Intrinsic value of Aehr Test Systems - AEHR

Previous Close

$1.86

  Intrinsic Value

$35.11

stock screener

  Rating & Target

str. buy

+999%

Previous close

$1.86

 
Intrinsic value

$35.11

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of AEHR 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 0.0

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  30
  47
  70
  101
  143
  197
  264
  347
  446
  563
  699
  855
  1,031
  1,226
  1,442
  1,677
  1,932
  2,206
  2,498
  2,809
  3,137
  3,483
  3,845
  4,225
  4,622
  5,035
  5,466
  5,914
  6,380
  6,864
Variable operating expenses, $m
  21
  32
  48
  69
  98
  134
  181
  237
  305
  385
  478
  585
  705
  839
  986
  1,147
  1,322
  1,509
  1,709
  1,921
  2,146
  2,382
  2,630
  2,890
  3,161
  3,444
  3,739
  4,045
  4,364
  4,695
Fixed operating expenses, $m
  11
  11
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
Total operating expenses, $m
  32
  43
  60
  81
  110
  147
  194
  250
  318
  399
  492
  599
  720
  854
  1,001
  1,163
  1,338
  1,525
  1,726
  1,938
  2,163
  2,400
  2,648
  2,909
  3,180
  3,463
  3,759
  4,065
  4,385
  4,716
Operating income, $m
  -2
  3
  10
  20
  33
  50
  71
  96
  128
  164
  207
  256
  311
  373
  440
  514
  595
  681
  773
  871
  974
  1,083
  1,197
  1,317
  1,442
  1,572
  1,707
  1,849
  1,995
  2,148
EBITDA, $m
  -1
  4
  11
  21
  35
  52
  74
  101
  134
  172
  217
  268
  325
  390
  460
  538
  621
  711
  807
  909
  1,017
  1,131
  1,250
  1,375
  1,505
  1,641
  1,783
  1,930
  2,083
  2,243
Interest expense (income), $m
  0
  1
  2
  3
  5
  8
  11
  15
  21
  28
  36
  46
  57
  70
  85
  101
  119
  138
  160
  182
  207
  232
  260
  288
  319
  350
  383
  417
  453
  490
  529
Earnings before tax, $m
  -2
  2
  7
  15
  25
  39
  55
  75
  100
  128
  161
  199
  241
  288
  339
  396
  456
  521
  590
  664
  741
  823
  909
  998
  1,091
  1,189
  1,290
  1,395
  1,505
  1,619
Tax expense, $m
  0
  0
  2
  4
  7
  10
  15
  20
  27
  35
  44
  54
  65
  78
  92
  107
  123
  141
  159
  179
  200
  222
  245
  269
  295
  321
  348
  377
  406
  437
Net income, $m
  -2
  1
  5
  11
  19
  28
  40
  55
  73
  94
  118
  145
  176
  210
  248
  289
  333
  380
  431
  485
  541
  601
  663
  729
  797
  868
  942
  1,019
  1,099
  1,182

