Intrinsic value of Analog Devices - ADI

Previous Close

$85.76

  Intrinsic Value

$158.63

stock screener

  Rating & Target

str. buy

+85%

Previous close

$85.76

 
Intrinsic value

$158.63

 
Up/down potential

+85%

 
Rating

str. buy

We calculate the intrinsic value of ADI 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 31.8

 

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, %
  31.80
  29.12
  26.71
  24.54
  22.58
  20.83
  19.24
  17.82
  16.54
  15.38
  14.34
  13.41
  12.57
  11.81
  11.13
  10.52
  9.97
  9.47
  9.02
  8.62
  8.26
  7.93
  7.64
  7.38
  7.14
  6.92
  6.73
  6.56
  6.40
  6.26
Revenue, $m
  6,732
  8,692
  11,013
  13,716
  16,813
  20,315
  24,224
  28,540
  33,260
  38,376
  43,881
  49,765
  56,020
  62,637
  69,610
  76,931
  84,598
  92,609
  100,965
  109,668
  118,725
  128,143
  137,932
  148,104
  158,676
  169,662
  181,083
  192,960
  205,314
  218,171
Variable operating expenses, $m
  4,148
  4,845
  5,671
  6,632
  7,733
  8,978
  10,369
  11,904
  13,582
  15,402
  15,606
  17,699
  19,923
  22,277
  24,756
  27,360
  30,087
  32,936
  35,908
  39,003
  42,224
  45,573
  49,055
  52,673
  56,432
  60,340
  64,401
  68,625
  73,019
  77,591
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
  4,148
  4,845
  5,671
  6,632
  7,733
  8,978
  10,369
  11,904
  13,582
  15,402
  15,606
  17,699
  19,923
  22,277
  24,756
  27,360
  30,087
  32,936
  35,908
  39,003
  42,224
  45,573
  49,055
  52,673
  56,432
  60,340
  64,401
  68,625
  73,019
  77,591
Operating income, $m
  2,584
  3,847
  5,343
  7,084
  9,080
  11,336
  13,855
  16,636
  19,677
  22,974
  28,275
  32,066
  36,097
  40,361
  44,853
  49,571
  54,511
  59,673
  65,057
  70,665
  76,501
  82,569
  88,877
  95,432
  102,244
  109,323
  116,682
  124,334
  132,295
  140,580
EBITDA, $m
  4,754
  6,138
  7,778
  9,686
  11,874
  14,346
  17,107
  20,155
  23,488
  27,101
  30,989
  35,144
  39,562
  44,235
  49,158
  54,329
  59,743
  65,401
  71,302
  77,448
  83,844
  90,495
  97,408
  104,592
  112,057
  119,816
  127,882
  136,269
  144,993
  154,073
Interest expense (income), $m
  183
  424
  611
  838
  1,107
  1,419
  1,778
  2,184
  2,636
  3,136
  3,683
  4,275
  4,913
  5,594
  6,319
  7,085
  7,893
  8,740
  9,628
  10,556
  11,524
  12,532
  13,581
  14,671
  15,805
  16,983
  18,207
  19,480
  20,802
  22,178
  23,608
Earnings before tax, $m
  2,160
  3,236
  4,505
  5,978
  7,661
  9,558
  11,671
  14,000
  16,541
  19,291
  23,999
  27,154
  30,503
  34,042
  37,768
  41,678
  45,771
  50,045
  54,501
  59,141
  63,969
  68,989
  74,206
  79,627
  85,261
  91,116
  97,202
  103,532
  110,117
  116,971
Tax expense, $m
  583
  874
  1,216
  1,614
  2,068
  2,581
  3,151
  3,780
  4,466
  5,209
  6,480
  7,331
  8,236
  9,191
  10,197
  11,253
  12,358
  13,512
  14,715
  15,968
  17,272
  18,627
  20,036
  21,499
  23,020
  24,601
  26,245
  27,954
  29,732
  31,582
Net income, $m
  1,577
  2,363
  3,289
  4,364
  5,592
  6,977
  8,520
  10,220
  12,075
  14,083
  17,520
  19,822
  22,267
  24,851
  27,571
  30,425
  33,413
  36,533
  39,786
  43,173
  46,698
  50,362
  54,170
  58,128
  62,240
  66,514
  70,958
  75,578
  80,386
  85,389

