Intrinsic value of NXP Semiconductors - NXPI

Previous Close

$105.75

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$105.75

 
Intrinsic value

$553.62

 
Up/down potential

+424%

 
Rating

str. buy

 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of NXPI 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 36.5

 

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, %
  55.68
  51.90
  47.21
  42.99
  39.19
  35.77
  32.69
  29.92
  27.43
  25.19
  23.17
  21.35
  19.72
  18.25
  16.92
  15.73
  14.66
  13.69
  12.82
  12.04
  11.34
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.45
  7.21
Revenue, $m
  9,498
  14,427
  21,239
  30,369
  42,271
  57,391
  76,155
  98,944
  126,086
  157,846
  194,419
  235,933
  282,453
  333,990
  390,505
  451,929
  518,165
  589,105
  664,638
  744,656
  829,067
  917,793
  1,010,782
  1,108,004
  1,209,461
  1,315,181
  1,425,221
  1,539,670
  1,658,644
  1,782,287
  1,910,773
Variable operating expenses, $m
 
  9,207
  13,137
  18,404
  25,270
  33,993
  44,818
  57,965
  73,623
  91,945
  113,044
  136,109
  162,946
  192,677
  225,281
  260,716
  298,927
  339,852
  383,427
  429,589
  478,285
  529,471
  583,116
  639,203
  697,734
  758,723
  822,205
  888,230
  956,865
  1,028,195
  1,102,318
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
  9,680
  9,207
  13,137
  18,404
  25,270
  33,993
  44,818
  57,965
  73,623
  91,945
  113,044
  136,109
  162,946
  192,677
  225,281
  260,716
  298,927
  339,852
  383,427
  429,589
  478,285
  529,471
  583,116
  639,203
  697,734
  758,723
  822,205
  888,230
  956,865
  1,028,195
  1,102,318
Operating income, $m
  -182
  5,220
  8,102
  11,965
  17,001
  23,398
  31,337
  40,979
  52,463
  65,901
  81,375
  99,824
  119,507
  141,312
  165,224
  191,213
  219,237
  249,253
  281,211
  315,067
  350,781
  388,322
  427,666
  468,801
  511,728
  556,458
  603,016
  651,440
  701,778
  754,093
  808,455
EBITDA, $m
  2,023
  7,911
  11,646
  16,652
  23,178
  31,469
  41,758
  54,253
  69,136
  86,551
  106,605
  129,368
  154,877
  183,135
  214,124
  247,804
  284,123
  323,022
  364,438
  408,314
  454,599
  503,250
  554,238
  607,548
  663,179
  721,148
  781,486
  844,241
  909,477
  977,274
  1,047,727
Interest expense (income), $m
  348
  333
  600
  970
  1,464
  2,109
  2,929
  3,946
  5,181
  6,652
  8,373
  10,355
  12,605
  15,126
  17,919
  20,981
  24,310
  27,900
  31,744
  35,838
  40,174
  44,749
  49,557
  54,597
  59,865
  65,364
  71,093
  77,057
  83,259
  89,707
  96,407
Earnings before tax, $m
  -603
  4,887
  7,501
  10,995
  15,536
  21,289
  28,408
  37,034
  47,283
  59,249
  73,002
  89,469
  106,903
  126,187
  147,306
  170,231
  194,927
  221,353
  249,466
  279,229
  310,607
  343,573
  378,108
  414,204
  451,862
  491,094
  531,923
  574,384
  618,520
  664,386
  712,048
Tax expense, $m
  -851
  1,319
  2,025
  2,969
  4,195
  5,748
  7,670
  9,999
  12,766
  15,997
  19,711
  24,157
  28,864
  34,070
  39,773
  45,962
  52,630
  59,765
  67,356
  75,392
  83,864
  92,765
  102,089
  111,835
  122,003
  132,595
  143,619
  155,084
  167,000
  179,384
  192,253
Net income, $m
  200
  3,567
  5,476
  8,027
  11,341
  15,541
  20,738
  27,034
  34,516
  43,252
  53,292
  65,313
  78,039
  92,116
  107,533
  124,269
  142,297
  161,588
  182,110
  203,837
  226,743
  250,808
  276,019
  302,369
  329,859
  358,499
  388,304
  419,300
  451,519
  485,002
  519,795