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
  33
  52
  77
  112
  158
  217
  291
  382
  492
  622
  772
  944
  1,138
  1,353
  1,591
  1,851
  2,132
  2,435
  2,757
  3,100
  3,463
  3,844
  4,244
  4,664
  5,101
  5,558
  6,033
  6,528
  7,042
  7,577
Adjusted assets (=assets-cash), $m
  33
  52
  77
  112
  158
  217
  291
  382
  492
  622
  772
  944
  1,138
  1,353
  1,591
  1,851
  2,132
  2,435
  2,757
  3,100
  3,463
  3,844
  4,244
  4,664
  5,101
  5,558
  6,033
  6,528
  7,042
  7,577
Revenue / Adjusted assets
  0.909
  0.904
  0.909
  0.902
  0.905
  0.908
  0.907
  0.908
  0.907
  0.905
  0.905
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
  0.906
Average production assets, $m
  2
  3
  5
  7
  10
  14
  18
  24
  31
  39
  48
  59
  71
  85
  99
  116
  133
  152
  172
  194
  216
  240
  265
  292
  319
  347
  377
  408
  440
  474
Working capital, $m
  6
  9
  14
  20
  28
  38
  51
  67
  87
  109
  136
  166
  200
  238
  280
  325
  375
  428
  485
  545
  609
  676
  746
  820
  897
  977
  1,060
  1,147
  1,238
  1,332
Total debt, $m
  14
  27
  44
  67
  98
  138
  188
  249
  323
  410
  511
  626
  756
  902
  1,061
  1,236
  1,425
  1,628
  1,845
  2,075
  2,319
  2,575
  2,844
  3,126
  3,420
  3,727
  4,046
  4,379
  4,724
  5,083
Total liabilities, $m
  22
  35
  52
  75
  106
  146
  196
  257
  331
  418
  519
  634
  764
  910
  1,069
  1,244
  1,433
  1,636
  1,853
  2,083
  2,327
  2,583
  2,852
  3,134
  3,428
  3,735
  4,054
  4,387
  4,732
  5,091
Total equity, $m
  11
  17
  25
  37
  52
  71
  96
  125
  161
  204
  253
  310
  373
  444
  522
  607
  699
  799
  904
  1,017
  1,136
  1,261
  1,392
  1,530
  1,673
  1,823
  1,979
  2,141
  2,310
  2,485
Total liabilities and equity, $m
  33
  52
  77
  112
  158
  217
  292
  382
  492
  622
  772
  944
  1,137
  1,354
  1,591
  1,851
  2,132
  2,435
  2,757
  3,100
  3,463
  3,844
  4,244
  4,664
  5,101
  5,558
  6,033
  6,528
  7,042
  7,576
Debt-to-equity ratio
  1.320
  1.580
  1.730
  1.830
  1.890
  1.940
  1.970
  1.990
  2.000
  2.010
  2.020
  2.020
  2.030
  2.030
  2.030
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.050
  2.050
  2.050
Adjusted equity ratio
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  1
  5
  11
  19
  28
  40
  55
  73
  94
  118
  145
  176
  210
  248
  289
  333
  380
  431
  485
  541
  601
  663
  729
  797
  868
  942
  1,019
  1,099
  1,182
Depreciation, amort., depletion, $m
  0
  1
  1
  1
  2
  3
  4
  5
  6
  8
  10
  12
  14
  17
  20
  23
  27
  30
  34
  39
  43
  48
  53
  58
  64
  69
  75
  82
  88
  95
Funds from operations, $m
  -2
  2
  6
  12
  21
  31
  44
  60
  79
  101
  127
  157
  190
  227
  268
  312
  360
  411
  466
  523
  585
  649
  716
  787
  861
  937
  1,017
  1,100
  1,187
  1,277
Change in working capital, $m
  2
  3
  4
  6
  8
  10
  13
  16
  19
  23
  26
  30
  34
  38
  42
  46
  49
  53
  57
  60
  64
  67
  70
  74
  77
  80
  84
  87
  90
  94
Cash from operations, $m
  -4
  -1
  2
  6
  12
  21
  31
  44
  60
  79
  101
  127
  156
  189
  226
  266
  310
  358
  409
  463
  521
  582
  646
  713
  784
  857
  934
  1,013
  1,096
  1,183
Maintenance CAPEX, $m
  0
  0
  -1
  -1
  -1
  -2
  -3
  -4
  -5
  -6
  -8
  -10
  -12
  -14
  -17
  -20
  -23
  -27
  -30
  -34
  -39
  -43
  -48
  -53
  -58
  -64
  -69
  -75
  -82
  -88
New CAPEX, $m
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -33
Cash from investing activities, $m
  -1
  -1
  -3
  -3
  -4
  -6
  -8
  -10
  -12
  -14
  -17
  -21
  -24
  -27
  -32
  -36
  -41
  -46
  -50
  -55
  -62
  -67
  -73
  -79
  -85
  -93
  -99
  -106
  -114
  -121
Free cash flow, $m
  -5
  -3
  0
  3
  8
  15
  23
  34
  48
  64
  84
  106
  132
  161
  194
  230
  270
  312
  358
  407
  459
  515
  573
  634
  698
  765
  834
  907
  983
  1,061
Issuance/(repayment) of debt, $m
  8
  12
  17
  23
  31
  40
  50
  61
  74
  87
  101
  115
  130
  145
  160
  175
  189
  203
  217
  230
  243
  256
  269
  282
  294
  307
  319
  332
  346
  359
Issuance/(repurchase) of shares, $m
  6
  5
  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
Cash from financing (excl. dividends), $m  
  14
  17
  20
  23
  31
  40
  50
  61
  74
  87
  101
  115
  130
  145
  160
  175
  189
  203
  217
  230
  243
  256
  269
  282
  294
  307
  319
  332
  346
  359
Total cash flow (excl. dividends), $m
  10
  14
  20
  27
  39
  55
  73
  96
  122
  151
  185
  222
  262
  306
  354
  405
  458
  515
  575
  638
  703
  771
  842
  916
  992
  1,071
  1,154
  1,239
  1,328
  1,420
Retained Cash Flow (-), $m
  -6
  -6
  -8
  -11
  -15
  -19
  -24
  -30
  -36
  -42
  -49
  -56
  -64
  -71
  -78
  -85
  -92
  -99
  -106
  -112
  -119
  -125
  -131
  -137
  -144
  -150
  -156
  -162
  -169
  -175
Prev. year cash balance distribution, $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
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
  13
  8
  11
  16
  24
  35
  49
  66
  86
  109
  135
  165
  199
  236
  276
  319
  366
  416
  469
  525
  584
  646
  711
  778
  848
  922
  998
  1,077
  1,159
  1,245
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
  13
  7
  10
  13
  19
  26
  33
  41
  49
  57
  64
  71
  76
  79
  81
  81
  80
  77
  72
  67
  60
  54
  47
  40
  33
  27
  21
  17
  13
  9
Current shareholders' claim on cash, %
  72.2
  61.2
  57.1
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7
  56.7

