Intrinsic value of Qorvo - QRVO

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$70.49

  Intrinsic Value

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  Value-price divergence*

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

We calculate the intrinsic value of QRVO 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 2017), $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 8.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.16
  52.60
  47.84
  43.56
  39.70
  36.23
  33.11
  30.30
  27.77
  25.49
  23.44
  21.60
  19.94
  18.44
  17.10
  15.89
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
Revenue, $m
  3,033
  3,984
  5,891
  8,456
  11,813
  16,093
  21,421
  27,911
  35,662
  44,752
  55,242
  67,173
  80,565
  95,424
  111,741
  129,496
  148,662
  169,208
  191,101
  214,309
  238,804
  264,564
  291,572
  319,818
  349,301
  380,029
  412,017
  445,289
  479,879
  515,827
  553,183
Variable operating expenses, $m
 
  3,589
  5,204
  7,378
  10,222
  13,848
  18,362
  23,860
  30,426
  38,127
  47,014
  56,908
  68,254
  80,843
  94,666
  109,708
  125,945
  143,352
  161,899
  181,561
  202,313
  224,137
  247,018
  270,947
  295,925
  321,958
  349,057
  377,245
  406,550
  437,005
  468,653
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
  2,945
  3,589
  5,204
  7,378
  10,222
  13,848
  18,362
  23,860
  30,426
  38,127
  47,014
  56,908
  68,254
  80,843
  94,666
  109,708
  125,945
  143,352
  161,899
  181,561
  202,313
  224,137
  247,018
  270,947
  295,925
  321,958
  349,057
  377,245
  406,550
  437,005
  468,653
Operating income, $m
  88
  395
  687
  1,079
  1,592
  2,246
  3,060
  4,051
  5,236
  6,625
  8,228
  10,265
  12,311
  14,582
  17,075
  19,788
  22,717
  25,856
  29,202
  32,748
  36,491
  40,427
  44,554
  48,871
  53,376
  58,071
  62,959
  68,044
  73,329
  78,822
  84,531
EBITDA, $m
  793
  1,216
  1,798
  2,582
  3,607
  4,913
  6,540
  8,522
  10,888
  13,663
  16,866
  20,508
  24,597
  29,134
  34,115
  39,536
  45,388
  51,660
  58,344
  65,430
  72,909
  80,774
  89,019
  97,643
  106,644
  116,026
  125,792
  135,950
  146,511
  157,486
  168,891
Interest expense (income), $m
  71
  35
  64
  105
  160
  232
  324
  438
  577
  743
  938
  1,163
  1,418
  1,705
  2,024
  2,374
  2,754
  3,165
  3,605
  4,075
  4,572
  5,097
  5,649
  6,228
  6,834
  7,465
  8,124
  8,810
  9,523
  10,264
  11,035
Earnings before tax, $m
  27
  361
  622
  974
  1,432
  2,014
  2,736
  3,614
  4,659
  5,882
  7,290
  9,102
  10,893
  12,876
  15,051
  17,414
  19,962
  22,691
  25,596
  28,673
  31,919
  35,330
  38,905
  42,643
  46,542
  50,606
  54,835
  59,234
  63,806
  68,558
  73,496
Tax expense, $m
  44
  97
  168
  263
  387
  544
  739
  976
  1,258
  1,588
  1,968
  2,457
  2,941
  3,477
  4,064
  4,702
  5,390
  6,127
  6,911
  7,742
  8,618
  9,539
  10,504
  11,513
  12,566
  13,664
  14,806
  15,993
  17,228
  18,511
  19,844
Net income, $m
  -17
  263
  454
  711
  1,045
  1,470
  1,997
  2,638
  3,401
  4,294
  5,322
  6,644
  7,952
  9,400
  10,987
  12,712
  14,573
  16,565
  18,685
  20,932
  23,301
  25,791
  28,401
  31,129
  33,976
  36,942
  40,030
  43,241
  46,579
  50,048
  53,652

