Intrinsic value of Microsemi - MSCC

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$49.10

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$49.10

 
Intrinsic value

$66.71

 
Up/down potential

+36%

 
Rating

buy

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

We calculate the intrinsic value of MSCC 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 5.7

 

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, %
  32.83
  32.50
  29.75
  27.28
  25.05
  23.04
  21.24
  19.61
  18.15
  16.84
  15.65
  14.59
  13.63
  12.77
  11.99
  11.29
  10.66
  10.10
  9.59
  9.13
  8.71
  8.34
  8.01
  7.71
  7.44
  7.19
  6.97
  6.78
  6.60
  6.44
  6.30
Revenue, $m
  1,655
  2,193
  2,845
  3,621
  4,528
  5,572
  6,755
  8,080
  9,547
  11,154
  12,901
  14,783
  16,797
  18,942
  21,213
  23,608
  26,125
  28,763
  31,520
  34,397
  37,395
  40,515
  43,760
  47,133
  50,638
  54,281
  58,067
  62,002
  66,093
  70,349
  74,778
Variable operating expenses, $m
 
  1,897
  2,388
  2,972
  3,654
  4,439
  5,329
  6,326
  7,429
  8,638
  9,952
  11,120
  12,635
  14,248
  15,957
  17,758
  19,652
  21,636
  23,710
  25,874
  28,129
  30,476
  32,917
  35,454
  38,091
  40,831
  43,679
  46,639
  49,716
  52,918
  56,249
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
  1,601
  1,897
  2,388
  2,972
  3,654
  4,439
  5,329
  6,326
  7,429
  8,638
  9,952
  11,120
  12,635
  14,248
  15,957
  17,758
  19,652
  21,636
  23,710
  25,874
  28,129
  30,476
  32,917
  35,454
  38,091
  40,831
  43,679
  46,639
  49,716
  52,918
  56,249
Operating income, $m
  54
  295
  457
  649
  874
  1,133
  1,426
  1,754
  2,118
  2,516
  2,949
  3,663
  4,162
  4,694
  5,256
  5,850
  6,474
  7,127
  7,810
  8,523
  9,266
  10,039
  10,843
  11,679
  12,548
  13,450
  14,388
  15,363
  16,377
  17,432
  18,529
EBITDA, $m
  261
  628
  815
  1,037
  1,297
  1,596
  1,934
  2,314
  2,734
  3,194
  3,694
  4,233
  4,810
  5,424
  6,075
  6,761
  7,482
  8,237
  9,027
  9,850
  10,709
  11,602
  12,532
  13,498
  14,501
  15,545
  16,629
  17,756
  18,927
  20,146
  21,414
Interest expense (income), $m
  89
  120
  168
  227
  296
  378
  472
  578
  697
  828
  973
  1,130
  1,299
  1,480
  1,672
  1,876
  2,091
  2,317
  2,554
  2,802
  3,060
  3,329
  3,609
  3,901
  4,204
  4,519
  4,846
  5,186
  5,539
  5,906
  6,289
Earnings before tax, $m
  -25
  176
  289
  423
  578
  755
  954
  1,176
  1,421
  1,688
  1,976
  2,533
  2,864
  3,214
  3,584
  3,974
  4,382
  4,810
  5,256
  5,722
  6,206
  6,710
  7,234
  7,778
  8,344
  8,932
  9,543
  10,178
  10,838
  11,525
  12,241
Tax expense, $m
  8
  47
  78
  114
  156
  204
  258
  318
  384
  456
  533
  684
  773
  868
  968
  1,073
  1,183
  1,299
  1,419
  1,545
  1,676
  1,812
  1,953
  2,100
  2,253
  2,412
  2,577
  2,748
  2,926
  3,112
  3,305
Net income, $m
  -33
  128
  211
  309
  422
  551
  697
  859
  1,037
  1,232
  1,442
  1,849
  2,090
  2,346
  2,616
  2,901
  3,199
  3,511
  3,837
  4,177
  4,530
  4,898
  5,281
  5,678
  6,091
  6,520
  6,966
  7,430
  7,912
  8,414
  8,936

