Intrinsic value of Inphi - IPHI

Previous Close

$38.99

  Intrinsic Value

$1,046

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+1970%

Previous close

$38.99

 
Intrinsic value

$1,046

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+1970%

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

We calculate the intrinsic value of IPHI 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 1.6

 

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, %
  37.82
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  266
  426
  658
  983
  1,427
  2,013
  2,767
  3,715
  4,878
  6,276
  7,928
  9,844
  12,036
  14,507
  17,260
  20,295
  23,608
  27,195
  31,049
  35,164
  39,535
  44,155
  49,020
  54,127
  59,471
  65,054
  70,875
  76,938
  83,245
  89,804
  96,620
Variable operating expenses, $m
 
  221
  336
  497
  716
  1,006
  1,379
  1,848
  2,423
  3,114
  3,931
  4,868
  5,952
  7,174
  8,536
  10,036
  11,675
  13,448
  15,354
  17,390
  19,551
  21,836
  24,242
  26,767
  29,410
  32,171
  35,050
  38,048
  41,167
  44,410
  47,781
Fixed operating expenses, $m
 
  104
  106
  109
  111
  114
  117
  120
  123
  126
  129
  133
  136
  139
  143
  146
  150
  154
  158
  161
  166
  170
  174
  178
  183
  187
  192
  197
  202
  207
  212
Total operating expenses, $m
  241
  325
  442
  606
  827
  1,120
  1,496
  1,968
  2,546
  3,240
  4,060
  5,001
  6,088
  7,313
  8,679
  10,182
  11,825
  13,602
  15,512
  17,551
  19,717
  22,006
  24,416
  26,945
  29,593
  32,358
  35,242
  38,245
  41,369
  44,617
  47,993
Operating income, $m
  25
  101
  216
  378
  599
  893
  1,271
  1,747
  2,332
  3,036
  3,867
  4,844
  5,948
  7,194
  8,582
  10,112
  11,783
  13,592
  15,537
  17,613
  19,818
  22,150
  24,605
  27,181
  29,879
  32,696
  35,634
  38,693
  41,877
  45,187
  48,627
EBITDA, $m
  56
  149
  285
  476
  736
  1,082
  1,527
  2,087
  2,775
  3,603
  4,581
  5,717
  7,015
  8,480
  10,113
  11,913
  13,877
  16,005
  18,291
  20,732
  23,325
  26,066
  28,953
  31,982
  35,154
  38,466
  41,920
  45,518
  49,261
  53,152
  57,197
Interest expense (income), $m
  3
  14
  25
  41
  64
  95
  135
  188
  253
  334
  431
  546
  679
  831
  1,003
  1,194
  1,404
  1,634
  1,883
  2,151
  2,437
  2,740
  3,061
  3,399
  3,753
  4,124
  4,512
  4,916
  5,337
  5,775
  6,230
Earnings before tax, $m
  11
  87
  191
  337
  536
  798
  1,136
  1,560
  2,079
  2,702
  3,436
  4,298
  5,269
  6,363
  7,579
  8,919
  10,379
  11,958
  13,653
  15,462
  17,382
  19,410
  21,544
  23,783
  26,126
  28,572
  31,122
  33,778
  36,540
  39,412
  42,397
Tax expense, $m
  -16
  24
  52
  91
  145
  216
  307
  421
  561
  729
  928
  1,160
  1,423
  1,718
  2,046
  2,408
  2,802
  3,229
  3,686
  4,175
  4,693
  5,241
  5,817
  6,421
  7,054
  7,714
  8,403
  9,120
  9,866
  10,641
  11,447
Net income, $m
  99
  64
  139
  246
  391
  583
  829
  1,138
  1,517
  1,972
  2,508
  3,137
  3,846
  4,645
  5,533
  6,511
  7,577
  8,729
  9,967
  11,287
  12,689
  14,169
  15,727
  17,361
  19,072
  20,857
  22,719
  24,658
  26,674
  28,771
  30,950