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,894
  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
  24,898
  34,933
  51,425
  73,533
  102,350
  138,962
  184,394
  239,573
  305,293
  382,193
  470,747
  571,266
  683,907
  808,692
  945,534
  1,094,259
  1,254,636
  1,426,404
  1,609,292
  1,803,042
  2,007,426
  2,222,259
  2,447,413
  2,682,819
  2,928,477
  3,184,457
  3,450,899
  3,728,014
  4,016,086
  4,315,465
  4,626,570
Adjusted assets (=assets-cash), $m
  23,004
  34,933
  51,425
  73,533
  102,350
  138,962
  184,394
  239,573
  305,293
  382,193
  470,747
  571,266
  683,907
  808,692
  945,534
  1,094,259
  1,254,636
  1,426,404
  1,609,292
  1,803,042
  2,007,426
  2,222,259
  2,447,413
  2,682,819
  2,928,477
  3,184,457
  3,450,899
  3,728,014
  4,016,086
  4,315,465
  4,626,570
Revenue / Adjusted assets
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
Average production assets, $m
  10,704
  16,260
  23,936
  34,226
  47,639
  64,680
  85,826
  111,510
  142,099
  177,892
  219,110
  265,896
  318,325
  376,406
  440,100
  509,324
  583,972
  663,921
  749,047
  839,228
  934,358
  1,034,353
  1,139,151
  1,248,721
  1,363,063
  1,482,209
  1,606,224
  1,735,208
  1,869,291
  2,008,638
  2,153,441
Working capital, $m
  2,965
  2,265
  3,334
  4,768
  6,636
  9,010
  11,956
  15,534
  19,796
  24,782
  30,524
  37,041
  44,345
  52,436
  61,309
  70,953
  81,352
  92,489
  104,348
  116,911
  130,163
  144,094
  158,693
  173,957
  189,885
  206,483
  223,760
  241,728
  260,407
  279,819
  299,991
Total debt, $m
  9,187
  15,800
  25,514
  38,535
  55,508
  77,073
  103,832
  136,333
  175,042
  220,336
  272,494
  331,700
  398,045
  471,544
  552,143
  639,742
  734,205
  835,376
  943,097
  1,057,216
  1,177,598
  1,304,135
  1,436,750
  1,575,405
  1,720,097
  1,870,869
  2,027,803
  2,191,024
  2,360,699
  2,537,033
  2,720,273
Total liabilities, $m
  13,963
  20,576
  30,290
  43,311
  60,284
  81,849
  108,608
  141,109
  179,818
  225,112
  277,270
  336,476
  402,821
  476,320
  556,919
  644,518
  738,981
  840,152
  947,873
  1,061,992
  1,182,374
  1,308,911
  1,441,526
  1,580,181
  1,724,873
  1,875,645
  2,032,579
  2,195,800
  2,365,475
  2,541,809
  2,725,049
Total equity, $m
  10,935
  14,358
  21,136
  30,222
  42,066
  57,113
  75,786
  98,465
  125,475
  157,081
  193,477
  234,790
  281,086
  332,372
  388,614
  449,740
  515,656
  586,252
  661,419
  741,050
  825,052
  913,349
  1,005,887
  1,102,639
  1,203,604
  1,308,812
  1,418,319
  1,532,214
  1,650,611
  1,773,656
  1,901,520
Total liabilities and equity, $m
  24,898
  34,934
  51,426
  73,533
  102,350
  138,962
  184,394
  239,574
  305,293
  382,193
  470,747
  571,266
  683,907
  808,692
  945,533
  1,094,258
  1,254,637
  1,426,404
  1,609,292
  1,803,042
  2,007,426
  2,222,260
  2,447,413
  2,682,820
  2,928,477
  3,184,457
  3,450,898
  3,728,014
  4,016,086
  4,315,465
  4,626,569
Debt-to-equity ratio
  0.840
  1.100
  1.210
  1.280
  1.320
  1.350
  1.370
  1.380
  1.400
  1.400
  1.410
  1.410
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
Adjusted equity ratio
  0.393
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  200
  3,567
  5,476
  8,027
  11,341
  15,541
  20,738
  27,034
  34,516
  43,252
  53,292
  65,313
  78,039
  92,116
  107,533
  124,269
  142,297
  161,588
  182,110
  203,837
  226,743
  250,808
  276,019
  302,369
  329,859
  358,499
  388,304
  419,300
  451,519
  485,002
  519,795
Depreciation, amort., depletion, $m
  2,205
  2,691
  3,544
  4,687
  6,178
  8,071
  10,421
  13,274
  16,673
  20,650
  25,230
  29,544
  35,369
  41,823
  48,900
  56,592
  64,886
  73,769
  83,227
  93,248
  103,818
  114,928
  126,572