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  190
  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
  4,423
  5,608
  7,277
  9,262
  11,581
  14,250
  17,277
  20,665
  24,417
  28,528
  32,994
  37,807
  42,960
  48,445
  54,254
  60,379
  66,817
  73,563
  80,615
  87,973
  95,640
  103,619
  111,918
  120,545
  129,510
  138,826
  148,508
  158,573
  169,037
  179,922
  191,248
Adjusted assets (=assets-cash), $m
  4,233
  5,608
  7,277
  9,262
  11,581
  14,250
  17,277
  20,665
  24,417
  28,528
  32,994
  37,807
  42,960
  48,445
  54,254
  60,379
  66,817
  73,563
  80,615
  87,973
  95,640
  103,619
  111,918
  120,545
  129,510
  138,826
  148,508
  158,573
  169,037
  179,922
  191,248
Revenue / Adjusted assets
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
Average production assets, $m
  811
  1,075
  1,394
  1,774
  2,219
  2,730
  3,310
  3,959
  4,678
  5,466
  6,321
  7,243
  8,231
  9,282
  10,394
  11,568
  12,801
  14,094
  15,445
  16,855
  18,324
  19,852
  21,442
  23,095
  24,813
  26,598
  28,453
  30,381
  32,386
  34,471
  36,641
Working capital, $m
  415
  353
  458
  583
  729
  897
  1,088
  1,301
  1,537
  1,796
  2,077
  2,380
  2,704
  3,050
  3,415
  3,801
  4,206
  4,631
  5,075
  5,538
  6,021
  6,523
  7,045
  7,588
  8,153
  8,739
  9,349
  9,982
  10,641
  11,326
  12,039
Total debt, $m
  2,179
  3,001
  4,048
  5,292
  6,747
  8,420
  10,317
  12,442
  14,794
  17,372
  20,172
  23,190
  26,421
  29,860
  33,502
  37,343
  41,379
  45,609
  50,030
  54,644
  59,451
  64,454
  69,658
  75,067
  80,688
  86,529
  92,600
  98,910
  105,471
  112,296
  119,398
Total liabilities, $m
  2,694
  3,516
  4,563
  5,807
  7,262
  8,935
  10,832
  12,957
  15,309
  17,887
  20,687
  23,705
  26,936
  30,375
  34,017
  37,858
  41,894
  46,124
  50,545
  55,159
  59,966
  64,969
  70,173
  75,582
  81,203
  87,044
  93,115
  99,425
  105,986
  112,811
  119,913
Total equity, $m
  1,729
  2,092
  2,714
  3,455
  4,320
  5,315
  6,444
  7,708
  9,107
  10,641
  12,307
  14,102
  16,024
  18,070
  20,237
  22,522
  24,923
  27,439
  30,069
  32,814
  35,674
  38,650
  41,745
  44,963
  48,307
  51,782
  55,394
  59,148
  63,051
  67,111
  71,336
Total liabilities and equity, $m
  4,423
  5,608
  7,277
  9,262
  11,582
  14,250
  17,276
  20,665
  24,416
  28,528
  32,994
  37,807
  42,960
  48,445
  54,254
  60,380
  66,817
  73,563
  80,614
  87,973
  95,640
  103,619
  111,918
  120,545
  129,510
  138,826
  148,509
  158,573
  169,037
  179,922
  191,249
Debt-to-equity ratio
  1.260
  1.430
  1.490
  1.530
  1.560
  1.580
  1.600
  1.610
  1.620
  1.630
  1.640
  1.640
  1.650
  1.650
  1.660
  1.660
  1.660
  1.660
  1.660
  1.670
  1.670
  1.670
  1.670
  1.670
  1.670
  1.670
  1.670
  1.670
  1.670
  1.670
  1.670
Adjusted equity ratio
  0.364
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -33
  128
  211
  309
  422
  551
  697
  859
  1,037
  1,232
  1,442
  1,849
  2,090
  2,346
  2,616
  2,901
  3,199
  3,511
  3,837
  4,177
  4,530
  4,898
  5,281
  5,678
  6,091
  6,520
  6,966
  7,430
  7,912
  8,414
  8,936
Depreciation, amort., depletion, $m
  207
  333
  358
  388
  423
  463
  509
  560
  616
  678
