Intrinsic value of Vicor - VICR

Previous Close

$17.75

  Intrinsic Value

$15.86

stock screener

  Rating & Target

hold

-11%

  Value-price divergence*

-97%

Previous close

$17.75

 
Intrinsic value

$15.86

 
Up/down potential

-11%

 
Rating

hold

 
Value-price divergence*

-97%

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

We calculate the intrinsic value of VICR 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 0.7

 

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, %
  -9.09
  17.40
  16.16
  15.04
  14.04
  13.14
  12.32
  11.59
  10.93
  10.34
  9.80
  9.32
  8.89
  8.50
  8.15
  7.84
  7.55
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
Revenue, $m
  200
  235
  273
  314
  358
  405
  455
  507
  563
  621
  682
  746
  812
  881
  953
  1,027
  1,105
  1,186
  1,269
  1,356
  1,447
  1,541
  1,639
  1,741
  1,847
  1,958
  2,073
  2,193
  2,319
  2,450
  2,587
Variable operating expenses, $m
 
  153
  177
  204
  233
  263
  296
  330
  366
  404
  443
  485
  528
  573
  619
  668
  718
  771
  825
  882
  941
  1,002
  1,065
  1,132
  1,201
  1,273
  1,348
  1,426
  1,507
  1,592
  1,681
Fixed operating expenses, $m
 
  81
  83
  85
  87
  89
  92
  94
  96
  99
  101
  104
  106
  109
  112
  114
  117
  120
  123
  126
  129
  133
  136
  139
  143
  146
  150
  154
  158
  162
  166
Total operating expenses, $m
  207
  234
  260
  289
  320
  352
  388
  424
  462
  503
  544
  589
  634
  682
  731
  782
  835
  891
  948
  1,008
  1,070
  1,135
  1,201
  1,271
  1,344
  1,419
  1,498
  1,580
  1,665
  1,754
  1,847
Operating income, $m
  -6
  1
  12
  25
  38
  52
  68
  84
  101
  119
  138
  157
  178
  199
  222
  245
  269
  295
  321
  348
  377
  407
  438
  470
  504
  539
  576
  614
  654
  696
  740
EBITDA, $m
  2
  6
  18
  31
  45
  60
  76
  94
  112
  131
  151
  172
  194
  217
  240
  265
  291
  318
  346
  375
  405
  437
  470
  504
  540
  577
  616
  657
  699
  744
  790
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
Earnings before tax, $m
  -6
  1
  12
  24
  38
  52
  67
  83
  100
  117
  136
  155
  176
  197
  219
  242
  266
  291
  317
  344
  372
  402
  432
  464
  497
  532
  568
  606
  646
  687
  731
Tax expense, $m
  0
  0
  3
  7
  10
  14
  18
  22
  27
  32
  37
  42
  47
  53
  59
  65
  72
  79
  86
  93
  101
  108
  117
  125
  134
  144
  153
  164
  174
  186
  197
Net income, $m
  -6
  1
  9
  18
  27
  38
  49
  60
  73
  86
  99
  113
  128
  144
  160
  177
  194
  212
  231
  251
  272
  293
  316
  339
  363
  388
  415
  443
  471
  502
  533