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  545
  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
  6,522
  9,139
  13,510
  19,395
  27,095
  36,911
  49,132
  64,017
  81,792
  102,642
  126,702
  154,066
  184,783
  218,863
  256,287
  297,010
  340,968
  388,092
  438,304
  491,534
  547,717
  606,799
  668,743
  733,528
  801,150
  871,626
  944,993
  1,021,305
  1,100,639
  1,183,090
  1,268,769
Adjusted assets (=assets-cash), $m
  5,977
  9,139
  13,510
  19,395
  27,095
  36,911
  49,132
  64,017
  81,792
  102,642
  126,702
  154,066
  184,783
  218,863
  256,287
  297,010
  340,968
  388,092
  438,304
  491,534
  547,717
  606,799
  668,743
  733,528
  801,150
  871,626
  944,993
  1,021,305
  1,100,639
  1,183,090
  1,268,769
Revenue / Adjusted assets
  0.507
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
Average production assets, $m
  2,827
  4,618
  6,827
  9,801
  13,692
  18,652
  24,827
  32,349
  41,332
  51,867
  64,026
  77,853
  93,375
  110,597
  129,508
  150,086
  172,300
  196,112
  221,486
  248,384
  276,774
  306,630
  337,932
  370,669
  404,840
  440,454
  477,527
  516,090
  556,180
  597,844
  641,140
Working capital, $m
  1,043
  797
  1,178
  1,691
  2,363
  3,219
  4,284
  5,582
  7,132
  8,950
  11,048
  13,435
  16,113
  19,085
  22,348
  25,899
  29,732
  33,842
  38,220
  42,862
  47,761
  52,913
  58,314
  63,964
  69,860
  76,006
  82,403
  89,058
  95,976
  103,165
  110,637
Total debt, $m
  989
  1,831
  2,998
  4,569
  6,625
  9,246
  12,509
  16,484
  21,230
  26,796
  33,220
  40,527
  48,728
  57,827
  67,820
  78,693
  90,430
  103,011
  116,418
  130,631
  145,631
  161,406
  177,945
  195,243
  213,298
  232,115
  251,704
  272,079
  293,262
  315,276
  338,152
Total liabilities, $m
  1,626
  2,440
  3,607
  5,178
  7,234
  9,855
  13,118
  17,093
  21,839
  27,405
  33,829
  41,136
  49,337
  58,436
  68,429
  79,302
  91,039
  103,620
  117,027
  131,240
  146,240
  162,015
  178,554
  195,852
  213,907
  232,724
  252,313
  272,688
  293,871
  315,885
  338,761
Total equity, $m
  4,897
  6,699
  9,903
  14,216
  19,860
  27,056
  36,014
  46,924
  59,954
  75,236
  92,873
  112,930
  135,446
  160,427
  187,859
  217,708
  249,930
  284,471
  321,277
  360,294
  401,476
  444,784
  490,189
  537,676
  587,243
  638,902
  692,680
  748,617
  806,769
  867,205
  930,008
Total liabilities and equity, $m
  6,523
  9,139
  13,510
  19,394
  27,094
  36,911
  49,132
  64,017
  81,793
  102,641
  126,702
  154,066
  184,783
  218,863
  256,288
  297,010
  340,969
  388,091
  438,304
  491,534
  547,716
  606,799
  668,743
  733,528
  801,150
  871,626
  944,993
  1,021,305
  1,100,640
  1,183,090
  1,268,769
Debt-to-equity ratio
  0.202
  0.270
  0.300
  0.320
  0.330
  0.340
  0.350
  0.350
  0.350
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
Adjusted equity ratio
  0.728
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -17
  263
  454
  711
  1,045
  1,470
  1,997
  2,638
  3,401
  4,294
  5,322
  6,644
  7,952
  9,400
  10,987
  12,712
  14,573
  16,565
  18,685
  20,932
  23,301
  25,791
  28,401
  31,129
  33,976
  36,942
  40,030
  43,241
  46,579
  50,048
  53,652
Depreciation, amort., depletion, $m
  705
  821
  1,112
  1,503
  2,015
  2,668
  3,480
  4,470
  5,652
  7,038
  8,638
  10,244
  12,286
  14,552
  17,041
  19,748
  22,671
  25,804
  29,143
  32,682
  36,418
  40,346
  44,465
  48,772
  53,268
  57,954
  62,833
  67,907
  73,182
  78,664
  84,360
Funds from operations, $m
  798
  1,085
  1,566
  2,214
  3,060
  4,138
  5,478