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
  27,817
  35,917
  45,510
  56,677
  69,476
  83,945
  100,098
  117,934
  137,436
  158,578
  181,325
  205,641
  231,488
  258,832
  287,643
  317,897
  349,579
  382,682
  417,209
  453,174
  490,598
  529,515
  569,965
  612,002
  655,685
  701,084
  748,278
  797,353
  848,405
  901,534
Adjusted assets (=assets-cash), $m
  27,817
  35,917
  45,510
  56,677
  69,476
  83,945
  100,098
  117,934
  137,436
  158,578
  181,325
  205,641
  231,488
  258,832
  287,643
  317,897
  349,579
  382,682
  417,209
  453,174
  490,598
  529,515
  569,965
  612,002
  655,685
  701,084
  748,278
  797,353
  848,405
  901,534
Revenue / Adjusted assets
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
Average production assets, $m
  7,661
  9,891
  12,533
  15,609
  19,134
  23,118
  27,567
  32,479
  37,849
  43,672
  49,936
  56,633
  63,751
  71,281
  79,216
  87,547
  96,273
  105,389
  114,898
  124,802
  135,109
  145,826
  156,966
  168,543
  180,573
  193,076
  206,073
  219,588
  233,647
  248,279
Working capital, $m
  7
  9
  11
  14
  17
  20
  24
  29
  33
  38
  44
  50
  56
  63
  70
  77
  85
  93
  101
  110
  119
  128
  138
  148
  159
  170
  181
  193
  205
  218
Total debt, $m
  11,308
  15,512
  20,491
  26,287
  32,930
  40,439
  48,822
  58,079
  68,201
  79,173
  90,979
  103,599
  117,014
  131,205
  146,158
  161,860
  178,303
  195,483
  213,403
  232,069
  251,492
  271,689
  292,683
  314,500
  337,172
  360,734
  385,228
  410,698
  437,193
  464,768
Total liabilities, $m
  14,437
  18,641
  23,620
  29,415
  36,058
  43,567
  51,951
  61,208
  71,329
  82,302
  94,108
  106,728
  120,142
  134,334
  149,287
  164,988
  181,431
  198,612
  216,532
  235,197
  254,621
  274,818
  295,812
  317,629
  340,300
  363,863
  388,356
  413,826
  440,322
  467,896
Total equity, $m
  13,380
  17,276
  21,890
  27,262
  33,418
  40,378
  48,147
  56,726
  66,107
  76,276
  87,217
  98,913
  111,346
  124,498
  138,356
  152,908
  168,147
  184,070
  200,678
  217,977
  235,978
  254,697
  274,153
  294,373
  315,384
  337,222
  359,922
  383,527
  408,083
  433,638
Total liabilities and equity, $m
  27,817
  35,917
  45,510
  56,677
  69,476
  83,945
  100,098
  117,934
  137,436
  158,578
  181,325
  205,641
  231,488
  258,832
  287,643
  317,896
  349,578
  382,682
  417,210
  453,174
  490,599
  529,515
  569,965
  612,002
  655,684
  701,085
  748,278
  797,353
  848,405
  901,534
Debt-to-equity ratio
  0.850
  0.900
  0.940
  0.960
  0.990
  1.000
  1.010
  1.020
  1.030
  1.040
  1.040
  1.050
  1.050
  1.050
  1.060
  1.060
  1.060
  1.060
  1.060
  1.060
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
Adjusted equity ratio
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,577
  2,363
  3,289
  4,364
  5,592
  6,977
  8,520
  10,220
  12,075
  14,083
  17,520
  19,822
  22,267
  24,851
  27,571
  30,425
  33,413
  36,533
  39,786
  43,173
  46,698
  50,362
  54,170
  58,128
  62,240
  66,514
  70,958
  75,578
  80,386
  85,389
Depreciation, amort., depletion, $m
  2,170
  2,291
  2,435
  2,602
  2,794
  3,010
  3,252
  3,519
  3,811
  4,127
  2,714
  3,078
  3,465
  3,874
  4,305
  4,758
  5,232
  5,728
  6,244
  6,783
  7,343
  7,925
  8,531
  9,160
  9,814
  10,493
  11,200
  11,934
  12,698
  13,493
Funds from operations, $m
  3,747
  4,654
  5,724
  6,966
  8,386
  9,987
  11,772
  13,739
  15,886
  18,210
  20,233
  22,900
  25,732
  28,725
  31,876
  35,183
  38,645
  42,260
  46,030
  49,956
  54,040
  58,287
  62,701
  67,288
  72,054
  77,008
  82,157
  87,513
  93,084
  98,883
Change in working capital, $m
