Intrinsic value of Alpha&Omega Semiconductor - AOSL

Previous Close

$10.61

  Intrinsic Value

$13.79

stock screener

  Rating & Target

buy

+30%

Previous close

$10.61

 
Intrinsic value

$13.79

 
Up/down potential

+30%

 
Rating

buy

We calculate the intrinsic value of AOSL 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 0.3

 

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, %
  10.30
  9.77
  9.29
  8.86
  8.48
  8.13
  7.82
  7.53
  7.28
  7.05
  6.85
  6.66
  6.50
  6.35
  6.21
  6.09
  5.98
  5.88
  5.80
  5.72
  5.64
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
Revenue, $m
  423
  464
  507
  552
  599
  648
  698
  751
  806
  863
  922
  983
  1,047
  1,113
  1,182
  1,254
  1,330
  1,408
  1,489
  1,574
  1,663
  1,756
  1,853
  1,954
  2,060
  2,171
  2,287
  2,409
  2,536
  2,669
Variable operating expenses, $m
  322
  354
  387
  421
  456
  494
  532
  572
  614
  657
  702
  749
  798
  848
  901
  956
  1,013
  1,073
  1,135
  1,200
  1,267
  1,338
  1,412
  1,489
  1,570
  1,654
  1,743
  1,835
  1,932
  2,034
Fixed operating expenses, $m
  82
  84
  85
  87
  89
  91
  93
  95
  97
  99
  102
  104
  106
  108
  111
  113
  116
  118
  121
  124
  126
  129
  132
  135
  138
  141
  144
  147
  150
  154
Total operating expenses, $m
  404
  438
  472
  508
  545
  585
  625
  667
  711
  756
  804
  853
  904
  956
  1,012
  1,069
  1,129
  1,191
  1,256
  1,324
  1,393
  1,467
  1,544
  1,624
  1,708
  1,795
  1,887
  1,982
  2,082
  2,188
Operating income, $m
  19
  27
  35
  44
  53
  63
  73
  84
  94
  106
  118
  130
  143
  157
  171
  185
  201
  217
  234
  251
  270
  289
  309
  330
  353
  376
  401
  426
  453
  482
EBITDA, $m
  48
  59
  70
  82
  95
  108
  121
  135
  150
  165
  181
  198
  215
  233
  252
  272
  292
  314
  336
  360
  384
  410
  437
  465
  495
  526
  558
  593
  628
  666
Interest expense (income), $m
  0
  0
  1
  2
  2
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
  21
  23
  25
  26
  28
  30
  32
  34
  36
  39
Earnings before tax, $m
  19
  26
  34
  42
  50
  59
  68
  78
  88
  98
  109
  120
  132
  145
  157
  171
  185
  200
  215
  231
  248
  266
  285
  304
  324
  346
  368
  392
  417
  443
Tax expense, $m
  5
  7
  9
  11
  14
  16
  18
  21
  24
  27
  29
  33
  36
  39
  43
  46
  50
  54
  58
  62
  67
  72
  77
  82
  88
  93
  99
  106
  113
  120
Net income, $m
  14
  19
  25
  31
  37
  43
  50
  57
  64
  72
  80
  88
  97
  106
  115
  125
  135
  146
  157
  169
  181
  194
  208
  222
  237
  253
  269
  286
  304
  323

