Intrinsic value of ASML Holding - ASML

Previous Close

$173.36

  Intrinsic Value

$250.76

stock screener

  Rating & Target

buy

+45%

Previous close

$173.36

 
Intrinsic value

$250.76

 
Up/down potential

+45%

 
Rating

buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ASML 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 75.1

 

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, %
  8.06
  34.90
  31.91
  29.22
  26.80
  24.62
  22.66
  20.89
  19.30
  17.87
  16.58
  15.43
  14.38
  13.44
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.94
  7.65
  7.39
  7.15
  6.93
  6.74
  6.56
  6.41
Revenue, $m
  7,171
  9,674
  12,761
  16,489
  20,908
  26,055
  31,957
  38,633
  46,090
  54,327
  63,336
  73,106
  83,621
  94,863
  106,816
  119,464
  132,791
  146,788
  161,447
  176,765
  192,743
  209,386
  226,706
  244,716
  263,437
  282,892
  303,109
  324,120
  345,962
  368,673
  392,299
Variable operating expenses, $m
 
  7,085
  9,182
  11,715
  14,716
  18,212
  22,222
  26,757
  31,822
  37,417
  43,537
  49,659
  56,801
  64,438
  72,557
  81,148
  90,201
  99,708
  109,666
  120,070
  130,924
  142,229
  153,994
  166,228
  178,944
  192,159
  205,892
  220,164
  235,000
  250,427
  266,476
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
  5,422
  7,085
  9,182
  11,715
  14,716
  18,212
  22,222
  26,757
  31,822
  37,417
  43,537
  49,659
  56,801
  64,438
  72,557
  81,148
  90,201
  99,708
  109,666
  120,070
  130,924
  142,229
  153,994
  166,228
  178,944
  192,159
  205,892
  220,164
  235,000
  250,427
  266,476
Operating income, $m
  1,750
  2,588
  3,578
  4,774
  6,191
  7,842
  9,735
  11,877
  14,268
  16,910
  19,800
  23,448
  26,820
  30,426
  34,260
  38,316
  42,591
  47,080
  51,781
  56,694
  61,819
  67,157
  72,712
  78,489
  84,493
  90,733
  97,217
  103,956
  110,961
  118,246
  125,823
EBITDA, $m
  2,124
  3,313
  4,370
  5,646
  7,160
  8,922
  10,943
  13,229
  15,783
  18,603
  21,689
  25,034
  28,635
  32,485
  36,578
  40,909
  45,473
  50,266
  55,285
  60,531
  66,002
  71,702
  77,632
  83,800
  90,211
  96,873
  103,796
  110,991
  118,470
  126,247
  134,338
Interest expense (income), $m
  59
  113
  205
  319
  456
  618
  808
  1,025
  1,270
  1,544
  1,847
  2,178
  2,537
  2,924
  3,337
  3,776
  4,241
  4,731
  5,246
  5,785
  6,348
  6,935
  7,547
  8,184
  8,846
  9,534
  10,249
  10,992
  11,764
  12,567
  13,402
Earnings before tax, $m
  1,785
  2,475
  3,373
  4,455
  5,735
  7,224
  8,928
  10,852
  12,998
  15,366
  17,953
  21,270
  24,283
  27,502
  30,923
  34,540
  38,349
  42,349
  46,536
  50,910
  55,471
  60,222
  65,165
  70,305
  75,648
  81,199
  86,968
  92,964
  99,197
  105,678
  112,421
Tax expense, $m
  232
  668
  911
  1,203
  1,549
  1,950
  2,411
  2,930
  3,510
  4,149
  4,847
  5,743
  6,556
  7,426
  8,349
  9,326
  10,354
  11,434
  12,565
  13,746
  14,977
  16,260
  17,595
  18,982
  20,425
  21,924
  23,481
  25,100
  26,783
  28,533
  30,354
Net income, $m
  1,553
  1,807
  2,462
  3,252
  4,187
  5,273
  6,517
  7,922
  9,489
  11,217
  13,106
  15,527
  17,726
  20,077
  22,573
  25,214
  27,995
  30,914
  33,971
  37,164
  40,494
  43,962
  47,571
  51,323
  55,223
  59,275
  63,487
  67,864
  72,414
  77,145
  82,067