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  394
  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
  991
  1,004
  1,551
  2,319
  3,365
  4,748
  6,527
  8,761
  11,504
  14,803
  18,697
  23,218
  28,386
  34,214
  40,708
  47,866
  55,680
  64,138
  73,228
  82,935
  93,243
  104,140
  115,614
  127,657
  140,263
  153,429
  167,159
  181,457
  196,333
  211,801
  227,878
Adjusted assets (=assets-cash), $m
  597
  1,004
  1,551
  2,319
  3,365
  4,748
  6,527
  8,761
  11,504
  14,803
  18,697
  23,218
  28,386
  34,214
  40,708
  47,866
  55,680
  64,138
  73,228
  82,935
  93,243
  104,140
  115,614
  127,657
  140,263
  153,429
  167,159
  181,457
  196,333
  211,801
  227,878
Revenue / Adjusted assets
  0.446
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
Average production assets, $m
  236
  378
  583
  872
  1,266
  1,786
  2,455
  3,295
  4,327
  5,567
  7,032
  8,732
  10,676
  12,868
  15,310
  18,002
  20,940
  24,122
  27,540
  31,191
  35,068
  39,166
  43,481
  48,010
  52,751
  57,703
  62,866
  68,244
  73,839
  79,656
  85,702
Working capital, $m
  434
  64
  99
  148
  214
  302
  415
  557
  732
  941
  1,189
  1,477
  1,805
  2,176
  2,589
  3,044
  3,541
  4,079
  4,657
  5,275
  5,930
  6,623
  7,353
  8,119
  8,921
  9,758
  10,631
  11,541
  12,487
  13,471
  14,493
Total debt, $m
  398
  714
  1,174
  1,821
  2,700
  3,863
  5,359
  7,238
  9,545
  12,319
  15,594
  19,396
  23,742
  28,644
  34,106
  40,125
  46,696
  53,810
  61,455
  69,618
  78,287
  87,452
  97,102
  107,230
  117,831
  128,904
  140,451
  152,475
  164,986
  177,995
  191,516
Total liabilities, $m
  528
  844
  1,304
  1,951
  2,830
  3,993
  5,489
  7,368
  9,675
  12,449
  15,724
  19,526
  23,872
  28,774
  34,236
  40,255
  46,826
  53,940
  61,585
  69,748
  78,417
  87,582
  97,232
  107,360
  117,961
  129,034
  140,581
  152,605
  165,116
  178,125
  191,646
Total equity, $m
  463
  160
  247
  369
  535
  755
  1,038
  1,393
  1,829
  2,354
  2,973
  3,692
  4,513
  5,440
  6,473
  7,611
  8,853
  10,198
  11,643
  13,187
  14,826
  16,558
  18,383
  20,297
  22,302
  24,395
  26,578
  28,852
  31,217
  33,676
  36,233
Total liabilities and equity, $m
  991
  1,004
  1,551
  2,320
  3,365
  4,748
  6,527
  8,761
  11,504
  14,803
  18,697
  23,218
  28,385
  34,214
  40,709
  47,866
  55,679
  64,138
  73,228
  82,935
  93,243
  104,140
  115,615
  127,657
  140,263
  153,429
  167,159
  181,457
  196,333
  211,801
  227,879
Debt-to-equity ratio
  0.860
  4.470
  4.760
  4.940
  5.050
  5.120
  5.160
  5.200
  5.220
  5.230
  5.250
  5.250
  5.260
  5.270
  5.270
  5.270
  5.270
  5.280
  5.280
  5.280
  5.280
  5.280
  5.280
  5.280
  5.280
  5.280
  5.280
  5.280
  5.290
  5.290
  5.290
Adjusted equity ratio
  0.116
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  99
  64
  139
  246
  391
  583
  829
  1,138
  1,517
  1,972
  2,508
  3,137
  3,846
  4,645
  5,533
  6,511
  7,577
  8,729
  9,967
  11,287
  12,689
  14,169
  15,727
  17,361
  19,072
  20,857
  22,719
  24,658
  26,674
  28,771
  30,950
Depreciation, amort., depletion, $m
  31
  48
  69
  98
  137
  189
  256
  340
  443
  567
  714
  873
  1,068
  1,287
  1,531
  1,800
  2,094
