Intrinsic value of Kopin - KOPN

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$3.77

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$3.77

 
Intrinsic value

$0.69

 
Up/down potential

-82%

 
Rating

str. sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of KOPN 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 0.3

 

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, %
  -28.13
  20.00
  18.50
  17.15
  15.94
  14.84
  13.86
  12.97
  12.17
  11.46
  10.81
  10.23
  9.71
  9.24
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.03
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
Revenue, $m
  23
  28
  33
  38
  44
  51
  58
  66
  74
  82
  91
  100
  110
  120
  131
  142
  153
  165
  177
  190
  204
  218
  232
  247
  263
  279
  296
  314
  332
  351
  371
Variable operating expenses, $m
 
  43
  51
  60
  69
  80
  91
  103
  115
  128
  142
  156
  172
  187
  204
  221
  239
  258
  277
  297
  318
  340
  362
  386
  410
  435
  462
  489
  518
  548
  579
Fixed operating expenses, $m
 
  7
  7
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
Total operating expenses, $m
  43
  50
  58
  68
  77
  88
  99
  111
  124
  137
  151
  165
  181
  197
  214
  231
  249
  269
  288
  308
  329
  352
  374
  398
  423
  448
  475
  503
  532
  562
  594
Operating income, $m
  -20
  -23
  -26
  -29
  -33
  -37
  -41
  -45
  -50
  -55
  -60
  -65
  -71
  -77
  -83
  -90
  -96
  -103
  -110
  -118
  -126
  -134
  -142
  -151
  -160
  -169
  -179
  -189
  -200
  -211
  -223
EBITDA, $m
  -19
  -22
  -25
  -28
  -31
  -35
  -39
  -43
  -48
  -53
  -58
  -63
  -68
  -74
  -80
  -86
  -92
  -99
  -106
  -113
  -120
  -128
  -136
  -144
  -153
  -162
  -172
  -181
  -191
  -202
  -213
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  5
  5
Earnings before tax, $m
  -20
  -23
  -26
  -29
  -33
  -37
  -41
  -46
  -50
  -55
  -61
  -66
  -72
  -78
  -84
  -91
  -98
  -105
  -112
  -120
  -128
  -136
  -145
  -154
  -163
  -173
  -183
  -193
  -204
  -216
  -228
Tax expense, $m
  3
  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
  -23
  -23
  -26
  -29
  -33
  -37
  -41
  -46
  -50
  -55
  -61
  -66
  -72
  -78
  -84
  -91
  -98
  -105
  -112
  -120
  -128
  -136
  -145
  -154
  -163
  -173
  -183
  -193
  -204
  -216
  -228

