Intrinsic value of Axcelis Technologies - ACLS

Previous Close

$18.12

  Intrinsic Value

$18.98

stock screener

  Rating & Target

hold

+5%

Previous close

$18.12

 
Intrinsic value

$18.98

 
Up/down potential

+5%

 
Rating

hold

We calculate the intrinsic value of ACLS 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 0001), $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 0.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.10
  14.99
  13.99
  13.09
  12.28
  11.55
  10.90
  10.31
  9.78
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
Revenue, $m
  477
  548
  625
  707
  793
  885
  982
  1,083
  1,189
  1,299
  1,414
  1,534
  1,659
  1,789
  1,924
  2,064
  2,210
  2,361
  2,518
  2,682
  2,852
  3,030
  3,214
  3,407
  3,607
  3,816
  4,034
  4,262
  4,500
  4,748
Variable operating expenses, $m
  372
  428
  488
  552
  620
  691
  767
  846
  928
  1,015
  1,105
  1,198
  1,296
  1,397
  1,502
  1,612
  1,726
  1,844
  1,967
  2,095
  2,228
  2,366
  2,510
  2,661
  2,817
  2,980
  3,151
  3,329
  3,514
  3,709
Fixed operating expenses, $m
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  60
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  83
Total operating expenses, $m
  416
  473
  534
  599
  668
  740
  817
  897
  980
  1,068
  1,160
  1,254
  1,353
  1,455
  1,562
  1,673
  1,788
  1,908
  2,032
  2,161
  2,296
  2,435
  2,581
  2,733
  2,891
  3,056
  3,228
  3,408
  3,595
  3,792
Operating income, $m
  60
  75
  91
  108
  126
  145
  165
  186
  208
  231
  255
  280
  306
  333
  362
  391
  422
  453
  487
  521
  557
  594
  633
  674
  716
  760
  806
  854
  905
  957
EBITDA, $m
  66
  82
  99
  116
  136
  156
  177
  199
  223
  247
  272
  299
  327
  355
  385
  416
  449
  482
  517
  554
  592
  631
  672
  715
  760
  807
  856
  906
  960
  1,015
Interest expense (income), $m
  5
  5
  7
  10
  13
  16
  19
  22
  25
  29
  32
  36
  40
  45
  49
  53
  58
  63
  68
  74
  79
  85
  91
  97
  104
  110
  117
  125
  132
  140
  149
Earnings before tax, $m
  55
  68
  81
  95
  110
  126
  143
  161
  179
  199
  219
  240
  262
  285
  308
  333
  359
  385
  413
  442
  472
  503
  536
  570
  606
  643
  681
  722
  764
  809
Tax expense, $m
  15
  18
  22
  26
  30
  34
  39
  43
  48
  54
  59
  65
  71
  77
  83
  90
  97
  104
  111
  119
  127
  136
  145
  154
  164
  174
  184
  195
  206
  218
Net income, $m
  40
  49
  59
  69
  81
  92
  104
  117
  131
  145
  160
  175
  191
  208
  225
  243
  262
  281
  301
  323
  344
  367
  391
  416
  442
  469
  497
  527
  558
  590