  2,412
  2,754
  3,119
  3,507
  3,917
  4,348
  4,801
  5,275
  5,770
  6,287
  6,824
  7,384
  7,966
  8,570
Funds from operations, $m
  44
  112
  208
  344
  528
  772
  1,085
  1,478
  1,961
  2,540
  3,222
  4,011
  4,914
  5,931
  7,064
  8,311
  9,671
  11,142
  12,721
  14,407
  16,195
  18,086
  20,075
  22,162
  24,347
  26,628
  29,006
  31,482
  34,058
  36,737
  39,520
Change in working capital, $m
  -19
  24
  35
  49
  67
  88
  113
  142
  174
  210
  248
  288
  329
  371
  413
  455
  497
  538
  578
  617
  656
  693
  730
  766
  802
  837
  873
  909
  946
  984
  1,022
Cash from operations, $m
  63
  88
  173
  295
  461
  684
  972
  1,336
  1,786
  2,330
  2,974
  3,723
  4,585
  5,561
  6,651
  7,856
  9,174
  10,604
  12,143
  13,789
  15,540
  17,393
  19,345
  21,397
  23,545
  25,790
  28,133
  30,573
  33,112
  35,753
  38,498
Maintenance CAPEX, $m
  0
  -24
  -38
  -58
  -87
  -127
  -179
  -245
  -329
  -433
  -557
  -703
  -873
  -1,068
  -1,287
  -1,531
  -1,800
  -2,094
  -2,412
  -2,754
  -3,119
  -3,507
  -3,917
  -4,348
  -4,801
  -5,275
  -5,770
  -6,287
  -6,824
  -7,384
  -7,966
New CAPEX, $m
  -22
  -142
  -206
  -289
  -393
  -520
  -669
  -840
  -1,032
  -1,241
  -1,465
  -1,700
  -1,944
  -2,192
  -2,442
  -2,692
  -2,939
  -3,181
  -3,419
  -3,651
  -3,877
  -4,098
  -4,315
  -4,529
  -4,741
  -4,952
  -5,164
  -5,377
  -5,595
  -5,817
  -6,046
Cash from investing activities, $m
  -448
  -166
  -244
  -347
  -480
  -647
  -848
  -1,085
  -1,361
  -1,674
  -2,022
  -2,403
  -2,817
  -3,260
  -3,729
  -4,223
  -4,739
  -5,275
  -5,831
  -6,405
  -6,996
  -7,605
  -8,232
  -8,877
  -9,542
  -10,227
  -10,934
  -11,664
  -12,419
  -13,201
  -14,012
Free cash flow, $m
  -385
  -77
  -70
  -53
  -19
  37
  124
  251
  425
  656
  953
  1,320
  1,768
  2,301
  2,922
  3,633
  4,435
  5,328
  6,312
  7,385
  8,544
  9,788
  11,113
  12,519
  14,003
  15,563
  17,199
  18,909
  20,693
  22,552
  24,486
Issuance/(repayment) of debt, $m
  -1
  316
  460
  646
  880
  1,163
  1,496
  1,879
  2,307
  2,774
  3,275
  3,802
  4,346
  4,902
  5,461
  6,019
  6,571
  7,114
  7,645
  8,163
  8,669
  9,164
  9,650
  10,128
  10,601
  11,073
  11,547
  12,025
  12,511
  13,009
  13,521
Issuance/(repurchase) of shares, $m
  6
  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 financing (excl. dividends), $m  
  247
  316
  460
  646
  880
  1,163
  1,496
  1,879
  2,307
  2,774
  3,275
  3,802
  4,346
  4,902
  5,461
  6,019
  6,571
  7,114
  7,645
  8,163
  8,669
  9,164
  9,650
  10,128
  10,601
  11,073
  11,547
  12,025
  12,511
  13,009
  13,521
Total cash flow (excl. dividends), $m
  -138
  240
  390
  594
  860
  1,200
  1,621
  2,130
  2,732
  3,431
  4,228
  5,121
  6,115
  7,203
  8,383
  9,652
  11,006
  12,442
  13,957
  15,548
  17,213
  18,952
  20,763
  22,647
  24,604
  26,637
  28,745
  30,933
  33,204
  35,560
  38,007
Retained Cash Flow (-), $m
  -172
  -60
  -87
  -122
  -166
  -220
  -283
  -355
  -436
  -525
  -619
  -719
  -822
  -927
  -1,033
  -1,138
  -1,242
  -1,345
  -1,445
  -1,543
  -1,639
  -1,733
  -1,824
  -1,915
  -2,004
  -2,094
  -2,183
  -2,273
  -2,365
  -2,459
  -2,556
Prev. year cash balance distribution, $m
 