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  77
  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
  88
  13
  16
  18
  21
  24
  28
  31
  35
  39
  43
  48
  53
  57
  62
  68
  73
  79
  85
  91
  97
  104
  111
  118
  126
  133
  142
  150
  159
  168
  178
Adjusted assets (=assets-cash), $m
  11
  13
  16
  18
  21
  24
  28
  31
  35
  39
  43
  48
  53
  57
  62
  68
  73
  79
  85
  91
  97
  104
  111
  118
  126
  133
  142
  150
  159
  168
  178
Revenue / Adjusted assets
  2.091
  2.154
  2.063
  2.111
  2.095
  2.125
  2.071
  2.129
  2.114
  2.103
  2.116
  2.083
  2.075
  2.105
  2.113
  2.088
  2.096
  2.089
  2.082
  2.088
  2.103
  2.096
  2.090
  2.093
  2.087
  2.098
  2.085
  2.093
  2.088
  2.089
  2.084
Average production assets, $m
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
  21
  23
  25
  26
  28
  30
  32
  34
  36
  38
  41
  43
  46
  48
Working capital, $m
  70
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -22
  -25
  -28
  -30
  -33
  -37
  -40
  -43
  -47
  -50
  -54
  -58
  -62
  -66
  -71
  -75
  -80
  -85
  -90
  -95
  -101
  -107
  -113
Total debt, $m
  0
  -2
  0
  2
  5
  8
  11
  14
  18
  21
  25
  29
  33
  38
  42
  47
  52
  57
  62
  68
  74
  80
  86
  92
  99
  106
  113
  121
  129
  137
  146
Total liabilities, $m
  14
  12
  14
  16
  19
  22
  25
  28
  32
  35
  39
  43
  47
  52
  56
  61
  66
  71
  76
  82
  88
  94
  100
  106
  113
  120
  127
  135
  143
  151
  160
Total equity, $m
  74
  1
  2
  2
  2
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
Total liabilities and equity, $m
  88
  13
  16
  18
  21
  24
  28
  31
  36
  39
  43
  48
  52
  58
  62
  68
  73
  79
  84
  91
  98
  104
  111
  118
  126
  133
  141
  150
  159
  168
  178
Debt-to-equity ratio
  0.000
  -1.610
  0.050
  1.360
  2.410
  3.260
  3.960
  4.540
  5.020
  5.430
  5.780
  6.080
  6.340
  6.560
  6.760
  6.930
  7.090
  7.230
  7.350
  7.460
  7.560
  7.650
  7.740
  7.820
  7.890
  7.950
  8.010
  8.070
  8.120
  8.170
  8.210
Adjusted equity ratio
  -0.273
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -23
  -23
  -26
  -29
  -33
  -37
  -41
  -46
  -50
  -55
  -61
  -66
  -72
  -78
  -84
  -91
  -98
  -105
  -112
  -120
  -128
  -136
  -145
  -154
  -163
  -173
  -183
  -193
  -204
  -216
  -228
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
Funds from operations, $m
  -27
  -22
  -25
  -28
  -32
  -35
  -39
  -44
  -48
  -53
  -58
  -64
  -69
  -75
  -81
  -87
  -94
  -101
  -108
  -115
  -123
  -131
  -139
  -147
  -156
  -166
  -175
  -185
  -196
  -207
  -218
Change in working capital, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from operations, $m
  -26
  -21
  -23
  -26
  -30
  -33
  -37
  -41
  -46
  -51
  -56
  -61
  -66
  -72
  -78
  -84
  -90
  -97
  -104
  -111
  -119
  -126
  -135
  -143
  -152
  -161
  -170
  -180
  -190
  -201
  -212
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
New CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
Cash from investing activities, $m
  23
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
Free cash flow, $m
  -3
  -22
  -25
  -28
  -31
  -35
  -40
  -44
  -49
  -54
  -59
  -64
  -70
  -76
  -82
  -89
  -96
  -103
  -110
  -118
  -125
  -134
  -142
  -151
  -160
  -170
  -180
  -190
  -201
  -212
  -224
Issuance/(repayment) of debt, $m
  0
  -2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Issuance/(repurchase) of shares, $m
  0
  0
  23
  26
  29
  33
  37
  41
  46
  50
  56
  61
  66
  72
  78
  85
  91
  98
  105
  113
  120
  128
  137
  145
  154
  163
  173
  183
  194
  205
  216
Cash from financing (excl. dividends), $m  
  -1
  -2
  25
  28
  32
  36
  40
  44
  49
  54
  60
  65
  70
  76
  83
  90
  96
  103
  110
  119
  126
  134
  143
  151
  161
  170
  180
  191
  202
  213
  225
Total cash flow (excl. dividends), $m
  -4
  -24
  -22
  -25
  -29
  -33
  -37
  -41
  -45
  -50
  -55
  -60
  -66
  -72
  -78
  -84
  -91
  -98
  -105
  -112
  -120
  -128
  -136
  -144
  -153
  -163
  -172
  -182
  -193
  -204
  -215
Retained Cash Flow (-), $m
  21
  -4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Prev. year cash balance distribution, $m
 
