Intrinsic value of Vicor - VICR

Previous Close

$23.40

  Intrinsic Value

$5.62

stock screener

  Rating & Target

str. sell

-76%

Previous close

$23.40

 
Intrinsic value

$5.62

 
Up/down potential

-76%

 
Rating

str. sell

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 0.9

 

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
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  200
  219
  238
  259
  280
  302
  325
  349
  374
  400
  426
  454
  483
  513
  545
  577
  612
  647
  684
  723
  763
  806
  850
  896
  944
  995
  1,048
  1,103
  1,161
  1,222
  1,285
Variable operating expenses, $m
 
  142
  155
  168
  182
  196
  211
  227
  243
  260
  277
  295
  314
  334
  354
  375
  398
  421
  445
  470
  496
  524
  552
  582
  614
  647
  681
  717
  755
  794
  835
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
  223
  238
  253
  269
  285
  303
  321
  339
  359
  378
  399
  420
  443
  466
  489
  515
  541
  568
  596
  625
  657
  688
  721
  757
  793
  831
  871
  913
  956
  1,001
Operating income, $m
  -6
  -4
  0
  6
  11
  16
  22
  28
  35
  41
  48
  55
  63
  71
  79
  88
  97
  106
  116
  127
  138
  149
  161
  174
  188
  202
  217
  232
  249
  266
  284
EBITDA, $m
  2
  4
  10
  16
  22
  28
  35
  42
  49
  57
  65
  73
  82
  91
  100
  110
  121
  132
  143
  155
  168
  181
  195
  209
  224
  241
  257
  275
  294
  314
  334
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
Earnings before tax, $m
  -6
  -4
  0
  5
  11
  16
  22
  28
  34
  40
  47
  54
  62
  70
  78
  86
  95
  105
  114
  125
  136
  147
  159
  172
  185
  199
  213
  229
  245
  262
  280
Tax expense, $m
  0
  0
  0
  1
  3
  4
  6
  7
  9
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  43
  46
  50
  54
  58
  62
  66
  71
  76
Net income, $m
  -6
  -4
  0
  4
  8
  12
  16
  20
  25
  30
  35
  40
  45
  51
  57
  63
  70
  76
  84
  91
  99
  107
  116
  125
  135
  145
  156
  167
  179
  191
  204