  138,747
  151,451
  164,690
  178,469
  192,801
  207,699
  223,182
  239,271
Funds from operations, $m
  2,674
  6,258
  9,020
  12,714
  17,519
  23,612
  31,159
  40,309
  51,189
  63,902
  78,521
  94,857
  113,408
  133,939
  156,433
  180,860
  207,183
  235,357
  265,338
  297,085
  330,561
  365,736
  402,591
  441,116
  481,311
  523,189
  566,773
  612,101
  659,218
  708,184
  759,066
Change in working capital, $m
  371
  774
  1,069
  1,433
  1,869
  2,374
  2,946
  3,578
  4,261
  4,986
  5,742
  6,518
  7,304
  8,091
  8,873
  9,643
  10,399
  11,138
  11,859
  12,563
  13,252
  13,930
  14,599
  15,264
  15,929
  16,598
  17,276
  17,968
  18,679
  19,412
  20,172
Cash from operations, $m
  2,303
  4,476
  7,951
  11,280
  15,650
  21,238
  28,213
  36,731
  46,928
  58,916
  72,780
  88,339
  106,105
  125,848
  147,560
  171,217
  196,784
  224,219
  253,479
  284,522
  317,308
  351,806
  387,992
  425,852
  465,382
  506,591
  549,497
  594,133
  640,539
  688,772
  738,894
Maintenance CAPEX, $m
  0
  -1,189
  -1,807
  -2,660
  -3,803
  -5,293
  -7,187
  -9,536
  -12,390
  -15,789
  -19,766
  -24,346
  -29,544
  -35,369
  -41,823
  -48,900
  -56,592
  -64,886
  -73,769
  -83,227
  -93,248
  -103,818
  -114,928
  -126,572
  -138,747
  -151,451
  -164,690
  -178,469
  -192,801
  -207,699
  -223,182
New CAPEX, $m
  -448
  -5,556
  -7,676
  -10,290
  -13,413
  -17,041
  -21,146
  -25,683
  -30,589
  -35,793
  -41,218
  -46,787
  -52,429
  -58,081
  -63,693
  -69,224
  -74,648
  -79,950
  -85,125
  -90,181
  -95,131
  -99,995
  -104,798
  -109,570
  -114,342
  -119,146
  -124,016
  -128,984
  -134,083
  -139,346
  -144,804
Cash from investing activities, $m
  -627
  -6,745
  -9,483
  -12,950
  -17,216
  -22,334
  -28,333
  -35,219
  -42,979
  -51,582
  -60,984
  -71,133
  -81,973
  -93,450
  -105,516
  -118,124
  -131,240
  -144,836
  -158,894
  -173,408
  -188,379
  -203,813
  -219,726
  -236,142
  -253,089
  -270,597
  -288,706
  -307,453
  -326,884
  -347,045
  -367,986
Free cash flow, $m
  1,676
  -2,270
  -1,532
  -1,669
  -1,566
  -1,096
  -120
  1,511
  3,949
  7,334
  11,796
  17,207
  24,132
  32,397
  42,044
  53,093
  65,544
  79,384
  94,585
  111,114
  128,930
  147,994
  168,266
  189,710
  212,294
  235,993
  260,792
  286,679
  313,655
  341,726
  370,908
Issuance/(repayment) of debt, $m
  -80
  7,034
  9,714
  13,021
  16,974
  21,564
  26,760
  32,501
  38,709
  45,294
  52,158
  59,206
  66,345
  73,499
  80,600
  87,599
  94,462
  101,171
  107,721
  114,119
  120,382
  126,537
  132,616
  138,654
  144,693
  150,772
  156,934
  163,221
  169,674
  176,334
  183,240
Issuance/(repurchase) of shares, $m
  -1,165
  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  
  -1,392
  7,034
  9,714
  13,021
  16,974
  21,564
  26,760
  32,501
  38,709
  45,294
  52,158
  59,206
  66,345
  73,499
  80,600
  87,599
  94,462
  101,171
  107,721
  114,119
  120,382
  126,537
  132,616
  138,654
  144,693
  150,772
  156,934
  163,221
  169,674
  176,334
  183,240
Total cash flow (excl. dividends), $m
  280
  4,764
  8,182
  11,352
  15,408
  20,468
  26,639
  34,012
  42,658
  52,628
  63,954
  76,412
  90,477
  105,896
  122,644
  140,692
  160,007
  180,555
  202,306
  225,232
  249,312
  274,531
  300,882
  328,364
  356,986
  386,765
  417,726
  449,901
  483,330
  518,061
  554,149
Retained Cash Flow (-), $m
  580
  -4,896
  -6,778
  -9,086
  -11,844
  -15,047
  -18,673
  -22,679
  -27,011
  -31,606
  -36,396
  -41,313
  -46,295
  -51,287
  -56,242
  -61,126
  -65,915
  -70,597
  -75,167
  -79,631
  -84,002
  -88,297
  -92,538
  -96,752
  -100,966
  -105,208
  -109,508
  -113,895
  -118,398
  -123,045
  -127,864
Prev. year cash balance distribution, $m
 
