Intrinsic value of NXP Semiconductors - NXPI

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$109.98

  Intrinsic Value

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  Value-price divergence*

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$109.98

 
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*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 38.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  7,827
  11,522
  16,475
  22,932
  31,135
  41,315
  53,678
  68,403
  85,633
  105,474
  127,996
  153,233
  181,192
  211,852
  245,175
  281,109
  319,595
  360,572
  403,982
  449,776
  497,911
  548,358
  601,102
  656,143
  713,497
  773,195
  835,284
  899,828
  966,906
  1,036,611
Interest expense (income), $m
  348
  333
  601
  972
  1,469
  2,116
  2,939
  3,960
  5,200
  6,677
  8,405
  10,396
  12,655
  15,186
  17,990
  21,066
  24,408
  28,012
  31,873
  35,983
  40,337
  44,930
  49,758
  54,818
  60,109
  65,629
  71,382
  77,370
  83,598
  90,072
  96,800
Earnings before tax, $m
  -603
  4,887
  7,501
  10,993
  15,532
  21,282
  28,398
  37,019
  47,263
  59,224
  72,970
  89,429
  106,853
  126,126
  147,234
  170,147
  194,829
  221,240
  249,338
  279,084
  310,444
  343,392
  377,907
  413,983
  451,619
  490,829
  531,634
  574,070
  618,181
  664,021
  711,656
Tax expense, $m
  -851
  1,319
  2,025
  2,968
  4,194
  5,746
  7,667
  9,995
  12,761
  15,990
  19,702
  24,146
  28,850
  34,054
  39,753
  45,940
  52,604
  59,735
  67,321
  75,353
  83,820
  92,716
  102,035
  111,775
  121,937
  132,524
  143,541
  154,999
  166,909
  179,286
  192,147
Net income, $m
  200
  3,567
  5,475
  8,025
  11,338
  15,536
  20,730
  27,024
  34,502
  43,233
  53,268
  65,283
  78,002
  92,072
  107,481
  124,207
  142,226
  161,505
  182,017
  203,732
  226,624
  250,676
  275,872
  302,207
  329,682
  358,305
  388,093
  419,071
  451,272
  484,735
  519,509