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
  107
  117
  127
  137
  148
  159
  171
  183
  196
  209
  223
  237
  252
  267
  283
  300
  317
  335
  354
  374
  395
  416
  439
  463
  487
  513
  540
  569
  599
  630
Adjusted assets (=assets-cash), $m
  98
  107
  117
  127
  137
  148
  159
  171
  183
  196
  209
  223
  237
  252
  267
  283
  300
  317
  335
  354
  374
  395
  416
  439
  463
  487
  513
  540
  569
  599
  630
Revenue / Adjusted assets
  2.041
  2.047
  2.034
  2.039
  2.044
  2.041
  2.044
  2.041
  2.044
  2.041
  2.038
  2.036
  2.038
  2.036
  2.041
  2.039
  2.040
  2.041
  2.042
  2.042
  2.040
  2.041
  2.043
  2.041
  2.039
  2.043
  2.043
  2.043
  2.040
  2.040
  2.040
Average production assets, $m
  39
  43
  46
  50
  55
  59
  63
  68
  73
  78
  83
  89
  94
  100
  106
  113
  119
  126
  133
  141
  149
  157
  166
  175
  184
  194
  204
  215
  226
  238
  251
Working capital, $m
  90
  37
  41
  44
  48
  51
  55
  59
  64
  68
  72
  77
  82
  87
  93
  98
  104
  110
  116
  123
  130
  137
  144
  152
  161
  169
  178
  188
  197
  208
  219
Total debt, $m
  0
  2
  4
  7
  9
  12
  14
  17
  20
  23
  26
  29
  33
  36
  40
  43
  47
  52
  56
  60
  65
  70
  75
  80
  86
  92
  98
  104
  111
  118
  125
Total liabilities, $m
  23
  25
  27
  30
  32
  35
  37
  40
  43
  46
  49
  52
  56
  59
  63
  66
  70
  75
  79
  83
  88
  93
  98
  103
  109
  115
  121
  127
  134
  141
  148
Total equity, $m
  131
  82
  89
  97
  105
  113
  122
  131
  140
  150
  160
  170
  181
  192
  204
  216
  229
  243
  256
  271
  286
  302
  319
  336
  354
  373
  393
  413
  435
  458
  482
Total liabilities and equity, $m
  154
  107
  116
  127
  137
  148
  159
  171
  183
  196
  209
  222
  237
  251
  267
  282
  299
  318
  335
  354
  374
  395
  417
  439
  463
  488
  514
  540
  569
  599
  630
Debt-to-equity ratio
  0.000
  0.030
  0.050
  0.070
  0.090
  0.100
  0.120
  0.130
  0.140
  0.150
  0.160
  0.170
  0.180
  0.190
  0.190
  0.200
  0.210
  0.210
  0.220
  0.220
  0.230
  0.230
  0.230
  0.240
  0.240
  0.250
  0.250
  0.250
  0.250
  0.260
  0.260
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
  -4
  0
  4
  8
  12
  16
  20
  25
  30
  35
  40
  45
  51
  57
  63
  70
  76
  84
  91
  99
  107
  116
  125
  135
  145
  156
  167
  179
  191
  204
Depreciation, amort., depletion, $m
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
Funds from operations, $m
  -1
  4
  10
  14
  19
  23
  29
  34
  39
  45
  51
  57
  64
  71
  78
  86
  93
  102
  110
  119
  129
  139
  149
  160
  172
  184
  197
  210
  224
  239
  255
Change in working capital, $m
  -2
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
Cash from operations, $m
  1
  1
  6
  11
  15
  20
  25
  30
  35
  41
  47
  53
  59
  66
  73
  80
  88
  96
  104
  113
  122
  132
  142
  152
  164
  175
  188
  201
  214
  229
  244
Maintenance CAPEX, $m
  0
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
New CAPEX, $m
  -8
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
Cash from investing activities, $m
  -9
  -12
  -13
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -30
  -31
  -32
  -35
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
Free cash flow, $m
  -8
  -11
  -6
  -3
  1
  5
  8
  12
  17
  21
  26
  31
  36
  41
  47
  52
  58
  65
  71
  78
  86
  94
  102
  110
  119
  129
  139
  149
  160
  172
  184
Issuance/(repayment) of debt, $m
  0
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Issuance/(repurchase) of shares, $m
  2
  11
  7
  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
Cash from financing (excl. dividends), $m  
  1
  13
  9
  6
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Total cash flow (excl. dividends), $m
  -7
  3
  3
  3
  3
  7
  11
  15
  20
  24
  29
  34
  39
  44
  50
  56
  62
  69
  76
  83
  90
  98
  107
  116
  125
  134
  145
  155
  167
  179
  191
Retained Cash Flow (-), $m
  4
  -11
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
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
  -4
  -4
  -4
  -1
  2
  6
  10
  14
  19
  23
  28
  33
  38
  44
  50
  56
  62
  68
  75
  83
  90
  98
  107
  115
  125
  135
  145
  156
  167
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
  -4
  -4
  -4
  -1
  2
  4
  6
  8
  10
  11
  12
  13
  13
  13
  13
  12
  11
  11
  10
  9
  7
  6
  5
  4
  4
  3
  2
  2
  1
Current shareholders' claim on cash, %
  100
  97.9
  96.7
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
  96.1
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Vicor Corporation designs, develops, manufactures and markets modular power components and power systems for converting, regulating and controlling electric current. The Company's segments include Brick Business Unit (BBU), VI Chip and Picor. The BBU segment designs, develops, manufactures and markets modular direct current-direct current converters and configurable products, and also includes the entities comprising Vicor Custom Power, and the BBU operations of Vicor Japan Company, Ltd. (VJCL). The VI Chip segment includes VI Chip Corporation, which designs, develops, manufactures and markets advanced power component products. The VI Chip segment also includes the VI Chip business conducted through VJCL. The Picor segment includes Picor Corporation (Picor), which designs, develops, manufactures and markets integrated circuits and related products for use in a range of power management and power system applications.

FINANCIAL RATIOS  of  Vicor (VICR)

Valuation Ratios
P/E Ratio -152.1
Price to Sales 4.6
Price to Book 7
Price to Tangible Book
Price to Cash Flow 912.8
Price to Free Cash Flow -130.4
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 9.4% 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 4.9 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 39.253 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 $0.9 billion.

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COMPANY NEWS

▶ ETFs with exposure to Vicor Corp. : October 11, 2017   [Oct-11-17 12:09PM  Capital Cube]
▶ 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]
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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