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  503
  578
  659
  745
  837
  934
  1,035
  1,142
  1,254
  1,370
  1,492
  1,618
  1,750
  1,887
  2,029
  2,177
  2,331
  2,490
  2,657
  2,829
  3,009
  3,196
  3,391
  3,593
  3,805
  4,025
  4,256
  4,496
  4,747
  5,009
Adjusted assets (=assets-cash), $m
  503
  578
  659
  745
  837
  934
  1,035
  1,142
  1,254
  1,370
  1,492
  1,618
  1,750
  1,887
  2,029
  2,177
  2,331
  2,490
  2,657
  2,829
  3,009
  3,196
  3,391
  3,593
  3,805
  4,025
  4,256
  4,496
  4,747
  5,009
Revenue / Adjusted assets
  0.948
  0.948
  0.948
  0.949
  0.947
  0.948
  0.949
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
  0.948
Average production assets, $m
  39
  45
  51
  58
  65
  73
  80
  89
  97
  107
  116
  126
  136
  147
  158
  169
  181
  194
  207
  220
  234
  248
  264
  279
  296
  313
  331
  349
  369
  389
Working capital, $m
  146
  168
  192
  217
  244
  272
  301
  332
  365
  399
  434
  471
  509
  549
  591
  634
  678
  725
  773
  823
  876
  930
  987
  1,046
  1,107
  1,172
  1,239
  1,308
  1,381
  1,458
Total debt, $m
  69
  93
  118
  145
  173
  203
  235
  268
  303
  339
  377
  416
  457
  500
  544
  590
  638
  688
  739
  793
  849
  907
  968
  1,031
  1,096
  1,165
  1,237
  1,311
  1,389
  1,471
Total liabilities, $m
  156
  180
  205
  232
  260
  290
  322
  355
  390
  426
  464
  503
  544
  587
  631
  677
  725
  775
  826
  880
  936
  994
  1,054
  1,118
  1,183
  1,252
  1,323
  1,398
  1,476
  1,558
Total equity, $m
  346
  398
  454
  514
  577
  643
  713
  787
  864
  944
  1,028
  1,115
  1,206
  1,300
  1,398
  1,500
  1,606
  1,716
  1,830
  1,949
  2,073
  2,202
  2,336
  2,476
  2,622
  2,774
  2,932
  3,098
  3,271
  3,451
Total liabilities and equity, $m
  502
  578
  659
  746
  837
  933
  1,035
  1,142
  1,254
  1,370
  1,492
  1,618
  1,750
  1,887
  2,029
  2,177
  2,331
  2,491
  2,656
  2,829
  3,009
  3,196
  3,390
  3,594
  3,805
  4,026
  4,255
  4,496
  4,747
  5,009
Debt-to-equity ratio
  0.200
  0.230
  0.260
  0.280
  0.300
  0.320
  0.330
  0.340
  0.350
  0.360
  0.370
  0.370
  0.380
  0.380
  0.390
  0.390
  0.400
  0.400
  0.400
  0.410
  0.410
  0.410
  0.410
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.430
Adjusted equity ratio
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689
  0.689

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  40
  49
  59
  69
  81
  92
  104
  117
  131
  145
  160
  175
  191
  208
  225
  243
  262
  281
  301
  323
  344
  367
  391
  416
  442
  469
  497
  527
  558
  590
Depreciation, amort., depletion, $m
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  49
  52
  55
  58
Funds from operations, $m
  46
  56
  67
  78
  90
  103
  116
  131
  145
  161
  177
  194
  211
  230
  249
  268
  289
  310
  332
  355
  379
  404
  431
  458
  486
  516
  547
  579
  613
  648
Change in working capital, $m
  20
  22
  24
  25
  27
  28
  30
  31
  33
  34
  35
  37
  38
  40
  41
  43
  45
  46
  48
  50
  52
  54
  57
  59
  62
  64
  67
  70
  73
  76
Cash from operations, $m
  26
  34
  43
  53
  64
  75
  87
  100
  113
  127
  142
  157
  173
  190
  207
  225
  244
  264
  284
  305
  327
  350
  374
  399
  425
  452
  480
  509
  540
  572
Maintenance CAPEX, $m
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -55
New CAPEX, $m
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -20
Cash from investing activities, $m
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -75
Free cash flow, $m
  15
  22
  30
  39
  48
  58
  68
  79
  91
  103
  116
  130
  144
  159
  174
  190
  207
  224
  242
  261
  280
  301
  322
  344
  367
  390
  415
  441
  468
  497
Issuance/(repayment) of debt, $m
  22
  23
  25
  27
  28
  30
  32
  33
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
Issuance/(repurchase) of shares, $m
  7
  3
  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  
  29
  26
  25
  27
  28
  30
  32
  33
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
Total cash flow (excl. dividends), $m
  44
  48
  55
  66
  76
  88
  100
  112
  126
  140
  154
  169
  185
  201
  218
  236
  255
  274
  294
  315
  336
  359
  382
  407
  432
  459
  487
  516
  546
  578
Retained Cash Flow (-), $m
  -48
  -52
  -56
  -59
  -63
  -67
  -70
  -74
  -77
  -80
  -84
  -87
  -91
  -94
  -98
  -102
  -106
  -110
  -114
  -119
  -124
  -129
  -134
  -140
  -146
  -152
  -159
  -166
  -173
  -181
Prev. year cash balance distribution, $m
  55
  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
  52
  -3
  0
  6
  13
  21
  30
  39
  49
  59
  70
  82
  94
  107
  120
  134
  149
  164
  179
  196
  212
  230
  248
  267
  287
  307
  328
  350
  374
  398
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
  49
  -3
  0
  5
  10
  15
  20
  24
  28
  31
  33
  35
  36
  36
  35
  34
  32
  30
  28
  25
  22
  19
  16
  14
  11
  9
  7
  5
  4
  3
Current shareholders' claim on cash, %
  98.5
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1