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
  34,433
  50,689
  72,480
  100,884
  136,972
  181,753
  236,142
  300,921
  376,720
  464,006
  563,086
  674,113
  797,112
  931,994
  1,078,589
  1,236,670
  1,405,978
  1,586,247
  1,777,223
  1,978,680
  2,190,437
  2,412,366
  2,644,402
  2,886,542
  3,138,856
  3,401,482
  3,674,630
  3,958,577
  4,253,669
  4,560,318
Adjusted assets (=assets-cash), $m
  23,004
  34,433
  50,689
  72,480
  100,884
  136,972
  181,753
  236,142
  300,921
  376,720
  464,006
  563,086
  674,113
  797,112
  931,994
  1,078,589
  1,236,670
  1,405,978
  1,586,247
  1,777,223
  1,978,680
  2,190,437
  2,412,366
  2,644,402
  2,886,542
  3,138,856
  3,401,482
  3,674,630
  3,958,577
  4,253,669
  4,560,318
Revenue / Adjusted assets
  0.413
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
Average production assets, $m
  10,704
  14,471
  21,302
  30,460
  42,397
  57,563
  76,383
  99,241
  126,464
  158,319
  195,002
  236,641
  283,301
  334,992
  391,677
  453,285
  519,719
  590,872
  666,632
  746,890
  831,554
  920,546
  1,013,814
  1,111,328
  1,213,090
  1,319,126
  1,429,497
  1,544,289
  1,663,620
  1,787,634
  1,916,506
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
  15,823
  25,576
  38,651
  55,694
  77,346
  104,215
  136,848
  175,716
  221,195
  273,567
  333,014
  399,631
  473,430
  554,359
  642,316
  737,165
  838,750
  946,911
  1,061,497
  1,182,371
  1,309,425
  1,442,583
  1,581,804
  1,727,088
  1,878,477
  2,036,052
  2,199,941
  2,370,309
  2,547,364
  2,731,354
Total liabilities, $m
  13,963
  20,660
  30,413
  43,488
  60,531
  82,183
  109,052
  141,685
  180,553
  226,032
  278,404
  337,851
  404,468
  478,267
  559,196
  647,153
  742,002
  843,587
  951,748
  1,066,334
  1,187,208
  1,314,262
  1,447,420
  1,586,641
  1,731,925
  1,883,314
  2,040,889
  2,204,778
  2,375,146
  2,552,201
  2,736,191
Total equity, $m
  10,935
  13,773
  20,276
  28,992
  40,354
  54,789
  72,701
  94,457
  120,369
  150,688
  185,603
  225,234
  269,645
  318,845
  372,797
  431,436
  494,668
  562,391
  634,499
  710,889
  791,472
  876,175
  964,947
  1,057,761
  1,154,617
  1,255,542
  1,360,593
  1,469,852
  1,583,431
  1,701,468
  1,824,127
Total liabilities and equity, $m
  24,898
  34,433
  50,689
  72,480
  100,885
  136,972
  181,753
  236,142
  300,922
  376,720
  464,007
  563,085
  674,113
  797,112
  931,993
  1,078,589
  1,236,670
  1,405,978
  1,586,247
  1,777,223
  1,978,680
  2,190,437
  2,412,367
  2,644,402
  2,886,542
  3,138,856
  3,401,482
  3,674,630
  3,958,577
  4,253,669
  4,560,318
Debt-to-equity ratio
  0.840
  1.150
  1.260
  1.330
  1.380
  1.410
  1.430
  1.450
  1.460
  1.470
  1.470
  1.480
  1.480
  1.480
  1.490
  1.490
  1.490
  1.490
  1.490
  1.490
  1.490
  1.490
  1.490
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
Adjusted equity ratio
  0.393
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  200
  3,567
  5,475
  8,025
  11,338
  15,536
  20,730
  27,024
  34,502
  43,233
  53,268
  65,283
  78,002
  92,072
  107,481
  124,207
  142,226
  161,505
  182,017
  203,732
  226,624
  250,676
  275,872
  302,207
  329,682
  358,305
  388,093
  419,071
  451,272
  484,735
  519,509
Depreciation, amort., depletion, $m
  2,205
  2,607
  3,420
  4,510
  5,932
  7,737
  9,978
  12,699
  15,940
  19,732
  24,099
  28,172
  33,726
  39,880
  46,628
  53,962
  61,871
  70,342
  79,361
  88,916
  98,995
  109,589
  120,692
  132,301
  144,415
  157,039
  170,178
  183,844
  198,050
  212,814
  228,155
Funds from operations, $m
  2,674
  6,174
  8,896
  12,535
  17,270
  23,273
  30,708
  39,723
  50,442
  62,965
  77,367
  93,454
  111,729
  131,952
  154,109
  178,170
  204,097
  231,847
  261,378
  292,647
  325,619
  360,265
  396,565
  434,508
  474,097
  515,344
  558,271
  602,915
  649,322
  697,549
  747,664
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
  3,216
  7,826
  11,102
  15,401
  20,899
  27,762
  36,145
  46,180
  57,979
  71,625
  86,937
  104,425
  123,861
  145,236
  168,526
  193,698
  220,710
  249,519
  280,084
  312,367
  346,335
  381,965
  419,244
  458,169
  498,746
  540,995
  584,947
  630,643
  678,137
  727,492
Maintenance CAPEX, $m
  0
  -1,134
  -1,723
  -2,536
  -3,626
  -5,047
  -6,853
  -9,093
  -11,814
  -15,055
  -18,848
  -23,215
  -28,172
  -33,726
  -39,880
  -46,628
  -53,962
  -61,871
  -70,342
  -79,361
  -88,916
  -98,995
  -109,589
  -120,692
  -132,301
  -144,415
  -157,039
  -170,178
  -183,844
  -198,050
  -212,814
New CAPEX, $m
  -448
  -4,943
  -6,832
  -9,158
  -11,937
  -15,166
  -18,820
  -22,857
  -27,224
  -31,855
  -36,683
  -41,639
  -46,660
  -51,691
  -56,685
  -61,608
  -66,435
  -71,153
  -75,759
  -80,259
  -84,664
  -88,992
  -93,267
  -97,514
  -101,761
  -106,037
  -110,371
  -114,792
  -119,331
  -124,015
  -128,871
Cash from investing activities, $m
  -627
  -6,077
  -8,555
  -11,694
  -15,563
  -20,213
  -25,673
  -31,950
  -39,038
  -46,910
  -55,531
  -64,854
  -74,832
  -85,417
  -96,565
  -108,236
  -120,397
  -133,024
  -146,101
  -159,620
  -173,580
  -187,987
  -202,856
  -218,206
  -234,062
  -250,452
  -267,410
  -284,970
  -303,175
  -322,065
  -341,685
Free cash flow, $m
  1,676
  -2,861
  -728
  -592
  -162
  686
  2,090
  4,194
  7,142
  11,069
  16,094
  22,083
  29,593
  38,444
  48,671
  60,290
  73,301
  87,685
  103,418
  120,465
  138,787
  158,348
  179,109
  201,038
  224,106
  248,294
  273,586
  299,976
  327,468
  356,072
  385,807
Issuance/(repayment) of debt, $m
  -80
  7,057
  9,754
  13,074
  17,043
  21,652
  26,869
  32,633
  38,867
  45,479
  52,372
  59,448
  66,617
  73,799
  80,929
  87,957
  94,849
  101,585
  108,161
  114,585
  120,874
  127,054
  133,158
  139,221
  145,284
  151,388
  157,576
  163,888
  170,368
  177,055
  183,989
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
  7,057
  9,754
  13,074
  17,043
  21,652
  26,869
  32,633
  38,867
  45,479
  52,372
  59,448
  66,617
  73,799
  80,929
  87,957
  94,849
  101,585
  108,161
  114,585
  120,874
  127,054
  133,158
  139,221
  145,284
  151,388
  157,576
  163,888
  170,368
  177,055
  183,989
Total cash flow (excl. dividends), $m
  280
  4,195
  9,026
  12,483
  16,881
  22,338
  28,959
  36,827
  46,009
  56,548
  68,466
  81,531
  96,210
  112,243
  129,600
  148,248
  168,149
  189,270
  211,579
  235,050
  259,661
  285,402
  312,267
  340,259
  369,391
  399,682
  431,161
  463,865
  497,837
  533,128
  569,796
Retained Cash Flow (-), $m
  580
  -4,706
  -6,502
  -8,716
  -11,362
  -14,435
  -17,913
  -21,756
  -25,912
  -30,320
  -34,914
  -39,632
  -44,411
  -49,199
  -53,953
  -58,638
  -63,232
  -67,723
  -72,108
  -76,390
  -80,583
  -84,703
  -88,772
  -92,814
  -96,856
  -100,926
  -105,051
  -109,259
  -113,579
  -118,037
  -122,660
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
 