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  56
  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
  154
  115
  134
  154
  175
  198
  223
  249
  276
  304
  334
  365
  398
  432
  467
  503
  541
  581
  622
  665
  709
  755
  803
  853
  905
  959
  1,016
  1,075
  1,136
  1,200
  1,267
Adjusted assets (=assets-cash), $m
  98
  115
  134
  154
  175
  198
  223
  249
  276
  304
  334
  365
  398
  432
  467
  503
  541
  581
  622
  665
  709
  755
  803
  853
  905
  959
  1,016
  1,075
  1,136
  1,200
  1,267
Revenue / Adjusted assets
  2.041
  2.043
  2.037
  2.039
  2.046
  2.045
  2.040
  2.036
  2.040
  2.043
  2.042
  2.044
  2.040
  2.039
  2.041
  2.042
  2.043
  2.041
  2.040
  2.039
  2.041
  2.041
  2.041
  2.041
  2.041
  2.042
  2.040
  2.040
  2.041
  2.042
  2.042
Average production assets, $m
  39
  46
  53
  61
  70
  79
  89
  99
  110
  121
  133
  145
  158
  172
  186
  200
  215
  231
  248
  265
  282
  301
  320
  340
  360
  382
  404
  428
  452
  478
  504
Working capital, $m
  90
  40
  46
  53
  61
  69
  77
  86
  96
  106
  116
  127
  138
  150
  162
  175
  188
  202
  216
  231
  246
  262
  279
  296
  314
  333
  352
  373
  394
  416
  440
Total debt, $m
  0
  4
  8
  13
  18
  24
  29
  35
  42
  49
  56
  63
  70
  78
  87
  95
  104
  114
  123
  133
  144
  154
  166
  177
  190
  202
  216
  230
  244
  259
  275
Total liabilities, $m
  23
  27
  31
  36
  41
  47
  52
  58
  65
  72
  79
  86
  93
  101
  110
  118
  127
  137
  146
  156
  167
  177
  189
  200
  213
  225
  239
  253
  267
  282
  298
Total equity, $m
  131
  88
  102
  118
  134
  152
  170
  190
  211
  233
  256
  279
  304
  330
  357
  385
  414
  444
  476
  508
  542
  578
  614
  653
  692
  734
  777
  822
  869
  918
  970
Total liabilities and equity, $m
  154
  115
  133
  154
  175
  199
  222
  248
  276
  305
  335
  365
  397
  431
  467
  503
  541
  581
  622
  664
  709
  755
  803
  853
  905
  959
  1,016
  1,075
  1,136
  1,200
  1,268
Debt-to-equity ratio
  0.000
  0.050
  0.080
  0.110
  0.140
  0.160
  0.170
  0.190
  0.200
  0.210
  0.220
  0.220
  0.230
  0.240
  0.240
  0.250
  0.250
  0.260
  0.260
  0.260
  0.260
  0.270
  0.270
  0.270
  0.270
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
Adjusted equity ratio
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765
  0.765

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  1
  9
  18
  27
  38
  49
  60
  73
  86
  99
  113
  128
  144
  160
  177
  194
  212
  231
  251
  272
  293
  316
  339
  363
  388
  415
  443
  471
  502
  533
Depreciation, amort., depletion, $m
  8
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  50
Funds from operations, $m
  -1
  5
  14
  24
  34
  46
  58
  70
  84
  98
  112
  128
  144
  161
  178
  197
  216
  236
  256
  278
  300
  323
  348
  373
  399
  427
  455
  485
  517
  549
  584
Change in working capital, $m
  -2
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
Cash from operations, $m
  1
  0
  8
  17
  27
  38
  49
  61
  74
  88
  102
  117
  133
  149
  166
  184
  203
  222
  242
  263
  285
  307
  331
  355
  381
  408
  436
  465
  495
  527
  561
Maintenance CAPEX, $m
  0
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -48
New CAPEX, $m
  -8
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -26
  -27
Cash from investing activities, $m
  -9
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -25
  -28
  -29
  -31
  -34
  -35
  -38
  -39
  -42
  -44
  -46
  -49
  -52
  -55
  -58
  -60
  -63
  -67
  -71
  -75
Free cash flow, $m
  -8
  -11
  -4
  4
  12
  21
  31
  42
  53
  65
  78
  91
  105
  120
  135
  151
  167
  185
  203
  221
  241
  261
  282
  304
  326
  350
  375
  401
  428
  456
  486
Issuance/(repayment) of debt, $m
  0
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
Issuance/(repurchase) of shares, $m
  2
  12
  5
  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
  16
  9
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
Total cash flow (excl. dividends), $m
  -7
  5
  5
  8
  17
  27
  37
  48
  60
  72
  85
  99
  113
  128
  143
  160
  176
  194
  212
  231
  251
  272
  293
  315
  339
  363
  388
  415
  443
  472
  502
Retained Cash Flow (-), $m
  4
  -13
  -14
  -15
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
Prev. year cash balance distribution, $m
 
  56
  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
 
  48
  -9
  -7
  1
  9
  19
  28
  39
  50
  62
  75
  88
  102
  116
  132
  147
  164
  181
  199
  217
  236
  256
  277
  299
  322
  345
  370
  396
  422
  451
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
 
  46
  -8
  -6
  1
  7
  13
  19
  24
  29
  33
  36
  38
  39
  39
  39
  37
  36
  33
  31
  28
  24
  21
  18
  15
  13
  10
  8
  6
  5
  3
Current shareholders' claim on cash, %
  100
  97.0
  95.9
  95.9
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Vicor Corporation designs, develops, manufactures, and markets modular components and power systems for converting, regulating, and controlling electric current worldwide. It operates through Brick Business Unit, VI Chip, and Picor segments. The company offers modular direct current (DC)-DC converters and complementary components, open-frame intermediate bus converters, configurable products, and custom power systems, as well as cool-power high density zero voltage soft switching DC-DC converters. It also provides modular power components, Vicor integrated adapter packages, system-in-package point-of-load regulators, and power path management components. The company serves independent manufacturers of electronic devices, original equipment manufacturers, and their contract manufacturers in aerospace and defense electronics, enterprise and high performance computing, industrial automation, telecommunications and networking infrastructure, test and measurement instrumentation, and vehicles and transportation markets. Vicor Corporation was founded in 1981 and is headquartered in Andover, Massachusetts.