  2
  2
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
Cash from operations, $m
  3,745
  4,652
  5,721
  6,963
  8,383
  9,984
  11,768
  13,734
  15,881
  18,205
  20,228
  22,894
  25,725
  28,718
  31,869
  35,176
  38,637
  42,252
  46,022
  49,947
  54,031
  58,278
  62,691
  67,277
  72,043
  76,997
  82,146
  87,501
  93,072
  98,870
Maintenance CAPEX, $m
  -316
  -416
  -538
  -681
  -848
  -1,040
  -1,256
  -1,498
  -1,765
  -2,057
  -2,373
  -2,714
  -3,078
  -3,465
  -3,874
  -4,305
  -4,758
  -5,232
  -5,728
  -6,244
  -6,783
  -7,343
  -7,925
  -8,531
  -9,160
  -9,814
  -10,493
  -11,200
  -11,934
  -12,698
New CAPEX, $m
  -1,848
  -2,231
  -2,642
  -3,075
  -3,525
  -3,985
  -4,449
  -4,912
  -5,371
  -5,822
  -6,265
  -6,697
  -7,118
  -7,530
  -7,934
  -8,332
  -8,725
  -9,117
  -9,509
  -9,905
  -10,306
  -10,717
  -11,140
  -11,577
  -12,030
  -12,503
  -12,997
  -13,515
  -14,059
  -14,632
Cash from investing activities, $m
  -2,164
  -2,647
  -3,180
  -3,756
  -4,373
  -5,025
  -5,705
  -6,410
  -7,136
  -7,879
  -8,638
  -9,411
  -10,196
  -10,995
  -11,808
  -12,637
  -13,483
  -14,349
  -15,237
  -16,149
  -17,089
  -18,060
  -19,065
  -20,108
  -21,190
  -22,317
  -23,490
  -24,715
  -25,993
  -27,330
Free cash flow, $m
  1,582
  2,005
  2,542
  3,206
  4,009
  4,959
  6,063
  7,324
  8,745
  10,325
  11,590
  13,484
  15,529
  17,723
  20,061
  22,539
  25,154
  27,904
  30,785
  33,798
  36,942
  40,217
  43,626
  47,170
  50,853
  54,680
  58,656
  62,786
  67,078
  71,540
Issuance/(repayment) of debt, $m
  3,457
  4,204
  4,979
  5,796
  6,643
  7,509
  8,384
  9,257
  10,122
  10,973
  11,806
  12,620
  13,415
  14,191
  14,953
  15,702
  16,443
  17,181
  17,920
  18,666
  19,423
  20,198
  20,994
  21,817
  22,672
  23,562
  24,494
  25,470
  26,496
  27,574
Issuance/(repurchase) of shares, $m
  1,642
  1,534
  1,325
  1,008
  564
  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  
  5,099
  5,738
  6,304
  6,804
  7,207
  7,509
  8,384
  9,257
  10,122
  10,973
  11,806
  12,620
  13,415
  14,191
  14,953
  15,702
  16,443
  17,181
  17,920
  18,666
  19,423
  20,198
  20,994
  21,817
  22,672
  23,562
  24,494
  25,470
  26,496
  27,574
Total cash flow (excl. dividends), $m
  6,680
  7,742
  8,846
  10,010
  11,217
  12,469
  14,447
  16,581
  18,867
  21,298
  23,396
  26,104
  28,944
  31,914
  35,013
  38,241
  41,597
  45,084
  48,705
  52,464
  56,365
  60,415
  64,620
  68,987
  73,525
  78,242
  83,149
  88,256
  93,574
  99,114
Retained Cash Flow (-), $m
  -3,218
  -3,896
  -4,614
  -5,371
  -6,157
  -6,959
  -7,770
  -8,579
  -9,381
  -10,169
  -10,941
  -11,696
  -12,433
  -13,152
  -13,858
  -14,552
  -15,239
  -15,923
  -16,608
  -17,299
  -18,001
  -18,719
  -19,457
  -20,220
  -21,012
  -21,837
  -22,700
  -23,605
  -24,556
  -25,555
Prev. year cash balance distribution, $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 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
  3,462
  3,846
  4,232
  4,638
  5,060
  5,509
  6,677
  8,002
  9,486
  11,129
  12,454
  14,408
  16,511
  18,762
  21,156
  23,689
  26,358
  29,162
  32,097
  35,165
  38,364
  41,696
  45,163
  48,767
  52,513
  56,405
  60,449
  64,651
  69,018
  73,559
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  3,236
  3,338
  3,386
  3,396
  3,364
  3,297
  3,564
  3,774
  3,912
  3,969
  3,797
  3,709
  3,542
  3,307
  3,019
  2,694
  2,350
  2,003
  1,666
  1,353
  1,072
  828
  622
  455
  324
  224
  150
  97
  61
  37
Current shareholders' claim on cash, %
  95.1
  91.7
  89.5
  88.2
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7
  87.7