  746
  570
  648
  731
  818
  911
  1,008
  1,110
  1,216
  1,327
  1,443
  1,563
  1,688
  1,819
  1,954
  2,094
  2,240
  2,392
  2,550
  2,714
  2,885
Funds from operations, $m
  361
  461
  569
  696
  844
  1,014
  1,205
  1,418
  1,654
  1,910
  2,188
  2,420
  2,738
  3,077
  3,435
  3,812
  4,207
  4,621
  5,053
  5,504
  5,973
  6,461
  6,969
  7,497
  8,045
  8,614
  9,207
  9,822
  10,462
  11,128
  11,821
Change in working capital, $m
  86
  87
  105
  125
  146
  168
  191
  213
  236
  259
  281
  303
  324
  345
  366
  386
  405
  425
  444
  463
  483
  502
  522
  543
  564
  586
  609
  634
  659
  685
  713
Cash from operations, $m
  275
  674
  464
  571
  698
  846
  1,015
  1,205
  1,417
  1,651
  1,907
  2,117
  2,414
  2,732
  3,069
  3,426
  3,802
  4,196
  4,609
  5,041
  5,491
  5,959
  6,447
  6,954
  7,480
  8,028
  8,597
  9,188
  9,803
  10,443
  11,108
Maintenance CAPEX, $m
  0
  -64
  -85
  -110
  -140
  -175
  -215
  -261
  -312
  -368
  -430
  -498
  -570
  -648
  -731
  -818
  -911
  -1,008
  -1,110
  -1,216
  -1,327
  -1,443
  -1,563
  -1,688
  -1,819
  -1,954
  -2,094
  -2,240
  -2,392
  -2,550
  -2,714
New CAPEX, $m
  -49
  -264
  -320
  -380
  -444
  -511
  -580
  -649
  -719
  -788
  -856
  -922
  -987
  -1,051
  -1,113
  -1,174
  -1,233
  -1,292
  -1,351
  -1,410
  -1,469
  -1,529
  -1,590
  -1,653
  -1,718
  -1,785
  -1,855
  -1,928
  -2,005
  -2,085
  -2,170
Cash from investing activities, $m
  -1,414
  -328
  -405
  -490
  -584
  -686
  -795
  -910
  -1,031
  -1,156
  -1,286
  -1,420
  -1,557
  -1,699
  -1,844
  -1,992
  -2,144
  -2,300
  -2,461
  -2,626
  -2,796
  -2,972
  -3,153
  -3,341
  -3,537
  -3,739
  -3,949
  -4,168
  -4,397
  -4,635
  -4,884
Free cash flow, $m
  -1,139
  346
  59
  81
  114
  160
  220
  295
  387
  495
  621
  697
  856
  1,033
  1,226
  1,434
  1,658
  1,896
  2,148
  2,415
  2,695
  2,987
  3,293
  3,612
  3,944
  4,289
  4,648
  5,020
  5,406
  5,807
  6,223
Issuance/(repayment) of debt, $m
  1,164
  863
  1,046
  1,244
  1,455
  1,673
  1,898
  2,125
  2,352
  2,578
  2,800
  3,018
  3,231
  3,439
  3,642
  3,841
  4,036
  4,230
  4,422
  4,614
  4,807
  5,003
  5,203
  5,409
  5,621
  5,841
  6,071
  6,310
  6,561
  6,825
  7,102
Issuance/(repurchase) of shares, $m
  5
  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  
  1,073
  863
  1,046
  1,244
  1,455
  1,673
  1,898
  2,125
  2,352
  2,578
  2,800
  3,018
  3,231
  3,439
  3,642
  3,841
  4,036
  4,230
  4,422
  4,614
  4,807
  5,003
  5,203
  5,409
  5,621
  5,841
  6,071
  6,310
  6,561
  6,825
  7,102
Total cash flow (excl. dividends), $m
  -67
  1,209
  1,106
  1,326
  1,569
  1,833
  2,118
  2,420
  2,739
  3,073
  3,421
  3,715
  4,087
  4,472
  4,868
  5,275
  5,694
  6,126
  6,570
  7,028
  7,502
  7,991
  8,497
  9,021
  9,565
  10,131
  10,718
  11,330
  11,967
  12,632
  13,325
Retained Cash Flow (-), $m
  -522
  -512
  -622
  -740
  -865
  -995
  -1,129
  -1,264
  -1,399
  -1,534
  -1,666
  -1,795
  -1,922
  -2,046
  -2,167
  -2,285
  -2,401
  -2,516
  -2,630
  -2,745
  -2,860
  -2,976
  -3,095
  -3,218
  -3,344
  -3,475
  -3,611
  -3,754
  -3,903
  -4,060
  -4,225
Prev. year cash balance distribution, $m
 
