Intrinsic value of SMTC - SMTX

Previous Close

$1.29

  Intrinsic Value

$0.68

stock screener

  Rating & Target

sell

-47%

  Value-price divergence*

0%

Previous close

$1.29

 
Intrinsic value

$0.68

 
Up/down potential

-47%

 
Rating

sell

 
Value-price divergence*

0%

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

We calculate the intrinsic value of SMTX 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 0.0

 

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, %
  -23.98
  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
  168
  171
  175
  180
  185
  190
  197
  203
  211
  218
  227
  236
  245
  255
  266
  278
  290
  303
  316
  331
  346
  362
  379
  397
  416
  435
  456
  478
  501
  526
  551
Variable operating expenses, $m
 
  168
  172
  177
  182
  187
  193
  200
  207
  214
  223
  231
  241
  251
  262
  273
  285
  297
  311
  325
  340
  356
  372
  390
  408
  428
  448
  470
  492
  516
  541
Fixed operating expenses, $m
 
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
Total operating expenses, $m
  167
  170
  174
  179
  184
  189
  195
  202
  209
  216
  226
  234
  244
  254
  265
  276
  288
  300
  314
  328
  343
  359
  375
  394
  412
  432
  452
  474
  496
  520
  545
Operating income, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
EBITDA, $m
  5
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
Interest expense (income), $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
Earnings before tax, $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
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
  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

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  9
  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
  69
  61
  63
  64
  66
  68
  70
  73
  75
  78
  81
  84
  88
  91
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  156
  163
  171
  179
  188
  197
Adjusted assets (=assets-cash), $m
  60
  61
  63
  64
  66
  68
  70
  73
  75
  78
  81
  84
  88
  91
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  156
  163
  171
  179
  188
  197
Revenue / Adjusted assets
  2.800
  2.803
  2.778
  2.813
  2.803
  2.794
  2.814
  2.781
  2.813
  2.795
  2.802
  2.810
  2.784
  2.802
  2.800
  2.808
  2.788
  2.806
  2.796
  2.805
  2.790
  2.806
  2.807
  2.796
  2.811
  2.788
  2.798
  2.795
  2.799
  2.798
  2.797
Average production assets, $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
Working capital, $m
  21
  17
  18
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
  46
  48
  51
  53
  56
Total debt, $m
  13
  9
  10
  11
  12
  13
  14
  16
  18
  19
  21
  23
  25
  28
  30
  33
  36
  38
  42
  45
  48
  52
  56
  60
  64
  68
  73
  78
  83
  89
  95
Total liabilities, $m
  43
  39
  40
  41
  42
  43
  44
  46
  48
  49
  51
  53
  55
  58
  60
  63
  66
  68
  72
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
  119
  125
Total equity, $m
  26
  22
  23
  24
  24
  25
  26
  27
  28
  29
  30
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  50
  52
  54
  57
  60
  63
  66
  69
  72
Total liabilities and equity, $m
  69
  61
  63
  65
  66
  68
  70
  73
  76
  78
  81
  84
  87
  91
  95
  99
  104
  108
  113
  118
  123
  129
  136
  142
  148
  155
  163
  171
  179
  188
  197
Debt-to-equity ratio
  0.500
  0.390
  0.420
  0.450
  0.490
  0.520
  0.560
  0.600
  0.640
  0.680
  0.720
  0.750
  0.790
  0.830
  0.870
  0.900
  0.940
  0.970
  1.000
  1.030
  1.060
  1.090
  1.120
  1.150
  1.170
  1.200
  1.220
  1.250
  1.270
  1.290
  1.310
Adjusted equity ratio
  0.333
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net 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
Depreciation, amort., depletion, $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
Funds from operations, $m
  10
  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
Change in working capital, $m
  3
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
Cash from operations, $m
  7
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
Maintenance CAPEX, $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
New CAPEX, $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
Cash from investing activities, $m
  -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
Free cash flow, $m
  6
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
Issuance/(repayment) of debt, $m
  -4
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
Cash from financing (excl. dividends), $m  
  -3
  1
  1
  1
  1
  1
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  5
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  8
  9
  10
Total cash flow (excl. dividends), $m
  2
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
Retained Cash Flow (-), $m
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
Prev. year cash balance distribution, $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
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
 
  4
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
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
 
