Intrinsic value of Rubicon Technology - RBCN

Previous Close

$8.36

  Intrinsic Value

$4.59

stock screener

  Rating & Target

sell

-45%

Previous close

$8.36

 
Intrinsic value

$4.59

 
Up/down potential

-45%

 
Rating

sell

We calculate the intrinsic value of RBCN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.0

 

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, %
  -16.67
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  20
  20
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
  66
Variable operating expenses, $m
 
  85
  87
  89
  91
  94
  97
  100
  104
  108
  112
  116
  121
  126
  132
  137
  143
  150
  156
  163
  171
  179
  187
  196
  205
  215
  225
  236
  248
  260
  272
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
  82
  85
  87
  89
  91
  94
  97
  100
  104
  108
  112
  116
  121
  126
  132
  137
  143
  150
  156
  163
  171
  179
  187
  196
  205
  215
  225
  236
  248
  260
  272
Operating income, $m
  -63
  -64
  -66
  -67
  -69
  -71
  -74
  -76
  -79
  -82
  -85
  -88
  -92
  -96
  -100
  -104
  -109
  -114
  -119
  -124
  -130
  -136
  -142
  -149
  -156
  -163
  -171
  -179
  -188
  -197
  -207
EBITDA, $m
  -57
  -58
  -59
  -61
  -63
  -65
  -67
  -69
  -71
  -74
  -77
  -80
  -83
  -87
  -90
  -94
  -98
  -103
  -107
  -112
  -117
  -123
  -129
  -135
  -141
  -148
  -155
  -162
  -170
  -178
  -187
Interest expense (income), $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
  0
Earnings before tax, $m
  -63
  -64
  -66
  -67
  -69
  -71
  -74
  -76
  -79
  -82
  -85
  -88
  -92
  -96
  -100
  -104
  -109
  -114
  -119
  -124
  -130
  -136
  -142
  -149
  -156
  -163
  -171
  -180
  -188
  -197
  -207
Tax expense, $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
  0
Net income, $m
  -63
  -64
  -66
  -67
  -69
  -71
  -74
  -76
  -79
  -82
  -85
  -88
  -92
  -96
  -100
  -104
  -109
  -114
  -119
  -124
  -130
  -136
  -142
  -149
  -156
  -163
  -171
  -180
  -188
  -197
  -207

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  18
  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
  53
  36
  37
  37
  39
  40
  41
  42
  44
  46
  47
  49
  51
  53
  56
  58
  60
  63
  66
  69
  72
  75
  79
  83
  87
  91
  95
  100
  105
  110
  115
Adjusted assets (=assets-cash), $m
  35
  36
  37
  37
  39
  40
  41
  42
  44
  46
  47
  49
  51
  53
  56
  58
  60
  63
  66
  69
  72
  75
  79
  83
  87
  91
  95
  100
  105
  110
  115
Revenue / Adjusted assets
  0.571
  0.556
  0.568
  0.568
  0.564
  0.575
  0.561
  0.571
  0.568
  0.565
  0.574
  0.571
  0.569
  0.566
  0.571
  0.569
  0.583
  0.571
  0.576
  0.565
  0.569
  0.573
  0.570
  0.566
  0.563
  0.571
  0.568
  0.570
  0.571
  0.573
  0.574
Average production assets, $m
  33
  33
  34
  35
  36
  37
  38
  39
  41
  42
  44
  46
  47
  49
  52
  54
  56
  59
  61
  64
  67
  70
  73
  77
  80
  84
  88
  93
  97
  102
  107
Working capital, $m
  43
  10
  10
  11
  11
  11
  12
  12
  13
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
Total debt, $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
Total liabilities, $m
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
Total equity, $m
  50
  33
  33
  34
  35
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  96
  100
  105
Total liabilities and equity, $m
  53
  36
  36
  37
  38
  39
  41
  43
  44
  46
  47
  49
  51
  54
  56
  58
  60
  63
  66
  69
  72
  75
  79
  83
  86
  91
  95
  100
  105
  109
  115
Debt-to-equity ratio
  0.000
  0.000
  0.000
  0.010
  0.010
  0.010
  0.010
  0.020
  0.020
  0.020
  0.020
  0.030
  0.030
  0.030
  0.030
  0.040
  0.040
  0.040
  0.040
  0.050
  0.050
  0.050
  0.050
  0.050
  0.060
  0.060
  0.060
  0.060
  0.060
  0.060
  0.070
Adjusted equity ratio
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914
  0.914