  364
  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
 
  542
  303
  471
  694
  980
  1,338
  1,774
  2,296
  2,906
  3,609
  4,403
  5,293
  6,276
  7,351
  8,514
  9,764
  11,097
  12,511
  14,004
  15,574
  17,219
  18,939
  20,732
  22,600
  24,543
  26,562
  28,660
  30,838
  33,101
  35,450
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
 
  520
  277
  410
  572
  760
  971
  1,199
  1,435
  1,669
  1,892
  2,091
  2,259
  2,386
  2,468
  2,500
  2,481
  2,415
  2,304
  2,156
  1,979
  1,781
  1,571
  1,359
  1,151
  955
  775
  615
  477
  361
  267
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Inphi Corporation provides high-speed analog and mixed signal semiconductor solutions for the communications, datacenter, and computing markets worldwide. The company’s analog and mixed signal semiconductor solutions offers high signal integrity at data speeds while reducing system power consumption. Its semiconductor solutions are designed to address bandwidth bottlenecks in networks, maximize throughput and minimize latency in computing environments, and enable the rollout of next generation communications, datacenter, and computing infrastructures. Its solutions provide a high-speed interface between analog signals and digital information in high-performance systems, such as telecommunications transport systems, enterprise networking equipment, datacenters and enterprise servers, storage platforms, test and measurement equipment, and military systems. The company also provides 10G/40G, 100G, and beyond 100G high-speed analog semiconductor solutions for the communications market and high-speed memory interface solutions for the computing market. Its products perform a range of functions, such as amplifying, encoding, multiplexing, demultiplexing, retiming, and buffering data and clock signals at speeds up to 100 Gbps. Inphi Corporation sells its products directly through its sales force, as well as through a network of sales representatives and distributors to original equipment manufacturers. The company was formerly known as TCom Communications, Inc. and changed its name to Inphi Corporation in February 2001. Inphi Corporation was incorporated in 2000 and is headquartered in Santa Clara, California.

FINANCIAL RATIOS  of  Inphi (IPHI)

Valuation Ratios
P/E Ratio 16.3
Price to Sales 6.1
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 25.6
Price to Free Cash Flow 39.3
Growth Rates
Sales Growth Rate 37.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 29.4%
Cap. Spend. - 3 Yr. Gr. Rate 5.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 86%
Total Debt to Equity 86%
Interest Coverage 5
Management Effectiveness
Return On Assets 14.2%
Ret/ On Assets - 3 Yr. Avg. 0.2%
Return On Total Capital 15%
Ret/ On T. Cap. - 3 Yr. Avg. -0.2%
Return On Equity 26.3%
Return On Equity - 3 Yr. Avg. 3.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 68%
Gross Margin - 3 Yr. Avg. 61.5%
EBITDA Margin 16.9%
EBITDA Margin - 3 Yr. Avg. 1.3%
Operating Margin 9.4%
Oper. Margin - 3 Yr. Avg. -10.9%
Pre-Tax Margin 4.1%
Pre-Tax Margin - 3 Yr. Avg. -12.5%
Net Profit Margin 37.2%
Net Profit Margin - 3 Yr. Avg. 2%
Effective Tax Rate -145.5%
Eff/ Tax Rate - 3 Yr. Avg. -70.4%
Payout Ratio 0%