Aehr Test Systems is engaged in the designing, manufacturing and marketing of advanced test and burn-in products to the semiconductor manufacturing industry. The Company manufactures and markets full wafer contact test systems, test during burn-in systems, test fixtures, die carriers and related accessories. The Company's principal products are the Advanced Burn-In and Test System (ABTS), the FOX full wafer contact parallel test and burn-in systems, WaferPak full wafer contactor, the DiePak carrier and test fixtures. The Company develops, manufactures and sells systems, which are designed to reduce the cost of testing and to perform reliability screening, or burn-in, of complex logic devices, memory integrated circuits (ICs), sensors and optical devices. These systems can be used to perform parallel testing and burn-in of packaged ICs, singulated bare die or ICs still in wafer form.

FINANCIAL RATIOS  of  Aehr Test Systems (AEHR)

Valuation Ratios
P/E Ratio -4.1
Price to Sales 1.3
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow -4.9
Price to Free Cash Flow -4.9
Growth Rates
Sales Growth Rate 26.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 35.3%
Total Debt to Equity 35.3%
Interest Coverage 0
Management Effectiveness
Return On Assets -29.3%
Ret/ On Assets - 3 Yr. Avg. -45.7%
Return On Total Capital -42.9%
Ret/ On T. Cap. - 3 Yr. Avg. -75.1%
Return On Equity -75%
Return On Equity - 3 Yr. Avg. -180.6%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 36.8%
Gross Margin - 3 Yr. Avg. 36.7%
EBITDA Margin -31.6%
EBITDA Margin - 3 Yr. Avg. -49.4%
Operating Margin -26.3%
Oper. Margin - 3 Yr. Avg. -45.4%
Pre-Tax Margin -31.6%
Pre-Tax Margin - 3 Yr. Avg. -49.4%
Net Profit Margin -31.6%
Net Profit Margin - 3 Yr. Avg. -49.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

AEHR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AEHR stock intrinsic value calculation we used $18.898 million for the last fiscal year's total revenue generated by Aehr Test Systems. The default revenue input number comes from 0001 income statement of Aehr Test Systems. 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 AEHR stock valuation model: a) initial revenue growth rate of 60% 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 AEHR is calculated based on our internal credit rating of Aehr Test Systems, 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 Aehr Test Systems.
    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 AEHR stock the variable cost ratio is equal to 68.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $11 million in the base year in the intrinsic value calculation for AEHR 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 11.2% for Aehr Test Systems.

Corporate tax rate of 27% is the nominal tax rate for Aehr Test Systems. 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 AEHR 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 AEHR are equal to 6.9%.

Life of production assets of 4.8 years is the average useful life of capital assets used in Aehr Test Systems 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 AEHR is equal to 19.4%. 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 - $16.794 million for Aehr Test Systems - 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 21.954 million for Aehr Test Systems 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 Aehr Test Systems at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Penny Stocks to Watch for November 2018   [Nov-01-18 08:50AM  Investopedia]
▶ Aehr Test Systems Exhibiting at SEMICON Taiwan 2018   [Sep-05-18 07:41PM  GlobeNewswire]
▶ Aehr Test Systems to Host Earnings Call   [03:00PM  ACCESSWIRE]
▶ Aehr Test Systems to Host Earnings Call   [12:00PM  ACCESSWIRE]
▶ Is It Time To Buy Aehr Test Systems (AEHR)?   [07:35AM  Simply Wall St.]
▶ Aehr Test Systems Added to Russell Microcap Index   [Jun-26-17 07:00AM  GlobeNewswire]
▶ ETFs with exposure to Aehr Test Systems : April 12, 2017   [Apr-12-17 01:08PM  Capital Cube]
▶ [$$] Two IPhone 8 Suppliers Set to Gain   [Apr-06-17 03:05PM  Barrons.com]

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