569
  634
  703
  775
  850
  929
  1,011
  1,096
  1,185
  1,277
  1,373
  1,473
  1,577
  1,685
  1,797
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
  22
  31
  42
  56
  73
  94
  118
  146
  177
  213
  252
  296
  343
  394
  449
  507
  569
  634
  703
  775
  850
  929
  1,011
  1,096
  1,185
  1,277
  1,373
  1,473
  1,577
  1,685
  1,797
Operating income, $m
  1
  1
  2
  3
  3
  4
  5
  7
  8
  10
  11
  13
  15
  18
  20
  23
  26
  28
  32
  35
  38
  42
  45
  49
  53
  57
  62
  66
  71
  76
  81
EBITDA, $m
  2
  1
  2
  3
  3
  4
  5
  7
  8
  10
  11
  13
  15
  18
  20
  23
  26
  28
  32
  35
  38
  42
  45
  49
  53
  57
  62
  66
  71
  76
  81
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
Earnings before tax, $m
  2
  1
  2
  2
  3
  4
  4
  5
  7
  8
  9
  11
  12
  14
  16
  18
  20
  22
  25
  27
  30
  33
  35
  38
  41
  44
  48
  51
  55
  58
  62
Tax expense, $m
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
Net income, $m
  2
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  43
  45

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12
  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
  23
  15
  21
  28
  37
  47
  59
  73
  89
  106
  126
  148
  171
  197
  224
  253
  284
  317
  351
  387
  425
  464
  505
  548
  592
  638
  686
  736
  788
  842
  898
Adjusted assets (=assets-cash), $m
  11
  15
  21
  28
  37
  47
  59
  73
  89
  106
  126
  148
  171
  197
  224
  253
  284
  317
  351
  387
  425
  464
  505
  548
  592
  638
  686
  736
  788
  842
  898
Revenue / Adjusted assets
  2.091
  2.133
  2.095
  2.107
  2.054
  2.085
  2.085
  2.082
  2.079
  2.094
  2.087
  2.088
  2.094
  2.086
  2.094
  2.095
  2.092
  2.091
  2.091
  2.093
  2.089
  2.093
  2.091
  2.091
  2.091
  2.092
  2.092
  2.091
  2.091
  2.090
  2.090
Average production assets, $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
  0
Working capital, $m
  15
  4
  6
  8
  10
  13
  16
  20
  24
  29
  34
  40
  47
  53
  61
  69
  77
  86
  95
  105
  115
  126
  137
  149
  161
  174
  187
  200
  214
  229
  244
Total debt, $m
  0
  3
  6
  11
  16
  23
  30
  39
  49
  61
  73
  87
  102
  118
  136
  154
  174
  195
  216
  239
  263
  288
  314
  341
  370
  399
  430
  461
  494
  528
  564
Total liabilities, $m
  7
  10
  13
  18
  23
  30
  37
  46
  56
  68
  80
  94
  109
  125
  143
  161
  181
  202
  223
  246
  270
  295
  321
  348
  377
  406
  437
  468
  501
  535
  571
Total equity, $m
  16
  6
  8
  10
  13
  17
  21
  26
  32
  39
  46
  54
  62
  72
  82
  92
  103
  115
  128
  141
  155
  169
  184
  199
  216
  232
  250
  268
  287
  306
  327
Total liabilities and equity, $m
  23
  16
  21
  28
  36
  47
  58
  72
  88
  107
  126
  148
  171
  197
  225
  253
  284
  317
  351
  387
  425
  464
  505
  547
  593
  638
  687
  736
  788
  841
  898
Debt-to-equity ratio
  0.000
  0.500
  0.830
  1.060
  1.220
  1.340
  1.420
  1.480
  1.530
  1.570
  1.590
  1.620
  1.630
  1.650
  1.660
  1.670
  1.680
  1.690
  1.690
  1.700
  1.700
  1.710
  1.710
  1.710
  1.710
  1.720
  1.720
  1.720
  1.720
  1.720
  1.730
Adjusted equity ratio
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  43
  45
Depreciation, amort., depletion, $m
  1
  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
Funds from operations, $m
  2
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  43
  45
Change in working capital, $m
  -1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
Cash from operations, $m
  3
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  2
  3
  3
  4
  5
  6
  7
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
Maintenance CAPEX, $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
  0
New CAPEX, $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
Cash from investing activities, $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
Free cash flow, $m
  1
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  2
  3
  3
  4
  5
  6
  7
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
Issuance/(repayment) of debt, $m
  0
  3
  4
  4
  5
  7
  8
  9
  10
  11
  13
  14
  15
  16
  17
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
Issuance/(repurchase) of shares, $m
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  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  
  0
  4
  5
  5
  6
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
Total cash flow (excl. dividends), $m
  0
  3
  4
  5
  6
  7
  9
  10
  12
  13
  14
  16
  18
  20
  22
  24
  26
  28
  31
  33
  35
  38
  41
  43
  46
  49
  52
  55
  59
  62
  66
Retained Cash Flow (-), $m
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -20
Prev. year cash balance distribution, $m
 
  12
  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
 
  14
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  43
  45
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
 