Analog Devices, Inc. (Analog Devices) designs, manufactures and markets a portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing technology, including integrated circuits (ICs), algorithms, software and subsystems. Its products include Analog Products, Converters, Amplifiers/Radio Frequency, Other Analog, Power Management and Reference, and Digital Signal Processing Products. The Company is a supplier of data converter products. The Company is a supplier of high-performance amplifiers. Its analog product line also includes products of high performance radio frequency (RF) ICs. The Company's DSPs are used for high-speed numeric calculations. The Company offers its products for applications in various end markets, such as industrial, automotive, consumer and communications. The Company operates in the United States, Rest of North/South America, Europe, Japan and China.

FINANCIAL RATIOS  of  Analog Devices (ADI)

Valuation Ratios
P/E Ratio 43.5
Price to Sales 6.2
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 28.4
Price to Free Cash Flow 34.8
Growth Rates
Sales Growth Rate 49.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 60.6%
Cap. Spend. - 3 Yr. Gr. Rate 2.8%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 74.3%
Total Debt to Equity 77.3%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.1%
Ret/ On Assets - 3 Yr. Avg. 9.5%
Return On Total Capital 5.8%
Ret/ On T. Cap. - 3 Yr. Avg. 10.4%
Return On Equity 9.5%
Return On Equity - 3 Yr. Avg. 13.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 59.9%
Gross Margin - 3 Yr. Avg. 63.6%
EBITDA Margin 31.2%
EBITDA Margin - 3 Yr. Avg. 32.5%
Operating Margin 20.7%
Oper. Margin - 3 Yr. Avg. 25%
Pre-Tax Margin 16.2%
Pre-Tax Margin - 3 Yr. Avg. 22.6%
Net Profit Margin 14.2%
Net Profit Margin - 3 Yr. Avg. 19.9%
Effective Tax Rate 12.2%
Eff/ Tax Rate - 3 Yr. Avg. 12%
Payout Ratio 82.8%

ADI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ADI stock intrinsic value calculation we used $5107.503 million for the last fiscal year's total revenue generated by Analog Devices. The default revenue input number comes from 0001 income statement of Analog Devices. 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 ADI stock valuation model: a) initial revenue growth rate of 31.8% 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 7%, whose default value for ADI is calculated based on our internal credit rating of Analog Devices, 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 Analog Devices.
    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 ADI stock the variable cost ratio is equal to 69.9%.

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 ADI 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 5.4% for Analog Devices.

Corporate tax rate of 27% is the nominal tax rate for Analog Devices. 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 ADI 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 ADI are equal to 113.8%.