  4
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  99.4
  98.4
  96.9
  95.1
  92.8
  90.3
  87.5
  84.5
  81.4
  78.2
  74.9
  71.6
  68.3
  65.1
  61.8
  58.7
  55.6
  52.6
  49.6
  46.8
  44.1
  41.6
  39.1
  36.7
  34.5
  32.4
  30.4
  28.5
  26.8
  25.1

SMTC Corporation provides advanced electronics manufacturing services worldwide. It provides end-to-end electronics manufacturing services, including product design and engineering; printed circuit board assembly; production, enclosure, and precision metal fabrication; systems integration and testing; configuration to order; build to order; and direct order fulfillment services. The company offers its integrated contract manufacturing services to original equipment manufacturers and technology companies primarily in the industrial, networking and communications, power and energy, and medical market sectors. SMTC Corporation was founded in 1985 and is headquartered in Markham, Canada.

FINANCIAL RATIOS  of  SMTC (SMTX)

Valuation Ratios
P/E Ratio 0
Price to Sales 0.1
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 3
Price to Free Cash Flow 4.3
Growth Rates
Sales Growth Rate -24%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.3%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 30.8%
Total Debt to Equity 50%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. -2.7%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. -4.8%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 8.9%
Gross Margin - 3 Yr. Avg. 8.5%
EBITDA Margin 3%
EBITDA Margin - 3 Yr. Avg. 2.2%
Operating Margin 0.6%
Oper. Margin - 3 Yr. Avg. 0.5%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. -0.1%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. -0.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SMTX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SMTX stock intrinsic value calculation we used $168 million for the last fiscal year's total revenue generated by SMTC. The default revenue input number comes from 2017 income statement of SMTC. 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 SMTX 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 SMTX is calculated based on our internal credit rating of SMTC, 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 SMTC.
    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 SMTX stock the variable cost ratio is equal to 98.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for SMTX 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 6.9% for SMTC.

Corporate tax rate of 27% is the nominal tax rate for SMTC. 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 SMTX 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 SMTX are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in SMTC 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 SMTX is equal to 10.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $26 million for SMTC - 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 16.51 million for SMTC 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 SMTC at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ SMTC Reports Second Quarter Fiscal Year 2017 Results   [Aug-02-17 04:45PM  GlobeNewswire]
▶ SMTC Reports Fourth Quarter and Fiscal Year 2016 Results   [Mar-08-17 05:00PM  GlobeNewswire]
▶ SMTC Reports Fourth Quarter and Fiscal Year 2016 Results   [Mar-02-17 08:00AM  GlobeNewswire]
▶ SMTC Announces Management Change   [09:15AM  GlobeNewswire]
▶ How Imation Corp. (IMN) Stacks Up Against Its Peers   [Dec-15-16 06:55PM  Insider Monkey]
▶ SMTC Reports First Quarter Fiscal 2016 Results   [May-05-16 05:00PM  GlobeNewswire]
▶ SMTC Reports Fourth Quarter and Fiscal Year 2015 Results   [Mar-16-16 05:56PM  GlobeNewswire]
▶ SMTC Appoints Chief Financial Officer   [Jan-28-16 05:58PM  at noodls]
▶ SMTC Appoints Chief Financial Officer   [04:30PM  GlobeNewswire]
▶ SMTC to Present at the MicroCap Conference   [Oct-28  10:30AM  GlobeNewswire]
▶ SMTC Reports Third Quarter Results   [Oct-27  05:00PM  GlobeNewswire]
▶ SMTC to Present at the Sidoti Emerging Growth Conference   [Aug-18  09:32AM  GlobeNewswire]
▶ 10-Q for SMTC Corp.   [Jul-31  08:09PM  at Company Spotlight]
▶ SMTC Reports Second Quarter Results   [Jul-28  05:30PM  GlobeNewswire]
▶ 10-Q for SMTC Corp.   [May-01  08:11PM  at Company Spotlight]
▶ SMTC Corporation Reports Q1 2015 Results   [Apr-28  05:52PM  at noodls]
▶ SMTC Reports First Quarter Results   [05:00PM  GlobeNewswire]
▶ 10-K for SMTC Corp.   [Apr-27  08:13PM  at Company Spotlight]
▶ SMTC Reports Fourth Quarter and Fiscal Year 2014 Results   [Mar-30  05:30PM  GlobeNewswire]
▶ Semtech reports 4Q loss   [Mar-04  05:54PM  AP]
Stock chart of SMTX Financial statements of SMTX
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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