  1,473
  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
 
  1,342
  1,403
  2,266
  3,564
  5,421
  7,967
  11,333
  15,647
  21,022
  27,559
  35,099
  44,182
  54,609
  66,402
  79,566
  94,091
  109,958
  127,139
  145,601
  165,311
  186,235
  208,343
  231,612
  256,021
  281,558
  308,218
  336,006
  364,932
  395,016
  426,285
Discount rate, %
 
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
 
  1,260
  1,230
  1,841
  2,666
  3,706
  4,939
  6,316
  7,769
  9,210
  10,545
  11,602
  12,470
  13,000
  13,159
  12,944
  12,383
  11,525
  10,439
  9,202
  7,895
  6,591
  5,353
  4,227
  3,243
  2,417
  1,748
  1,225
  832
  547
  347
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

NXP Semiconductors N.V., a semiconductor company, provides high performance mixed signal and standard product solutions for radio frequency (RF), analog, power management, interface, security, and digital processing products worldwide. It offers products for car audio and visual head-end unit applications, in-vehicle networking products, two-way secure entry products, and various sensors and microcontrollers. The company also provides secure identification solutions comprising passive RF connectivity devices; microcontroller devices; and secure real-time operating system software products to facilitate the encryption-decryption of data, and the interaction with the reader infrastructure systems. In addition, it delivers semiconductor-based technologies for connected devices, secure mobile transaction solutions, and various connectivity solutions; and offers digital networking processors, secure interface and system management products, high-performance RF power-amplifiers, and smart antennae solutions. Further, the company provides standard semiconductor components, such as small signal discretes, power discretes, protection and signal conditioning devices, and standard logic devices. Its products are used in automotive, identification, mobile, consumer, computing, wireless infrastructure, lighting, and industrial applications. NXP Semiconductors N.V. markets its products to various original equipment manufacturers, original design manufacturers, contract manufacturers, and distributors. The company has a strategic collaboration with HID Global Corporation; and Huawei to develop mobile payment system for public transit systems in China. The company was formerly known as KASLION Acquisition B.V and changed its name to NXP Semiconductors N.V. in May 2010. NXP Semiconductors N.V. was founded in 2006 and is headquartered in Eindhoven, the Netherlands.

FINANCIAL RATIOS  of  NXP Semiconductors (NXPI)

Valuation Ratios
P/E Ratio 177.3
Price to Sales 3.7
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 15.4
Price to Free Cash Flow 19.1
Growth Rates
Sales Growth Rate 55.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 26.9%
Cap. Spend. - 3 Yr. Gr. Rate 12.4%
Financial Strength
Quick Ratio 4
Current Ratio 0.6
LT Debt to Equity 80.2%
Total Debt to Equity 84%
Interest Coverage -1
Management Effectiveness
Return On Assets 0.2%
Ret/ On Assets - 3 Yr. Avg. 6.9%
Return On Total Capital 1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.3%
Return On Equity 1.8%
Return On Equity - 3 Yr. Avg. 28.6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 43%
Gross Margin - 3 Yr. Avg. 45.3%
EBITDA Margin 20.5%
EBITDA Margin - 3 Yr. Avg. 25.7%
Operating Margin -1.9%
Oper. Margin - 3 Yr. Avg. 16.5%
Pre-Tax Margin -6.3%
Pre-Tax Margin - 3 Yr. Avg. 9.8%
Net Profit Margin 2.1%
Net Profit Margin - 3 Yr. Avg. 12.2%
Effective Tax Rate 141.1%
Eff/ Tax Rate - 3 Yr. Avg. 46.8%
Payout Ratio 0%

NXPI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NXPI stock intrinsic value calculation we used $9498 million for the last fiscal year's total revenue generated by NXP Semiconductors. The default revenue input number comes from 2016 income statement of NXP Semiconductors. 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 NXPI stock valuation model: a) initial revenue growth rate of 51.9% 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 6.5%, whose default value for NXPI is calculated based on our internal credit rating of NXP Semiconductors, 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 NXP Semiconductors.
    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 NXPI stock the variable cost ratio is equal to 67%.