Life of production assets of 18.4 years is the average useful life of capital assets used in Analog Devices 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 ADI is equal to 0.1%. 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 - $10161.54 million for Analog Devices - 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 370.897 million for Analog Devices 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 Analog Devices at the current share price and the inputted number of shares is $31.8 billion.

Management's discussion and analysis

Results of Operations

Overview
 
Fiscal Year
 
2016 over 2015
 
2015 over 2014
 
2016
 
2015
 
2014
 
  $ Change
 
% Change
 
  $ Change
 
% Change
Revenue
$
3,421,409
   
$
3,435,092
   
$
2,864,773
   
$
(13,683
)
 
 %
 
$
570,319
   
20
%
Gross Margin %
65.1
%
 
65.8
%
 
63.9
%
               
Net income
$
861,664
   
$
696,878
   
$
629,320
   
$
164,786
   
24
 %
 
$
67,558
   
11
%
Net income as a % of Revenue
25.2
%
 
20.3
%
 
22.0
%
               
Diluted EPS
$
2.76
   
$
2.20
   
$
1.98
   
$
0.56
   
25
 %
 
$
0.22
   
11
%
Proposed Acquisition of Linear Technology Corporation
On July 26, 2016, we entered into a definitive agreement (the Merger Agreement) to acquire Linear Technology Corporation (Linear), an independent manufacturer of high performance linear integrated circuits. Under the terms of the Merger Agreement, Linear stockholders will receive, for each outstanding share of Linear common stock, $46.00 in cash and 0.2321 of a share of our common stock at the closing. Based on the number of outstanding shares of Linear common stock as of July 26, 2016 and our 5-day volume weighted average price as of July 21, 2016, the value of the total consideration to be paid by us is estimated to be approximately $14.8 billion. On October 18, 2016, Linear stockholders approved the Merger Agreement. As of October 29, 2016 we had received antitrust clearance in the United States and Germany. Subsequently, we have also received antitrust clearances in Japan and Israel. We currently expect the transaction to be completed by the end of the second quarter of our fiscal year ended October 28, 2017 (fiscal 2017), subject to receipt of the remaining required regulatory clearances and the satisfaction or waiver of the other conditions contained in the Merger Agreement.
We intend to fund the acquisition with the issuance of approximately 58.0 million new shares of our common stock and approximately $11.6 billion of new short- and long-term indebtedness. The financing is supported by fully underwritten bridge financing commitments and is expected to consist of term loans and bonds. See Note 6, Acquisitions and Note 16, Debt, of the Notes to the Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further information.
Acquisition of Hittite Microwave Corporation (Hittite)
On July 22, 2014, we completed the acquisition of Hittite, a company that designed and developed high performance integrated circuits, modules, subsystems and instrumentation for radio frequency, microwave and millimeterwave applications. The total consideration paid to acquire Hittite was approximately $2.4 billion, financed through a combination of existing cash on hand and a 90-day term loan facility of $2.0 billion. The acquisition of Hittite is referred to as the Hittite Acquisition. See Note 6, Acquisitions, of the Notes to the Consolidated Financial Statements contained in Item 8 of this Annual Report on From 10-K for further discussion related to the Hittite Acquisition.
Revenue Trends by End Market
The following table summarizes revenue by end market. The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the “ship to” customer information and the end customer product or application into which our product will be incorporated. As data systems for capturing and tracking this data evolve and improve, the categorization of products by end market can vary over time. When this occurs, we reclassify revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.
Automotive end market revenue increased year-over-year in fiscal 2016 primarily as a result of increased demand for our powertrain, advanced driver assistance systems, and infotainment products. The year-over-year decrease in the consumer end market in fiscal 2016 was primarily the result of lower demand for products sold into portable consumer applications.
The year-over-year increase in the industrial and communications end markets revenue in fiscal 2015 was the result of the Hittite Acquisition. Consumer end market revenue increased in fiscal 2015 as compared to fiscal 2014 as a result of increased demand for products sold into the portable sector of this end market.

[Source: Form 10-K dated 2016-11-22]

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