FINANCIAL RATIOS  of  Vicor (VICR)

Valuation Ratios
P/E Ratio -115.4
Price to Sales 3.5
Price to Book 5.3
Price to Tangible Book
Price to Cash Flow 692.4
Price to Free Cash Flow -98.9
Growth Rates
Sales Growth Rate -9.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.1%
Cap. Spend. - 3 Yr. Gr. Rate 5.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -3.8%
Ret/ On Assets - 3 Yr. Avg. -3.1%
Return On Total Capital -4.5%
Ret/ On T. Cap. - 3 Yr. Avg. -3.7%
Return On Equity -4.5%
Return On Equity - 3 Yr. Avg. -3.7%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 45.5%
Gross Margin - 3 Yr. Avg. 44.6%
EBITDA Margin 1%
EBITDA Margin - 3 Yr. Avg. 1.1%
Operating Margin -3.5%
Oper. Margin - 3 Yr. Avg. -3.2%
Pre-Tax Margin -3%
Pre-Tax Margin - 3 Yr. Avg. -3.1%
Net Profit Margin -3%
Net Profit Margin - 3 Yr. Avg. -2.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

VICR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VICR stock intrinsic value calculation we used $200 million for the last fiscal year's total revenue generated by Vicor. The default revenue input number comes from 2016 income statement of Vicor. 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 VICR stock valuation model: a) initial revenue growth rate of 17.4% 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 VICR is calculated based on our internal credit rating of Vicor, 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 Vicor.
    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 VICR stock the variable cost ratio is equal to 65%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $79 million in the base year in the intrinsic value calculation for VICR 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 Vicor.

Corporate tax rate of 27% is the nominal tax rate for Vicor. 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 VICR 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 VICR are equal to 19.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Vicor 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 VICR is equal to 17%. 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 - $131 million for Vicor - 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 38.976 million for Vicor 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 Vicor at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ ETFs with exposure to Vicor Corp. : August 17, 2017   [Aug-17-17 04:07PM  Capital Cube]
▶ ETFs with exposure to Vicor Corp. : July 25, 2017   [Jul-25-17 02:01PM  Capital Cube]
▶ ETFs with exposure to Vicor Corp. : July 14, 2017   [Jul-14-17 05:28PM  Capital Cube]
▶ Vicor Corp. Value Analysis (NASDAQ:VICR) : July 3, 2017   [Jul-03-17 04:58PM  Capital Cube]
▶ ETFs with exposure to Vicor Corp. : May 25, 2017   [May-25-17 12:50PM  Capital Cube]
▶ ETFs with exposure to Vicor Corp. : May 3, 2017   [May-03-17 04:26PM  Capital Cube]
▶ Vicor reports 1Q loss   [Apr-25-17 05:04PM  Associated Press]
▶ Vicor Corp. Value Analysis (NASDAQ:VICR) : April 19, 2017   [Apr-19-17 03:23PM  Capital Cube]
▶ ETFs with exposure to Vicor Corp. : April 7, 2017   [Apr-07-17 05:42PM  Capital Cube]
▶ Vicor reports 4Q loss   [Feb-23-17 08:01PM  Associated Press]
▶ Vicor reports 4Q loss   [08:01PM  AP]
▶ How Vicor Corp (VICR) Stands Up Against Its Peers   [Dec-20-16 07:55AM  at Insider Monkey]
▶ Vicor reports 2Q loss   [Jul-26-16 05:09PM  AP]
▶ Vicor reports 4Q loss   [Feb-26-16 05:04AM  AP]
▶ Should You Buy AgroFresh Solutions Inc (AGFS)?   [Nov-29  11:57AM  at Insider Monkey]
▶ Does Vicor Corp (VICR) Represent a Good Investment ?   [Nov-24  01:41AM  at Insider Monkey]
▶ Trellus Managements Under-the-Radar Stock Picks for Q4   [Nov-02  10:35AM  at Insider Monkey]
Financial statements of VICR
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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