IPHI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IPHI stock intrinsic value calculation we used $266 million for the last fiscal year's total revenue generated by Inphi. The default revenue input number comes from 2016 income statement of Inphi. 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 IPHI stock valuation model: a) initial revenue growth rate of 60% 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 IPHI is calculated based on our internal credit rating of Inphi, 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 Inphi.
    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 IPHI stock the variable cost ratio is equal to 53.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $101 million in the base year in the intrinsic value calculation for IPHI 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 Inphi.

Corporate tax rate of 27% is the nominal tax rate for Inphi. 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 IPHI 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 IPHI are equal to 88.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Inphi 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 IPHI is equal to 15%. 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 - $463 million for Inphi - 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 40.768 million for Inphi 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 Inphi at the current share price and the inputted number of shares is $1.6 billion.

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COMPANY NEWS

▶ Inphi Corp. Value Analysis (NYSE:IPHI) : July 14, 2017   [Jul-14-17 06:05PM  Capital Cube]
▶ ETFs with exposure to Inphi Corp. : July 12, 2017   [Jul-12-17 02:42PM  Capital Cube]
▶ ETFs with exposure to Inphi Corp. : June 30, 2017   [Jun-30-17 03:05PM  Capital Cube]
▶ ETFs with exposure to Inphi Corp. : June 19, 2017   [Jun-19-17 03:34PM  Capital Cube]
▶ ETFs with exposure to Inphi Corp. : June 8, 2017   [Jun-08-17 01:41PM  Capital Cube]
▶ ETFs with exposure to Inphi Corp. : May 29, 2017   [May-29-17 12:48PM  Capital Cube]
▶ Chip Stocks And Semiconductor Industry News   [May-18-17 04:32PM  Investor's Business Daily]
▶ Who Needs China? Fiber Optic Stocks Rally Off Lows On Amazon, Verizon Hopes   [May-03-17 04:36PM  Investor's Business Daily]
▶ Why Inphi Corp. Stock Plummeted Today   [12:30PM  Motley Fool]
▶ Story Stocks from Briefing.com   [12:09PM  Briefing.com]
▶ Inphi reports 1Q loss   [May-02-17 06:45PM  Associated Press]
▶ Is This Fiber-Optics IPO Eyeing A New Base And Breakout?   [May-01-17 12:05PM  Investor's Business Daily]
▶ Inphi Corp. Value Analysis (NYSE:IPHI) : April 27, 2017   [Apr-27-17 04:56PM  Capital Cube]
▶ Which Companies Are Now Outperforming 95% Of All Stocks?   [Apr-21-17 11:38AM  Investor's Business Daily]
▶ Inphi Joins Rank Of Stocks With 95-Plus Composite Rating   [11:29AM  Investor's Business Daily]
▶ Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks   [Apr-20-17 09:39AM  Investor's Business Daily]
▶ Ciena Merchant Chip Strategy Targets Acacia, Inphi And China   [Mar-21-17 04:11PM  Investor's Business Daily]
▶ This Tech Company Is Now Rated Among The Top 3% Of All Stocks   [10:47AM  Investor's Business Daily]
▶ Inphi beats Street 4Q forecasts   [Feb-07-17 07:49PM  AP]
▶ Inphi Rising on Q4 Beat, Higher Q1 View   [05:20PM  at Barrons.com]
▶ Is Inphi Corporation (IPHI) A Good Stock To Buy?   [Dec-07-16 08:33AM  at Insider Monkey]
Stock chart of IPHI Financial statements of IPHI Annual reports of IPHI
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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