  149
  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
 
  846
  483
  585
  703
  838
  989
  1,156
  1,340
  1,540
  1,755
  1,919
  2,165
  2,426
  2,701
  2,990
  3,293
  3,609
  3,940
  4,284
  4,642
  5,014
  5,401
  5,804
  6,221
  6,656
  7,107
  7,576
  8,064
  8,572
  9,100
Discount rate, %
 
  9.00
  9.45
  9.92
  10.42
  10.94
  11.49
  12.06
  12.66
  13.30
  13.96
  14.66
  15.39
  16.16
  16.97
  17.82
  18.71
  19.65
  20.63
  21.66
  22.74
  23.88
  25.07
  26.33
  27.64
  29.03
  30.48
  32.00
  33.60
  35.28
  37.05
PV of cash for distribution, $m
 
  777
  403
  441
  473
  499
  515
  521
  516
  501
  475
  426
  388
  346
  301
  256
  212
  171
  135
  103
  77
  56
  39
  27
  18
  11
  7
  4
  2
  1
  1
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

Microsemi Corporation designs, manufactures, and markets analog and mixed-signal semiconductor solutions in the United States, Europe, and Asia. The company offers analog mixed-signal integrated circuits; field programmable gate arrays; system on chip solutions and application-specific integrated circuits; power management products; and timing and synchronization devices, and precise time solutions. It also provides voice processing devices, radio frequency solutions, discrete components, enterprise storage and communication solutions, security technologies and scalable anti-tamper products, Ethernet solutions, and power-over-Ethernet integrated circuits and midspans, as well as custom design capabilities and services. The company’s products are used in various applications, such as communications infrastructure systems comprising wireless and wired LAN systems; implantable pacemakers and defibrillators; radar systems; missile systems; military and commercial satellites and aircraft; oil field equipment; and enterprise storage and hyper scale data centers. It serves aerospace and defense, communications, data center, and industrial markets. The company was formerly known as Microsemiconductor Corp and changed its name to Microsemi Corporation in March 1983. Microsemi Corporation was founded in 1960 and is headquartered in Aliso Viejo, California.

FINANCIAL RATIOS  of  Microsemi (MSCC)

Valuation Ratios
P/E Ratio -169
Price to Sales 3.4
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 20.3
Price to Free Cash Flow 24.7
Growth Rates
Sales Growth Rate 32.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11.4%
Cap. Spend. - 3 Yr. Gr. Rate 5.8%
Financial Strength
Quick Ratio 5
Current Ratio 0.3
LT Debt to Equity 123.7%
Total Debt to Equity 126%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital -1.1%
Ret/ On T. Cap. - 3 Yr. Avg. 1.5%
Return On Equity -2.2%
Return On Equity - 3 Yr. Avg. 2.4%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 56.6%
Gross Margin - 3 Yr. Avg. 55.1%
EBITDA Margin 16.4%
EBITDA Margin - 3 Yr. Avg. 17.6%
Operating Margin 3.3%
Oper. Margin - 3 Yr. Avg. 6%
Pre-Tax Margin -1.5%
Pre-Tax Margin - 3 Yr. Avg. 2.8%
Net Profit Margin -2%
Net Profit Margin - 3 Yr. Avg. 2.3%
Effective Tax Rate -32%
Eff/ Tax Rate - 3 Yr. Avg. -5.2%
Payout Ratio 0%

MSCC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MSCC stock intrinsic value calculation we used $1655 million for the last fiscal year's total revenue generated by Microsemi. The default revenue input number comes from 2016 income statement of Microsemi. 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 MSCC stock valuation model: a) initial revenue growth rate of 32.5% 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 9%, whose default value for MSCC is calculated based on our internal credit rating of Microsemi, 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 Microsemi.
    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 MSCC stock the variable cost ratio is equal to 90.2%.

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 MSCC 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 5.6% for Microsemi.

Corporate tax rate of 27% is the nominal tax rate for Microsemi. 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 MSCC 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 MSCC are equal to 49%.

Life of production assets of 12.7 years is the average useful life of capital assets used in Microsemi 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 MSCC is equal to 16.1%. 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 - $1729 million for Microsemi - 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 115.467 million for Microsemi 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 Microsemi at the current share price and the inputted number of shares is $5.7 billion.


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COMPANY NEWS

▶ Microsemi to Close China Manufacturing Facility   [Mar-21-17 04:02PM  PR Newswire]
▶ Microsemi Wins ZTE's "2016 Best Delivery Support" Award   [Jan-03-17 07:00AM  PR Newswire]
▶ Deutsche Bank Has 5 Top Pick Chip Stocks to Buy for 2017   [Dec-15-16 10:20AM  at 24/7 Wall St.]
▶ [$$] GE Ventures Spins Out Menlo Micro With $18.7 Million Funding   [Dec-06-16 07:30AM  at The Wall Street Journal]
▶ The 2 Best Performing Tech Stocks in November   [Nov-26-16 04:32PM  at Motley Fool]
▶ Skyworks: Eyeing the Microsemi Deal (MSCC, SWKS)   [Nov-08-16 05:22PM  at Investopedia]
▶ RBC Indicates $70 Takeout Price for Microsemi (SWKS)   [Nov-07-16 04:05PM  at Investopedia]
▶ Bigger Isn't Better for Skyworks   [03:17PM  at Bloomberg]
Stock chart of MSCC Financial statements of MSCC
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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