Axcelis Technologies, Inc. designs, manufactures and services ion implantation and other processing equipment used in the fabrication of semiconductor chips. The Company also provides aftermarket lifecycle products and services, including used tools, spare parts, equipment upgrades, maintenance services and customer training. The Company offers a complete line of high energy, high current and medium current implanters for all application requirements. The Company's Purion XE high energy system combines its radio frequency (RF) Linac high energy, spot beam technology with the Purion platform. The Company also offers the Purion M medium current system. The Company's Purion M systems also offer differentiation for specialty applications, such as hot silicon carbide. The Company's Purion H high current system is extendable into ultra-low energy applications to satisfy future process requirements, including leakage current performance.

FINANCIAL RATIOS  of  Axcelis Technologies (ACLS)

Valuation Ratios
P/E Ratio 48.6
Price to Sales 2
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow -59.4
Price to Free Cash Flow -44.6
Growth Rates
Sales Growth Rate -11.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 23.9%
Total Debt to Equity 23.9%
Interest Coverage 3
Management Effectiveness
Return On Assets 5.5%
Ret/ On Assets - 3 Yr. Avg. 2.9%
Return On Total Capital 4.6%
Ret/ On T. Cap. - 3 Yr. Avg. 2%
Return On Equity 5.7%
Return On Equity - 3 Yr. Avg. 2.6%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 37.5%
Gross Margin - 3 Yr. Avg. 35.2%
EBITDA Margin 7.5%
EBITDA Margin - 3 Yr. Avg. 4.5%
Operating Margin 6.4%
Oper. Margin - 3 Yr. Avg. 2.6%
Pre-Tax Margin 4.1%
Pre-Tax Margin - 3 Yr. Avg. 1.4%
Net Profit Margin 4.1%
Net Profit Margin - 3 Yr. Avg. 1.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -3.3%
Payout Ratio 0%

ACLS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ACLS stock intrinsic value calculation we used $410.561 million for the last fiscal year's total revenue generated by Axcelis Technologies. The default revenue input number comes from 0001 income statement of Axcelis Technologies. 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 ACLS stock valuation model: a) initial revenue growth rate of 16.1% 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 ACLS is calculated based on our internal credit rating of Axcelis Technologies, 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 Axcelis Technologies.
    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 ACLS stock the variable cost ratio is equal to 78.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $43 million in the base year in the intrinsic value calculation for ACLS 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 10.7% for Axcelis Technologies.

Corporate tax rate of 27% is the nominal tax rate for Axcelis Technologies. 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 ACLS 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 ACLS are equal to 8.2%.

Life of production assets of 6.7 years is the average useful life of capital assets used in Axcelis Technologies 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 ACLS is equal to 30.7%. 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 - $353.61 million for Axcelis Technologies - 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 32.146 million for Axcelis Technologies 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 Axcelis Technologies at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

▶ Top 4 Small-Cap Stocks for 2018   [Oct-03-18 06:45PM  Investopedia]
▶ Axcelis: 2Q Earnings Snapshot   [05:49PM  Associated Press]
▶ Axcelis: 1Q Earnings Snapshot   [May-02-18 06:55PM  Associated Press]
▶ 10 Risky (But Rewarding) Small-Cap Stocks to Buy Now   [Apr-27-18 12:36PM  InvestorPlace]
▶ Axcelis tops Street 4Q forecasts   [Feb-06-18 05:09PM  Associated Press]
▶ [$$] Primecap: Two Stocks It's Buying, One It's Selling   [Jan-05-18 07:13AM  Barrons.com]
▶ Top 4 Small-Cap Stocks for 2017   [Nov-06-17 11:59AM  Investopedia]
▶ Axcelis tops Street 3Q forecasts   [Nov-02-17 05:31PM  Associated Press]
▶ Axcelis misses 2Q profit forecasts   [Aug-04-17 02:28AM  Associated Press]
▶ Could These Chip-Gear Stocks Start To Rally After Recent Slide?   [Jun-30-17 12:30PM  Investor's Business Daily]

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