  7,108
  9,053
  11,332
  13,960
  16,888
  20,238
  23,952
  28,028
  32,461
  37,244
  42,369
  47,828
  53,614
  59,719
  66,137
  72,866
  79,901
  87,244
  94,897
  102,862
  111,147
  119,760
  128,711
  138,013
Change in working capital, $m
  21
  275
  381
  513
  671
  856
  1,066
  1,298
  1,550
  1,818
  2,098
  2,386
  2,678
  2,972
  3,263
  3,551
  3,833
  4,109
  4,379
  4,642
  4,899
  5,152
  5,402
  5,649
  5,897
  6,146
  6,398
  6,654
  6,918
  7,190
  7,471
Cash from operations, $m
  777
  645
  1,185
  1,701
  2,389
  3,282
  4,412
  5,810
  7,503
  9,514
  11,862
  14,502
  17,559
  20,980
  24,764
  28,910
  33,410
  38,260
  43,450
  48,972
  54,819
  60,985
  67,464
  74,252
  81,348
  88,751
  96,465
  104,493
  112,842
  121,521
  130,541
Maintenance CAPEX, $m
  0
  -398
  -608
  -898
  -1,290
  -1,802
  -2,454
  -3,267
  -4,256
  -5,438
  -6,825
  -8,424
  -10,244
  -12,286
  -14,552
  -17,041
  -19,748
  -22,671
  -25,804
  -29,143
  -32,682
  -36,418
  -40,346
  -44,465
  -48,772
  -53,268
  -57,954
  -62,833
  -67,907
  -73,182
  -78,664
New CAPEX, $m
  -553
  -1,593
  -2,209
  -2,974
  -3,891
  -4,961
  -6,175
  -7,522
  -8,982
  -10,536
  -12,158
  -13,828
  -15,522
  -17,222
  -18,911
  -20,578
  -22,213
  -23,812
  -25,374
  -26,898
  -28,390
  -29,856
  -31,302
  -32,737
  -34,171
  -35,613
  -37,074
  -38,563
  -40,090
  -41,664
  -43,296
Cash from investing activities, $m
  -490
  -1,991
  -2,817
  -3,872
  -5,181
  -6,763
  -8,629
  -10,789
  -13,238
  -15,974
  -18,983
  -22,252
  -25,766
  -29,508
  -33,463
  -37,619
  -41,961
  -46,483
  -51,178
  -56,041
  -61,072
  -66,274
  -71,648
  -77,202
  -82,943
  -88,881
  -95,028
  -101,396
  -107,997
  -114,846
  -121,960
Free cash flow, $m
  287
  -1,346
  -1,632
  -2,171
  -2,792
  -3,480
  -4,217
  -4,979
  -5,736
  -6,460
  -7,121
  -7,750
  -8,206
  -8,528
  -8,699
  -8,709
  -8,551
  -8,224
  -7,728
  -7,069
  -6,253
  -5,288
  -4,184
  -2,950
  -1,596
  -131
  1,437
  3,098
  4,846
  6,676
  8,582
Issuance/(repayment) of debt, $m
  0
  843
  1,167
  1,571
  2,056
  2,621
  3,263
  3,974
  4,746
  5,567
  6,424
  7,306
  8,201
  9,100
  9,992
  10,873
  11,737
  12,582
  13,407
  14,212
  15,001
  15,775
  16,539
  17,297
  18,055
  18,817
  19,589
  20,375
  21,182
  22,014
  22,876
Issuance/(repurchase) of shares, $m
  -150
  2,202
  3,669
  4,913
  6,380
  8,055
  9,912
  11,915
  14,019
  16,176
  18,334
  20,502
  22,520
  24,410
  26,139
  27,686
  29,036
  30,183
  31,127
  31,874
  32,434
  32,821
  33,050
  33,139
  33,107
  32,972
  32,752
  32,464
  32,124
  31,746
  31,345
Cash from financing (excl. dividends), $m  
  -166
  3,045
  4,836
  6,484
  8,436
  10,676
  13,175
  15,889
  18,765
  21,743
  24,758
  27,808
  30,721
  33,510
  36,131
  38,559
  40,773
  42,765
  44,534
  46,086
  47,435
  48,596
  49,589
  50,436
  51,162
  51,789
  52,341
  52,839
  53,306
  53,760
  54,221
Total cash flow (excl. dividends), $m
  120
  -503
  -464
  -600
  -736
  -859
  -955
  -1,004
  -990
  -893
  -697
  -444
  -5
  572
  1,293
  2,164
  3,186
  4,358
  5,678
  7,143
  8,748
  10,487
  12,355
  14,348
  16,460
  18,687
  21,025
  23,473
  26,028
  28,690
  31,458
Retained Cash Flow (-), $m
  103
  -2,312
  -3,205
  -4,313
  -5,644
  -7,196
  -8,958
  -10,911
  -13,029
  -15,282
  -17,636
  -20,058
  -22,515
  -24,981
  -27,432
  -29,850
  -32,222
  -34,541
  -36,806
  -39,017
  -41,182
  -43,307
  -45,405
  -47,487
  -49,567
  -51,659
  -53,778
  -55,937
  -58,152
  -60,436
  -62,803
Prev. year cash balance distribution, $m
 