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 NXPI 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 3.8% for NXP Semiconductors.

Corporate tax rate of 27% is the nominal tax rate for NXP Semiconductors. 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 NXPI 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 NXPI are equal to 112.7%.

Life of production assets of 9 years is the average useful life of capital assets used in NXP Semiconductors 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 NXPI is equal to 15.7%. 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 - $10935 million for NXP Semiconductors - 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 345.217 million for NXP Semiconductors 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 NXP Semiconductors at the current share price and the inputted number of shares is $36.5 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
TXN Texas Instrume 79.18 60.00  sell
MXIM Maxim Integrat 44.15 19.25  str.sell
ON ON Semiconduct 14.18 91.62  str.buy
STM STMicroelectro 15.99 1.74  str.sell
SLAB Silicon Labora 71.15 66.36  hold
MCHP Microchip Tech 75.58 613.44  str.buy

COMPANY NEWS

▶ Qualcomm Results Don't Impress   [Apr-20-17 10:12AM  Investopedia]
▶ Apple Royalty Dispute Dings Qualcomm's Guidance   [Apr-19-17 07:23PM  Motley Fool]
▶ Qualcomm earnings: 4 ways to trade it   [05:00PM  CNBC Videos]
▶ [$$] Qualcomm Earnings: What to Watch   [08:00AM  The Wall Street Journal]
▶ Jim Cramer: Qualcomm Is Too Beholden to Apple   [Apr-11-17 11:03AM  TheStreet.com]
▶ NXP Semi Options: Exploring the Mystery of $110   [Apr-05-17 12:05PM  Investopedia]
▶ Qualcomm, NXP receive antitrust approval   [Apr-04-17 06:20PM  Reuters]
▶ 3 Top Driverless Car Stocks to Buy Now   [11:06AM  Motley Fool]
▶ 5 Top Dividend Stocks in Autonomous Vehicles   [Apr-02-17 09:05AM  Motley Fool]
▶ 5 Top Dividend Stocks in Autonomous Vehicles   [09:05AM  at Motley Fool]
▶ How Is Qualcomm's NXP Semiconductors Buyout Coming Along?   [Mar-07-17 06:48PM  at Motley Fool]
▶ 3 Popular Stocks Hedge Fund Tycoons Are Ditching   [Mar-04-17 11:46AM  at Motley Fool]
▶ [$$] Apple-Qualcomm Dispute Could Last Two Years   [Mar-03-17 04:05PM  at Barrons.com]
▶ Why Broadcom Stock Is Outperforming Peers   [Feb-28-17 10:35AM  at Market Realist]
▶ Wired Infrastructure Segment Protects Broadcom   [09:06AM  at Market Realist]
▶ Is Qualcomm Out of Danger?   [Feb-19-17 10:09PM  Gurufocus]
▶ Fir Trees Big Tobacco Buy And Other Major Moves Heading Into 2017   [Feb-17-17 09:55AM  at Insider Monkey]
▶ NXP Wins Prestigious Automotive Innovation Award with Radar   [Feb-15-17 06:30PM  GlobeNewswire]
▶ Why Qualcomm, Inc. Stock Spiked 30% in 2016   [11:22AM  at Motley Fool]
▶ Cramer: NXPI Should Hit $110 Even Without QCOM Deal   [Feb-14-17 05:25PM  at TheStreet]
▶ Billionaire Ken Fishers Monster Q4 Moves   [12:38PM  at Insider Monkey]
▶ NXP Unveils Secure Platform Solution for the IoT   [Feb-13-17 11:10AM  GlobeNewswire]
▶ Why ADIs Automotive Is a Future Growth Driver   [07:35AM  at Market Realist]
▶ NXP Semiconductors NV Is Paying Off $2.7 Billion of Debt   [Feb-11-17 02:00PM  at Motley Fool]
▶ [$$] Deal Close Announcements: Feb. 6-10   [Feb-10-17 05:10PM  at The Wall Street Journal]
Stock chart of NXPI Financial statements of NXPI
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.