  77
  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
 
  49
  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, %
 
  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
 
  47
  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
  100.0
  16.8
  2.9
  0.5
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Kopin Corporation invents, develops, manufactures, and sells wearable technologies and display products in the United States, the Asia-Pacific, and Europe. The company offers Kopin Wearable technology that includes component technologies, which can be integrated to create products and proprietary headset systems, which use voice as the primary user interface and through the use of wireless technologies can contact other users, devices, or information from the cloud. It also provides principal display products, a miniature high density color or monochrome active matrix liquid crystal displays; CyberDisplay products, a single crystal silicon used in conventional integrated circuits; optical lenses and backlights; and whisper chip to enhance the performance of existing audio systems and speech recognition engines. The company’s display products are used in military, consumer, electronic, and industrial products, such as thermal weapon sights, digital cameras, virtual and augmented reality gaming, training and simulation products, and metrology tools. It sells its components directly and through distributors to original equipment manufacturers; and military display products directly to prime contractors of the United States government or to foreign companies. Kopin Corporation was founded in 1984 and is headquartered Westborough, Massachusetts.

FINANCIAL RATIOS  of  Kopin (KOPN)

Valuation Ratios
P/E Ratio -11.1
Price to Sales 11.1
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow -9.8
Price to Free Cash Flow -9.8
Growth Rates
Sales Growth Rate -28.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
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 -23.7%
Ret/ On Assets - 3 Yr. Avg. -19.2%
Return On Total Capital -27.2%
Ret/ On T. Cap. - 3 Yr. Avg. -21.6%
Return On Equity -27.2%
Return On Equity - 3 Yr. Avg. -21.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 17.4%
Gross Margin - 3 Yr. Avg. 21.4%
EBITDA Margin -82.6%
EBITDA Margin - 3 Yr. Avg. -67.1%
Operating Margin -87%
Oper. Margin - 3 Yr. Avg. -86.3%
Pre-Tax Margin -87%
Pre-Tax Margin - 3 Yr. Avg. -73.8%
Net Profit Margin -100%
Net Profit Margin - 3 Yr. Avg. -78.1%
Effective Tax Rate -15%
Eff/ Tax Rate - 3 Yr. Avg. -5%
Payout Ratio 0%

KOPN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KOPN stock intrinsic value calculation we used $23 million for the last fiscal year's total revenue generated by Kopin. The default revenue input number comes from 2016 income statement of Kopin. 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 KOPN stock valuation model: a) initial revenue growth rate of 20% 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 KOPN is calculated based on our internal credit rating of Kopin, 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 Kopin.
    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 KOPN stock the variable cost ratio is equal to 156.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7 million in the base year in the intrinsic value calculation for KOPN 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 Kopin.

Corporate tax rate of 27% is the nominal tax rate for Kopin. 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 KOPN 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 KOPN are equal to 13%.

Life of production assets of 4 years is the average useful life of capital assets used in Kopin 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 KOPN is equal to -30.4%. 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 - $74 million for Kopin - 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 67.878 million for Kopin 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 Kopin at the current share price and the inputted number of shares is $0.3 billion.


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COMPANY NEWS

▶ ETFs with exposure to Kopin Corp. : April 19, 2017   [Apr-19-17 02:25PM  Capital Cube]
▶ ETFs with exposure to Kopin Corp. : April 5, 2017   [Apr-05-17 05:00PM  Capital Cube]
▶ Kopin reports 4Q loss   [08:14AM  Associated Press]
▶ Kopin Corporation to Present at ROTH 29th Annual Conference   [Mar-03-17 04:01PM  Business Wire]
▶ Kopin to Present at 19th Annual Needham Growth Conference   [Jan-09-17 04:15PM  Business Wire]
▶ Kopin reports 3Q loss   [Oct-27-16 08:04AM  AP]
▶ Kopin reports 2Q loss   [08:09AM  AP]
▶ Kopin Corporation to Present at East Coast Ideas Conference   [Jun-28-16 04:05PM  Business Wire]
▶ Kopin reports 1Q loss   [May-04-16 08:36AM  AP]
▶ Kopin reports 4Q loss   [04:50PM  AP]
Stock chart of KOPN Financial statements of KOPN
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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