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,282
  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
  18,160
  18,711
  24,682
  31,894
  40,440
  50,396
  61,813
  74,726
  89,149
  105,081
  122,507
  141,404
  161,742
  183,488
  206,608
  231,071
  256,849
  283,923
  312,276
  341,905
  372,810
  405,002
  438,503
  473,339
  509,550
  547,180
  586,284
  626,925
  669,171
  713,101
  758,799
Adjusted assets (=assets-cash), $m
  13,878
  18,711
  24,682
  31,894
  40,440
  50,396
  61,813
  74,726
  89,149
  105,081
  122,507
  141,404
  161,742
  183,488
  206,608
  231,071
  256,849
  283,923
  312,276
  341,905
  372,810
  405,002
  438,503
  473,339
  509,550
  547,180
  586,284
  626,925
  669,171
  713,101
  758,799
Revenue / Adjusted assets
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
Average production assets, $m
  2,834
  3,821
  5,040
  6,513
  8,259
  10,292
  12,623
  15,260
  18,206
  21,459
  25,018
  28,877
  33,030
  37,471
  42,192
  47,188
  52,452
  57,981
  63,772
  69,822
  76,133
  82,708
  89,549
  96,663
  104,058
  111,742
  119,728
  128,027
  136,655
  145,626
  154,958
Working capital, $m
  5,570
  2,090
  2,756
  3,562
  4,516
  5,628
  6,903
  8,345
  9,955
  11,735
  13,681
  15,791
  18,062
  20,490
  23,072
  25,804
  28,683
  31,706
  34,873
  38,181
  41,632
  45,227
  48,968
  52,859
  56,902
  61,105
  65,472
  70,010
  74,728
  79,633
  84,737
Total debt, $m
  3,503
  5,868
  9,110
  13,026
  17,667
  23,073
  29,273
  36,284
  44,116
  52,767
  62,229
  72,491
  83,534
  95,342
  107,896
  121,179
  135,177
  149,878
  165,274
  181,362
  198,144
  215,624
  233,815
  252,731
  272,394
  292,827
  314,060
  336,128
  359,068
  382,922
  407,736
Total liabilities, $m
  7,795
  10,160
  13,402
  17,318
  21,959
  27,365
  33,565
  40,576
  48,408
  57,059
  66,521
  76,783
  87,826
  99,634
  112,188
  125,471
  139,469
  154,170
  169,566
  185,654
  202,436
  219,916
  238,107
  257,023
  276,686
  297,119
  318,352
  340,420
  363,360
  387,214
  412,028
Total equity, $m
  10,365
  8,551
  11,280
  14,575
  18,481
  23,031
  28,249
  34,150
  40,741
  48,022
  55,986
  64,622
  73,916
  83,854
  94,420
  105,599
  117,380
  129,753
  142,710
  156,250
  170,374
  185,086
  200,396
  216,316
  232,864
  250,061
  267,932
  286,505
  305,811
  325,887
  346,771
Total liabilities and equity, $m
  18,160
  18,711
  24,682
  31,893
  40,440
  50,396
  61,814
  74,726
  89,149
  105,081
  122,507
  141,405
  161,742
  183,488
  206,608
  231,070
  256,849
  283,923
  312,276
  341,904
  372,810
  405,002
  438,503
  473,339
  509,550
  547,180
  586,284
  626,925
  669,171
  713,101
  758,799
Debt-to-equity ratio
  0.338
  0.690
  0.810
  0.890
  0.960
  1.000
  1.040
  1.060
  1.080
  1.100
  1.110
  1.120
  1.130
  1.140
  1.140
  1.150
  1.150
  1.160
  1.160
  1.160
  1.160
  1.160
  1.170
  1.170
  1.170
  1.170
  1.170
  1.170
  1.170
  1.180
  1.180
Adjusted equity ratio
  0.438
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,553
  1,807
  2,462
  3,252
  4,187
  5,273
  6,517
  7,922
  9,489
  11,217
  13,106
  15,527
  17,726
  20,077
  22,573
  25,214
  27,995
  30,914
  33,971
  37,164
  40,494
  43,962
  47,571
  51,323
  55,223
  59,275
  63,487
  67,864
  72,414
  77,145
  82,067
Depreciation, amort., depletion, $m
  374
  724
  791
  872
  968
  1,080
  1,208
  1,353
  1,515
  1,693
  1,889
  1,587
  1,815
  2,059
  2,318
  2,593
  2,882
  3,186
  3,504