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
  416
  456
  499
  543
  589
  637
  687
  738
  792
  848
  906
  967
  1,029
  1,095
  1,163
  1,233
  1,307
  1,384
  1,464
  1,548
  1,636
  1,727
  1,822
  1,922
  2,026
  2,135
  2,249
  2,368
  2,493
  2,624
Adjusted assets (=assets-cash), $m
  416
  456
  499
  543
  589
  637
  687
  738
  792
  848
  906
  967
  1,029
  1,095
  1,163
  1,233
  1,307
  1,384
  1,464
  1,548
  1,636
  1,727
  1,822
  1,922
  2,026
  2,135
  2,249
  2,368
  2,493
  2,624
Revenue / Adjusted assets
  1.017
  1.018
  1.016
  1.017
  1.017
  1.017
  1.016
  1.018
  1.018
  1.018
  1.018
  1.017
  1.017
  1.016
  1.016
  1.017
  1.018
  1.017
  1.017
  1.017
  1.017
  1.017
  1.017
  1.017
  1.017
  1.017
  1.017
  1.017
  1.017
  1.017
Average production assets, $m
  146
  160
  175
  191
  207
  223
  241
  259
  278
  298
  318
  339
  361
  384
  408
  433
  459
  486
  514
  543
  574
  606
  639
  674
  711
  749
  789
  831
  875
  921
Working capital, $m
  17
  19
  20
  22
  24
  26
  28
  30
  32
  35
  37
  39
  42
  45
  47
  50
  53
  56
  60
  63
  67
  70
  74
  78
  82
  87
  91
  96
  101
  107
Total debt, $m
  15
  29
  43
  58
  73
  90
  106
  124
  142
  161
  180
  201
  222
  244
  267
  291
  315
  341
  368
  397
  426
  457
  489
  523
  558
  594
  633
  673
  715
  759
Total liabilities, $m
  140
  154
  168
  183
  199
  215
  231
  249
  267
  286
  305
  326
  347
  369
  392
  416
  441
  466
  494
  522
  551
  582
  614
  648
  683
  719
  758
  798
  840
  884
Total equity, $m
  276
  303
  331
  360
  391
  422
  455
  490
  525
  562
  601
  641
  682
  726
  771
  818
  867
  918
  971
  1,026
  1,084
  1,145
  1,208
  1,274
  1,343
  1,416
  1,491
  1,570
  1,653
  1,740
Total liabilities and equity, $m
  416
  457
  499
  543
  590
  637
  686
  739
  792
  848
  906
  967
  1,029
  1,095
  1,163
  1,234
  1,308
  1,384
  1,465
  1,548
  1,635
  1,727
  1,822
  1,922
  2,026
  2,135
  2,249
  2,368
  2,493
  2,624
Debt-to-equity ratio
  0.050
  0.090
  0.130
  0.160
  0.190
  0.210
  0.230
  0.250
  0.270
  0.290
  0.300
  0.310
  0.320
  0.340
  0.350
  0.360
  0.360
  0.370
  0.380
  0.390
  0.390
  0.400
  0.400
  0.410
  0.420
  0.420
  0.420
  0.430
  0.430
  0.440
Adjusted equity ratio
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  19
  25
  31
  37
  43
  50
  57
  64
  72
  80
  88
  97
  106
  115
  125
  135
  146
  157
  169
  181
  194
  208
  222
  237
  253
  269
  286
  304
  323
Depreciation, amort., depletion, $m
  29
  32
  35
  38
  41
  45
  48
  52
  56
  60
  64
  68
  72
  77
  82
  87
  92
  97
  103
  109
  115
  121
  128
  135
  142
  150
  158
  166
  175
  184
Funds from operations, $m
  43
  51
  60
  69
  78
  88
  98
  109
  120
  131
  143
  156
  169
  182
  197
  211
  227
  243
  260
  277
  296
  315
  336
  357
  379
  402
  427
  452
  479
  508
Change in working capital, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
Cash from operations, $m
  41
  49
  58
  67
  76
  86
  96
  107
  118
  129
  141
  153
  166
  180
  194
  208
  224
  240
  257
  274
  292
  312
  332
  353
  375
  398
  422
  448
  474
  502
Maintenance CAPEX, $m
  -26
  -29
  -32
  -35
  -38
  -41
  -45
  -48
  -52
  -56
  -60
  -64
  -68
  -72
  -77
  -82
  -87
  -92
  -97
  -103
  -109
  -115
  -121
  -128
  -135
  -142
  -150
  -158
  -166
  -175
New CAPEX, $m
  -14
  -14
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
Cash from investing activities, $m
  -40
  -43
  -47
  -51
  -54
  -58
  -62
  -66
  -71
  -76
  -80
  -85
  -90
  -95
  -101
  -107
  -113
  -119
  -125
  -132
  -140
  -147
  -154
  -163
  -172
  -180
  -190
  -200
  -210
  -221
Free cash flow, $m
  1
  6
  11
  16
  22
  28
  34
  40
  47
  54
  61
  68
  76
  85
  93
  102
  111
  121
  131
  142
  153
  165
  177
  190
  203
  218
  232
  248
  264
  281
Issuance/(repayment) of debt, $m
  13
  14
  14
  15
  16
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  38
  40
  42
  44
Issuance/(repurchase) of shares, $m
  12
  8
  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  
  25
  22
  17
  15
  16
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  38
  40
  42
  44
Total cash flow (excl. dividends), $m
  27
  28
  29
  31
  37
  44
  51
  58
  65
  73
  81
  89
  98
  107
  116
  126
  136
  147
  158
  170
  183
  196
  209
  224
  239
  254
  271
  288
  306
  326
Retained Cash Flow (-), $m
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -61
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
Prev. year cash balance distribution, $m
  21
  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
  22
  1
  1
  2
  7
  12
  18
  23
  29
  36
  42
  49
  56
  63
  71
  79
  87
  96
  105
  115
  125
  135
  146
  157
  169
  182
  195
  209
  223
  239
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
  21
  1
  1
  2
  5
  9
  12
  15
  17
  19
  20
  21
  21
  21
  21
  20
  19
  18
  16
  15
  13
  11
  10
  8
  7
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  95.0
  92.2
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1
  91.1