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -63
  -64
  -66
  -67
  -69
  -71
  -74
  -76
  -79
  -82
  -85
  -88
  -92
  -96
  -100
  -104
  -109
  -114
  -119
  -124
  -130
  -136
  -142
  -149
  -156
  -163
  -171
  -180
  -188
  -197
  -207
Depreciation, amort., depletion, $m
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Funds from operations, $m
  1
  -58
  -59
  -61
  -63
  -65
  -67
  -69
  -71
  -74
  -77
  -80
  -83
  -87
  -90
  -94
  -98
  -103
  -107
  -112
  -117
  -123
  -129
  -135
  -141
  -148
  -155
  -162
  -170
  -178
  -187
Change in working capital, $m
  16
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
Cash from operations, $m
  -15
  -58
  -60
  -61
  -63
  -65
  -67
  -69
  -72
  -75
  -77
  -81
  -84
  -87
  -91
  -95
  -99
  -104
  -108
  -113
  -118
  -124
  -130
  -136
  -142
  -149
  -156
  -164
  -172
  -180
  -189
Maintenance CAPEX, $m
  0
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
Cash from investing activities, $m
  14
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -10
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -12
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -23
  -24
Free cash flow, $m
  -1
  -65
  -67
  -68
  -70
  -73
  -75
  -78
  -81
  -84
  -87
  -90
  -94
  -98
  -102
  -107
  -111
  -116
  -122
  -127
  -133
  -139
  -146
  -153
  -160
  -168
  -176
  -184
  -193
  -203
  -212
Issuance/(repayment) of debt, $m
  -2
  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
Issuance/(repurchase) of shares, $m
  0
  65
  66
  68
  70
  73
  75
  78
  80
  83
  87
  90
  94
  98
  102
  106
  111
  116
  121
  127
  133
  139
  145
  152
  160
  167
  175
  184
  193
  202
  212
Cash from financing (excl. dividends), $m  
  -2
  65
  66
  68
  70
  73
  75
  78
  80
  83
  87
  90
  94
  98
  102
  106
  111
  116
  121
  127
  133
  139
  145
  152
  160
  167
  175
  184
  193
  202
  212
Total cash flow (excl. dividends), $m
  -4
  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
Retained Cash Flow (-), $m
  62
  -65
  -66
  -68
  -70
  -73
  -75
  -78
  -80
  -83
  -87
  -90
  -94
  -98
  -102
  -106
  -111
  -116
  -121
  -127
  -133
  -139
  -145
  -152
  -160
  -167
  -175
  -184
  -193
  -202
  -212
Prev. year cash balance distribution, $m
 
  18
  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
 
  -47
  -66
  -68
  -70
  -73
  -75
  -78
  -80
  -83
  -87
  -90
  -94
  -98
  -102
  -106
  -111
  -116
  -121
  -127
  -133
  -139
  -145
  -152
  -160
  -167
  -175
  -184
  -193
  -202
  -212
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
 
  -45
  -61
  -59
  -58
  -56
  -54
  -52
  -50
  -48
  -45
  -43
  -40
  -37
  -34
  -31
  -28
  -25
  -22
  -20
  -17
  -14
  -12
  -10
  -8
  -7
  -5
  -4
  -3
  -2
  -2
Current shareholders' claim on cash, %
  100
  25.7
  6.6
  1.7
  0.4
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Rubicon Technology, Inc. is a vertically integrated, electronic materials provider specializing in monocrystalline sapphire for applications in light-emitting diodes (LEDs), optical systems and specialty electronic devices. The Company's product lines include sapphire cores; four and six-inch sapphire wafers; four, six, and eight-inch patterned sapphire substrate (PSS) wafers, and optical sapphire components. Its sapphire is also used as an exterior component in mobile devices, specifically camera lens covers, dual flashes and home buttons on certain newer model smartphones and as the crystal covering the faces of certain smart watches. In addition, some consumer electronics original equipment manufacturers (OEMs) use sapphire faceplates for smartphones. For the LED market, it sells 2 to 6-inch material in core form and four, six and eight-inch material in polished and PSS wafer form. Its principal customers are semiconductor device manufacturers and wafer polishing companies.

FINANCIAL RATIOS  of  Rubicon Technology (RBCN)

Valuation Ratios
P/E Ratio -0.4
Price to Sales 1.1
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow -1.5
Price to Free Cash Flow -1.4
Growth Rates
Sales Growth Rate -16.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -35.6%
Financial Strength
Quick Ratio NaN
Current Ratio 5
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -73.3%
Ret/ On Assets - 3 Yr. Avg. -48.3%
Return On Total Capital -76.8%
Ret/ On T. Cap. - 3 Yr. Avg. -50.4%
Return On Equity -77.8%
Return On Equity - 3 Yr. Avg. -50.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin -130%
Gross Margin - 3 Yr. Avg. -97%
EBITDA Margin -285%
EBITDA Margin - 3 Yr. Avg. -209.8%
Operating Margin -310%
Oper. Margin - 3 Yr. Avg. -240%
Pre-Tax Margin -315%
Pre-Tax Margin - 3 Yr. Avg. -245.2%
Net Profit Margin -315%
Net Profit Margin - 3 Yr. Avg. -245.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

RBCN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RBCN stock intrinsic value calculation we used $20 million for the last fiscal year's total revenue generated by Rubicon Technology. The default revenue input number comes from 2016 income statement of Rubicon Technology. 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 RBCN stock valuation model: a) initial revenue growth rate of 2% 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 RBCN is calculated based on our internal credit rating of Rubicon Technology, 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 Rubicon Technology.
    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 RBCN stock the variable cost ratio is equal to 415%.

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 RBCN 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 Rubicon Technology.

Corporate tax rate of 27% is the nominal tax rate for Rubicon Technology. 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 RBCN 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 RBCN are equal to 162.5%.

Life of production assets of 5.4 years is the average useful life of capital assets used in Rubicon Technology 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 RBCN is equal to 50%. 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 - $50 million for Rubicon Technology - 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 2.725 million for Rubicon Technology 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 Rubicon Technology at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Rubicon Technology Announces Reverse Stock Split   [May-04-17 08:00AM  Business Wire]
▶ [$$] Rubicon Technology Partners Invests in Gimmal   [Jan-26-17 02:57PM  at The Wall Street Journal]
▶ Rubicon Announces Malaysia Facility Closure   [12:00AM  Business Wire]
▶ Rubicon Technology Sends Letter to Stockholders   [May-26-16 06:30PM  Business Wire]
▶ 10-Q for Rubicon Technology, Inc.   [Aug-10  08:13PM  at Company Spotlight]
▶ Rubicon Technology to Present at Investor Conferences   [Aug-05  08:02AM  Business Wire]
Financial statements of RBCN
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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