  3,836
  4,183
  4,544
  4,920
  5,311
  5,717
  6,140
  6,578
  7,034
  7,509
  8,001
  8,514
Funds from operations, $m
  1,447
  2,531
  3,254
  4,125
  5,155
  6,353
  7,725
  9,275
  11,003
  12,911
  14,995
  17,113
  19,541
  22,135
  24,892
  27,807
  30,877
  34,100
  37,475
  41,001
  44,677
  48,507
  52,491
  56,634
  60,940
  65,415
  70,065
  74,898
  79,922
  85,147
  90,582
Change in working capital, $m
  -311
  541
  667
  805
  954
  1,112
  1,275
  1,442
  1,611
  1,779
  1,946
  2,110
  2,271
  2,428
  2,582
  2,732
  2,879
  3,023
  3,166
  3,309
  3,451
  3,595
  3,741
  3,890
  4,044
  4,202
  4,367
  4,538
  4,718
  4,906
  5,103
Cash from operations, $m
  1,758
  1,990
  2,587
  3,319
  4,201
  5,242
  6,450
  7,833
  9,393
  11,131
  13,048
  15,003
  17,270
  19,707
  22,310
  25,075
  27,998
  31,077
  34,309
  37,692
  41,226
  44,911
  48,750
  52,744
  56,896
  61,213
  65,698
  70,360
  75,205
  80,241
  85,478
Maintenance CAPEX, $m
  0
  -156
  -210
  -277
  -358
  -454
  -565
  -694
  -838
  -1,000
  -1,179
  -1,375
  -1,587
  -1,815
  -2,059
  -2,318
  -2,593
  -2,882
  -3,186
  -3,504
  -3,836
  -4,183
  -4,544
  -4,920
  -5,311
  -5,717
  -6,140
  -6,578
  -7,034
  -7,509
  -8,001
New CAPEX, $m
  -343
  -988
  -1,219
  -1,473
  -1,745
  -2,033
  -2,332
  -2,637
  -2,945
  -3,254
  -3,559
  -3,859
  -4,153
  -4,441
  -4,721
  -4,996
  -5,264
  -5,529
  -5,790
  -6,051
  -6,311
  -6,574
  -6,841
  -7,114
  -7,395
  -7,685
  -7,986
  -8,299
  -8,627
  -8,971
  -9,332
Cash from investing activities, $m
  -3,365
  -1,144
  -1,429
  -1,750
  -2,103
  -2,487
  -2,897
  -3,331
  -3,783
  -4,254
  -4,738
  -5,234
  -5,740
  -6,256
  -6,780
  -7,314
  -7,857
  -8,411
  -8,976
  -9,555
  -10,147
  -10,757
  -11,385
  -12,034
  -12,706
  -13,402
  -14,126
  -14,877
  -15,661
  -16,480
  -17,333
Free cash flow, $m
  -1,607
  847
  1,158
  1,570
  2,097
  2,755
  3,553
  4,502
  5,609
  6,878
  8,311
  9,769
  11,530
  13,451
  15,530
  17,761
  20,141
  22,666
  25,333
  28,137
  31,078
  34,154
  37,364
  40,709
  44,191
  47,811
  51,573
  55,482
  59,543
  63,761
  68,145
Issuance/(repayment) of debt, $m
  2,349
  2,626
  3,242
  3,916
  4,641
  5,406
  6,200
  7,012
  7,832
  8,651
  9,463
  10,261
  11,044
  11,808
  12,554
  13,283
  13,998
  14,701
  15,396
  16,088
  16,781
  17,481
  18,191
  18,916
  19,662
  20,433
  21,234
  22,068
  22,940
  23,854
  24,814
Issuance/(repurchase) of shares, $m
  193
  400
  266
  43
  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  
  2,543
  3,026
  3,508
  3,959
  4,641
  5,406
  6,200
  7,012
  7,832
  8,651
  9,463
  10,261
  11,044
  11,808
  12,554
  13,283
  13,998
  14,701
  15,396
  16,088
  16,781
  17,481
  18,191
  18,916
  19,662
  20,433
  21,234
  22,068
  22,940
  23,854
  24,814
Total cash flow (excl. dividends), $m
  944
  3,874
  4,666
  5,529
  6,738
  8,160
  9,753
  11,514
  13,441
  15,529
  17,773
  20,031
  22,574
  25,259
  28,084
  31,044
  34,139
  37,367
  40,729
  44,226
  47,860
  51,635
  55,555
  59,626
  63,853
  68,244
  72,807
  77,550
  82,483
  87,615
  92,959
Retained Cash Flow (-), $m
  -1,511
  -2,207
  -2,729
  -3,296
  -3,906
  -4,550
  -5,218
  -5,901
  -6,591
  -7,281
  -7,964
  -8,636
  -9,295
  -9,938
  -10,566
  -11,179
  -11,781
  -12,372
  -12,958
  -13,540
  -14,124
  -14,712
  -15,310
  -15,920
  -16,548
  -17,197
  -17,871
  -18,573
  -19,307
  -20,076
  -20,884
Prev. year cash balance distribution, $m
 