  13
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  3
  3
  3
  2
  2
  2
  2
  1
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  96.3
  93.2
  90.6
  88.4
  86.6
  85.2
  84.1
  83.4
  82.9
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6

Data I/O Corporation designs, manufactures, and sells programming systems for electronic device manufacturers worldwide. The company’s programming system products are used to program integrated circuits (ICs) with the specific data necessary for the ICs. It provides PSV handlers off-line automated programming systems; and RoadRunner and RoadRunner3 series handlers, an in-line automated programming systems. The company also offers non-automated programming systems comprising FlashPAK III programmer; and Sprint/Unifamily programmers, an off-line, low volume, and engineering non-automated system. In addition, it provides hardware support, system installation and repair, and device programming services. The company markets and sells its products to original equipment manufacturers in automotive electronics, wireless, consumer electronics, and the Internet of things and their electronic manufacturing service contract manufacturers through direct sales, internal telesales, and indirect sales representatives and distributors. Data I/O Corporation was founded in 1969 and is headquartered in Redmond, Washington.

FINANCIAL RATIOS  of  Data I/O (DAIO)

Valuation Ratios
P/E Ratio 32.6
Price to Sales 2.8
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 21.7
Price to Free Cash Flow 65.2
Growth Rates
Sales Growth Rate 4.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 9.3%
Ret/ On Assets - 3 Yr. Avg. 6.6%
Return On Total Capital 12.9%
Ret/ On T. Cap. - 3 Yr. Avg. 9.1%
Return On Equity 12.9%
Return On Equity - 3 Yr. Avg. 9.1%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 56.5%
Gross Margin - 3 Yr. Avg. 55.2%
EBITDA Margin 13%
EBITDA Margin - 3 Yr. Avg. 10.4%
Operating Margin 4.3%
Oper. Margin - 3 Yr. Avg. 4.5%
Pre-Tax Margin 8.7%
Pre-Tax Margin - 3 Yr. Avg. 5.9%
Net Profit Margin 8.7%
Net Profit Margin - 3 Yr. Avg. 5.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

DAIO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DAIO stock intrinsic value calculation we used $23 million for the last fiscal year's total revenue generated by Data I/O. The default revenue input number comes from 2016 income statement of Data I/O. 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 DAIO stock valuation model: a) initial revenue growth rate of 40% 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 DAIO is calculated based on our internal credit rating of Data I/O, 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 Data I/O.
    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 DAIO stock the variable cost ratio is equal to 95.7%.

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 DAIO 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 Data I/O.

Corporate tax rate of 27% is the nominal tax rate for Data I/O. 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 DAIO 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 DAIO are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Data I/O 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 DAIO is equal to 13%. 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 - $16 million for Data I/O - 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 7.701 million for Data I/O 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 Data I/O at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
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CPSH CPS Technologi 1.18 0.20  str.sell
XLNX Xilinx 62.71 46.15  sell
JBL Jabil Circuit 30.08 40.01  buy
SANM Sanmina 36.75 70.09  str.buy
AVT Avnet 37.54 44.47  hold
CYBE CyberOptics 15.00 10.59  str.sell
CY Cypress Semico 13.73 0.35  str.sell

COMPANY NEWS

▶ Data I/O Reports Second Quarter 2017 Results   [Jul-27-17 04:05PM  Marketwired]
▶ ETFs with exposure to Data I/O Corp. : July 5, 2017   [Jul-05-17 12:38PM  Capital Cube]
▶ ETFs with exposure to Data I/O Corp. : May 31, 2017   [May-31-17 12:28PM  Capital Cube]
▶ ETFs with exposure to Data I/O Corp. : May 18, 2017   [May-18-17 01:39PM  Capital Cube]
▶ Data I/O Reports First Quarter 2017 Results   [May-04-17 04:05PM  Marketwired]
▶ ETFs with exposure to Data I/O Corp. : April 5, 2017   [Apr-05-17 04:37PM  Capital Cube]
▶ Data I/O Corporation Announces Upcoming Investor Events   [Feb-07-17 09:00AM  Marketwired]
▶ Data I/O Reports Third Quarter 2016 Results   [Oct-27-16 04:05PM  Marketwired]
▶ Data I/O Reports Second Quarter 2016 Results   [Jul-28-16 04:05PM  Marketwired]
▶ Data I/O Reports First Quarter 2016 Results   [Apr-28-16 04:05PM  Marketwired]
▶ Data I/O Reports Fourth Quarter 2015 Results   [Feb-25-16 04:05PM  Marketwired]
▶ Data I/O to Present at the LD Micro Main Event   [Nov-24  08:00AM  Accesswire]
▶ Data I/O Reports Third Quarter 2015 Results   [Oct-29  04:05PM  Marketwired]
▶ 10-Q for Data I/O Corp.   [Aug-17  08:13PM  at Company Spotlight]
▶ Data I/O Announces LumenX(TM) Programming Technology   [Aug-10  06:15PM  Marketwired]
▶ 10-Q for Data I/O Corp.   [May-16  08:09PM  at Company Spotlight]
▶ Data I/O Reports 2015 First Quarter Results   [Apr-30  04:57PM  at noodls]
Stock chart of DAIO Financial statements of DAIO
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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