  613
  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
 
  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
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
 
  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
Current shareholders' claim on cash, %
  100
  77.6
  59.1
  46.0
  36.6
  29.7
  24.5
  20.6
  17.6
  15.2
  13.4
  11.9
  10.6
  9.6
  8.8
  8.1
  7.6
  7.1
  6.7
  6.3
  6.0
  5.7
  5.5
  5.3
  5.1
  4.9
  4.8
  4.7
  4.6
  4.5
  4.4

Qorvo, Inc. provides technologies and radio frequency (RF) solutions for mobile, infrastructure, and defense and aerospace applications worldwide. It operates through Mobile Products (MP) and Infrastructure and Defense Products (IDP) segments. The MP segment offers RF front end modules that combine high-performance filters, power amplifiers (PA), low noise amplifiers and switches, PA modules, transmit modules, antenna control solutions, antenna switch modules, diversity receive modules, and envelope tracking power management devices. This segment supplies its RF solutions into mobile devices, including smartphones, notebook computers, wearables, tablets, and cellular-based applications for the Internet of things. The IDP segment provides high power gallium arsenide, gallium nitride power amplifiers, low noise amplifiers, switches, radio frequency filter solutions, CMOS system-on-a-chip solutions, fixed frequency and voltage-controlled oscillators, filters, attenuators, modulators, driver and transimpedance amplifiers, and various multichip and hybrid assemblies. This segment supplies its RF solutions to wireless network infrastructure, defense, and aerospace markets; and connectivity applications for commercial, consumer, industrial, and automotive markets. The company sells its products directly to customers, as well as through a network of domestic and foreign sales representative firms and distributors to original equipment manufacturers and original design manufacturers. Qorvo, Inc. is headquartered in Greensboro, North Carolina.

FINANCIAL RATIOS  of  Qorvo (QRVO)

Valuation Ratios
P/E Ratio -524.4
Price to Sales 2.9
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 11.5
Price to Free Cash Flow 39.8
Growth Rates
Sales Growth Rate 16.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 75%
Cap. Spend. - 3 Yr. Gr. Rate 52.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 20.2%
Total Debt to Equity 20.2%
Interest Coverage 1
Management Effectiveness
Return On Assets -0.9%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital -0.3%
Ret/ On T. Cap. - 3 Yr. Avg. 1.6%
Return On Equity -0.3%
Return On Equity - 3 Yr. Avg. 1.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 37.5%
Gross Margin - 3 Yr. Avg. 39.3%
EBITDA Margin 26.5%
EBITDA Margin - 3 Yr. Avg. 24%
Operating Margin 2.9%
Oper. Margin - 3 Yr. Avg. 3.5%
Pre-Tax Margin 0.9%
Pre-Tax Margin - 3 Yr. Avg. 2.6%
Net Profit Margin -0.6%
Net Profit Margin - 3 Yr. Avg. 3.3%
Effective Tax Rate 163%
Eff/ Tax Rate - 3 Yr. Avg. -255.2%
Payout Ratio 0%

QRVO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the QRVO stock intrinsic value calculation we used $2611 million for the last fiscal year's total revenue generated by Qorvo. The default revenue input number comes from 2017 income statement of Qorvo. 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 QRVO stock valuation model: a) initial revenue growth rate of 52.6% 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 QRVO is calculated based on our internal credit rating of Qorvo, 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 Qorvo.
    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 QRVO stock the variable cost ratio is equal to 92.9%.

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 QRVO 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 Qorvo.

Corporate tax rate of 27% is the nominal tax rate for Qorvo. 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 QRVO 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 QRVO are equal to 115.9%.

Life of production assets of 7.6 years is the average useful life of capital assets used in Qorvo 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 QRVO is equal to 20%. 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 - $5000 million for Qorvo - 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 123.655 million for Qorvo 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 Qorvo at the current share price and the inputted number of shares is $8.7 billion.


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Stock chart of QRVO Financial statements of QRVO Annual reports of QRVO
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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