  4,021
  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
 
  5,688
  1,937
  2,233
  2,832
  3,611
  4,535
  5,613
  6,849
  8,248
  9,809
  11,395
  13,279
  15,322
  17,518
  19,865
  22,358
  24,994
  27,771
  30,685
  33,736
  36,923
  40,245
  43,705
  47,305
  51,047
  54,936
  58,977
  63,176
  67,539
  72,075
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
 
  5,453
  1,774
  1,943
  2,332
  2,799
  3,291
  3,792
  4,281
  4,738
  5,143
  5,411
  5,667
  5,826
  5,881
  5,832
  5,682
  5,438
  5,114
  4,725
  4,287
  3,819
  3,339
  2,864
  2,409
  1,986
  1,603
  1,266
  977
  737
  543
Current shareholders' claim on cash, %
  100
  99.1
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7

ASML Holding N.V. is a holding company. The Company is a manufacturer of chip-making equipment. The Company is engaged in the development, production, marketing, selling and servicing of semiconductor equipment systems, consisting of lithography systems. The Company's products include systems, and installed base products and services. The Company's principal operations are in the Netherlands, the United States and Asia. The Company offers TWINSCAN systems, equipped with lithography system with a mercury lamp as light source (i-line), Krypton Fluoride (KrF) and Argon Fluoride (ArF) light sources for 300 millimeter processing wafers for manufacturing environments for which imaging at a small resolution is required. TWINSCAN systems also include immersion lithography systems (TWINSCAN immersion systems). The Company also offers NXE systems, which are equipped with extreme ultraviolet (EUV) light source technology. The Company offers YieldStar, a wafer metrology system.

FINANCIAL RATIOS  of  ASML Holding (ASML)

Valuation Ratios
P/E Ratio 48
Price to Sales 10.4
Price to Book 7.2
Price to Tangible Book
Price to Cash Flow 42.4
Price to Free Cash Flow 52.7
Growth Rates
Sales Growth Rate 8.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -12.9%
Cap. Spend. - 3 Yr. Gr. Rate 8.6%
Financial Strength
Quick Ratio 16
Current Ratio 0.1
LT Debt to Equity 31.3%
Total Debt to Equity 33.8%
Interest Coverage 31
Management Effectiveness
Return On Assets 10%
Ret/ On Assets - 3 Yr. Avg. 10.5%
Return On Total Capital 13%
Ret/ On T. Cap. - 3 Yr. Avg. 14.2%
Return On Equity 16.2%
Return On Equity - 3 Yr. Avg. 16.7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 44.8%
Gross Margin - 3 Yr. Avg. 45.1%
EBITDA Margin 30.9%
EBITDA Margin - 3 Yr. Avg. 29.2%
Operating Margin 24.4%
Oper. Margin - 3 Yr. Avg. 23.7%
Pre-Tax Margin 24.9%
Pre-Tax Margin - 3 Yr. Avg. 23.8%
Net Profit Margin 21.7%
Net Profit Margin - 3 Yr. Avg. 21.4%
Effective Tax Rate 13%
Eff/ Tax Rate - 3 Yr. Avg. 9.8%
Payout Ratio 30.3%

ASML stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ASML stock intrinsic value calculation we used $7171 million for the last fiscal year's total revenue generated by ASML Holding. The default revenue input number comes from 2016 income statement of ASML Holding. 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 ASML stock valuation model: a) initial revenue growth rate of 34.9% 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 ASML is calculated based on our internal credit rating of ASML Holding, 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 ASML Holding.
    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 ASML stock the variable cost ratio is equal to 75.1%.

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 ASML 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 ASML Holding.

Corporate tax rate of 27% is the nominal tax rate for ASML Holding. 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 ASML 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 ASML are equal to 39.5%.

Life of production assets of 18.2 years is the average useful life of capital assets used in ASML Holding 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 ASML is equal to 21.6%. 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 - $10365 million for ASML Holding - 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 433.341 million for ASML Holding 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 ASML Holding at the current share price and the inputted number of shares is $75.1 billion.