  962
  2,523
  3,766
  5,519
  7,903
  11,046
  15,072
  20,098
  26,228
  33,552
  41,899
  51,799
  63,043
  75,647
  89,610
  104,917
  121,547
  139,472
  158,660
  179,079
  200,699
  223,495
  247,445
  272,535
  298,756
  326,111
  354,606
  384,258
  415,091
  447,137
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
 
  903
  2,211
  3,060
  4,129
  5,403
  6,847
  8,400
  9,979
  11,491
  12,838
  13,849
  14,620
  15,008
  14,991
  14,578
  13,807
  12,739
  11,451
  10,028
  8,553
  7,103
  5,742
  4,516
  3,452
  2,564
  1,849
  1,293
  876
  575
  364
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 184.4
Price to Sales 3.9
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 16
Price to Free Cash Flow 19.9
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 100.3%.

Life of production assets of 8.4 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 - $10540 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 346.027 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 $38.1 billion.


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COMPANY NEWS

▶ Why Qualcomm May Have to Pay $45 Billion for NXP   [Jun-22-17 06:00AM  Investopedia]
▶ Qualcomm, Inc.: The Bear Case from a Bull   [Jun-21-17 06:46PM  Motley Fool]
▶ Apple Inc. (AAPL): The Apple Car Exists Sort Of   [Jun-15-17 02:03PM  InvestorPlace]
▶ [$$] EU Opens In-Depth Probe Into Qualcomm-NXP Deal   [Jun-12-17 12:50AM  The Wall Street Journal]
▶ [$$] Brussels launches probe into Qualcomm-NXP deal   [Jun-09-17 01:56PM  Financial Times]
▶ [$$] EU Opens In-Depth Probe Into Qualcomm-NXP Deal   [12:26PM  The Wall Street Journal]
▶ [$$] Qualcomm/NXP: chip more in   [06:24PM  Financial Times]
▶ NXP/Qualcomm: Is a New Deal Price Coming?   [12:28PM  Investopedia]
▶ Qualcomm, Qorvo, Best Buy, Costco Get Price-Target Hikes   [May-26-17 08:40AM  Investor's Business Daily]
▶ Bullish on NVIDIA? You'll Love These Stocks   [May-25-17 03:13PM  Motley Fool]
▶ Nows the Time to Buy These Hated Tech Stocks   [May-24-17 01:48PM  Motley Fool]
▶ Whats Analysts Take on Qualcomm?   [10:36AM  Market Realist]
▶ A Look at Qualcomms Stock Performance   [09:05AM  Market Realist]
▶ What Could Increase Qualcomms Leverage in Fiscal 2017?   [May-23-17 10:36AM  Market Realist]
▶ Chips: Is a Bubble Building? Asks BlueFin   [May-22-17 12:03PM  Barrons.com]
▶ Qualcomm Shares Climb on JPMorgan Upgrade   [10:30AM  TheStreet.com]
▶ Cramer: How to Play Arconic and NXP Semi   [May-21-17 10:00AM  TheStreet.com]
▶ How Would NXPs Acquisition Benefit Qualcomm?   [11:48AM  Market Realist]
▶ ETFs with exposure to NXP Semiconductors NV : May 9, 2017   [May-09-17 04:53PM  Capital Cube]
▶ [$$] Goldman shakes up investment bank leadership   [May-08-17 01:44PM  Financial Times]
▶ NXP tops Street 1Q forecasts   [05:03AM  Associated Press]
▶ Is the NXP Semi/Qualcomm Tender Offer in Trouble?   [May-02-17 12:46PM  Investopedia]
▶ [$$] Buy Qualcomm on Likely Apple Settlement   [May-01-17 01:01PM  Barrons.com]
▶ Apple Twists Qualcomm's Arm   [11:50AM  Investopedia]
▶ Qualcomm Results Don't Impress   [Apr-20-17 10:12AM  Investopedia]
Stock chart of NXPI Financial statements of NXPI Annual reports 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.

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