Alpha and Omega Semiconductor Limited is a designer, developer and global supplier of power semiconductors. The Company's portfolio of power semiconductors includes approximately 1,600 products, as of June 30, 2016. The Company's product portfolio consists of two categories: power discretes and power integrated circuits (ICs). The Company's portfolio of products focuses high-volume applications, including personal computers, flat panel televisions, light-emitting diode (LED) lighting, smart phones, battery packs, consumer and industrial motor controls and power supplies for television, computers, servers and telecommunications equipment. The Company sells its products primarily to distributors in the Asia Pacific region, who in turn sell these products to end customers. The Company conducts its operations primarily in the United States, Hong Kong, China, Taiwan, Korea and Japan. Its products are applicable in desktop and tablet personal computers, flat panel displays and televisions.

FINANCIAL RATIOS  of  Alpha&Omega Semiconductor (AOSL)

Valuation Ratios
P/E Ratio 18.2
Price to Sales 0.7
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 5.9
Price to Free Cash Flow -19.6
Growth Rates
Sales Growth Rate 14%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 154.5%
Cap. Spend. - 3 Yr. Gr. Rate 44.1%
Financial Strength
Quick Ratio 116
Current Ratio 0.1
LT Debt to Equity 0.4%
Total Debt to Equity 0.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 5.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.5%
Return On Equity 5.5%
Return On Equity - 3 Yr. Avg. 0.5%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 24%
Gross Margin - 3 Yr. Avg. 20.7%
EBITDA Margin 10.4%
EBITDA Margin - 3 Yr. Avg. 8.7%
Operating Margin 3.4%
Oper. Margin - 3 Yr. Avg. 0.9%
Pre-Tax Margin 3.4%
Pre-Tax Margin - 3 Yr. Avg. 0.8%
Net Profit Margin 3.7%
Net Profit Margin - 3 Yr. Avg. 0.1%
Effective Tax Rate 30.8%
Eff/ Tax Rate - 3 Yr. Avg. 110.3%
Payout Ratio 0%

AOSL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AOSL stock intrinsic value calculation we used $383.337 million for the last fiscal year's total revenue generated by Alpha&Omega Semiconductor. The default revenue input number comes from 0001 income statement of Alpha&Omega Semiconductor. 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 AOSL stock valuation model: a) initial revenue growth rate of 10.3% 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 AOSL is calculated based on our internal credit rating of Alpha&Omega Semiconductor, 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 Alpha&Omega Semiconductor.
    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 AOSL stock the variable cost ratio is equal to 76.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $80 million in the base year in the intrinsic value calculation for AOSL 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 Alpha&Omega Semiconductor.

Corporate tax rate of 27% is the nominal tax rate for Alpha&Omega Semiconductor. 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 AOSL 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 AOSL are equal to 34.5%.

Life of production assets of 4.9 years is the average useful life of capital assets used in Alpha&Omega Semiconductor 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 AOSL is equal to 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 - $270.77 million for Alpha&Omega Semiconductor - 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 23.88 million for Alpha&Omega Semiconductor 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 Alpha&Omega Semiconductor at the current share price and the inputted number of shares is $0.3 billion.

RELATED COMPANIES Price Int.Val. Rating
ON ON Semiconduct 17.87 29.83  buy
DIOD Diodes 32.70 69.88  str.buy
SMTC Semtech 48.22 20.82  str.sell
MPWR Monolithic Pow 123.65 60.65  str.sell
TXN Texas Instrume 95.81 122.57  hold
VSH Vishay Interte 20.18 262.37  str.buy
STM STMicroelectro 13.88 746.43  str.buy

COMPANY NEWS

▶ Alpha and Omega: Fiscal 1Q Earnings Snapshot   [05:43PM  Associated Press]
▶ Alpha and Omega: Fiscal 4Q Earnings Snapshot   [05:51PM  Associated Press]
▶ Alpha and Omega: Fiscal 3Q Earnings Snapshot   [May-02-18 06:24PM  Associated Press]
▶ Alpha and Omega beats Street 2Q forecasts   [Feb-07-18 07:31PM  Associated Press]
▶ Alpha and Omega misses 1Q profit forecasts   [Nov-06-17 05:37AM  Associated Press]
▶ Alpha and Omega beats Street 4Q forecasts   [Aug-09-17 10:22PM  Associated Press]
▶ New Strong Buy Stocks for May 26th   [May-26-17 11:07AM  Zacks]
▶ New Strong Buy Stocks for May 17th   [May-17-17 10:24AM  Zacks]
▶ Alpha and Omega beats Street 3Q forecasts   [May-03-17 06:39PM  Associated Press]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.