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COMPANY NEWS

▶ ETFs with exposure to ASML Holding NV : December 7, 2017   [Dec-07-17 12:56PM  Capital Cube]
▶ ETFs with exposure to ASML Holding NV : November 27, 2017   [Nov-27-17 12:05PM  Capital Cube]
▶ ETFs with exposure to ASML Holding NV : November 13, 2017   [Nov-13-17 11:42AM  Capital Cube]
▶ ETFs with exposure to ASML Holding NV : November 2, 2017   [Nov-02-17 11:46AM  Capital Cube]
▶ ETFs with exposure to ASML Holding NV : October 23, 2017   [Oct-23-17 10:20AM  Capital Cube]
▶ ASML Earnings Top But Chip-Gear Maker Guides Low   [Oct-18-17 04:12PM  Investor's Business Daily]
▶ ASML beats Street 3Q forecasts   [08:27AM  Associated Press]
▶ Is ASML Holding (ASML) a Great Growth Stock?   [Oct-13-17 08:47AM  Zacks]
▶ ASML's New Machines Could Change The Future Of Chipmaking   [Sep-15-17 05:15PM  Investor's Business Daily]
▶ Is Lam Research Overvalued?   [Sep-01-17 05:41PM  Zacks]
▶ These 5 Top Stocks Are Less Than 1% From Buy Points   [Aug-31-17 07:30AM  Investor's Business Daily]
▶ Relative Strength? These 5 Top Stocks Absolutely Have It   [Aug-30-17 06:59AM  Investor's Business Daily]
▶ These 4 Chip Stocks Just Carved This 'Super Growth' Pattern; S&P 500 Futures   [Aug-28-17 06:59AM  Investor's Business Daily]
▶ ETFs with exposure to ASML Holding NV : August 14, 2017   [Aug-14-17 04:08PM  Capital Cube]
▶ ETFs with exposure to ASML Holding NV : August 3, 2017   [Aug-03-17 07:40PM  Capital Cube]
▶ ASML beats 2Q profit forecasts   [Jul-19-17 08:09PM  Associated Press]
▶ Chip-Gear Maker ASML Jumps To Record High On Q2 Beat   [12:22PM  Investor's Business Daily]
▶ Chip Equipment Maker ASML Jumps On Earnings   [05:37AM  Investor's Business Daily]
▶ Qualcomm, ASML To Kick Off Chip Earnings: Investing Action Plan   [Jul-18-17 04:47PM  Investor's Business Daily]
▶ These 6 Big-Cap Stocks Are Within 1% Of Buy Points   [Jul-14-17 12:43AM  Investor's Business Daily]
▶ Beating the Benchmark   [Jul-13-17 04:04PM  GuruFocus.com]
▶ Futures Rise Before Yellen: 3 Chip Stocks Near Buy Zone   [Jul-12-17 07:03AM  Investor's Business Daily]
▶ Indexes Mostly Revive; 3 FAANGs Consolidate, And ASML Nears An Entry   [Jul-11-17 09:58AM  Investor's Business Daily]
▶ Chip Plays Rally As Nasdaq Pulls Ahead; This Hot Sector Cools   [Jun-23-17 02:45PM  Investor's Business Daily]
▶ Three Petrobras Workers Die After Offshore Explosion   [Jun-12-17 01:13PM  TheStreet.com]
▶ Lam Surges, ASML Falls, But Chip Equipment Market Shines   [Apr-19-17 07:10PM  Barrons.com]
▶ Chip Gear Stocks Soared Today: Here's Why   [04:39PM  Investor's Business Daily]
▶ ASML tops Street 1Q forecasts   [05:28AM  Associated Press]
▶ ETFs with exposure to ASML Holding NV : April 5, 2017   [Apr-05-17 04:20PM  Capital Cube]
▶ ASML Earns Membership In 95-Plus Composite Rating Club   [Mar-13-17 03:30PM  Investor's Business Daily]
▶ Chip Gear Stocks Rocking As Investors Come Knocking   [Mar-10-17 04:45PM  Investor's Business Daily]
▶ ASML publishes 2016 annual reports   [02:01AM  GlobeNewswire]
▶ [$$] The Risks and Rewards in ASML and Applied Materials   [Jan-21-17 12:01AM  at Barrons.com]
▶ ASML etches 'remarkable' 2016 profit   [Jan-17-17 07:37PM  AFP]
Financial statements of ASML
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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