Intrinsic value of Avnet, Inc. - AVT

Previous Close

$43.00

  Intrinsic Value

$9.61

stock screener

  Rating & Target

str. sell

-78%

Previous close

$43.00

 
Intrinsic value

$9.61

 
Up/down potential

-78%

 
Rating

str. sell

We calculate the intrinsic value of AVT 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 4.7

 

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, %
  11.70
  11.03
  10.43
  9.88
  9.40
  8.96
  8.56
  8.20
  7.88
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
Revenue, $m
  21,264
  23,610
  26,072
  28,649
  31,340
  34,147
  37,071
  40,112
  43,274
  46,561
  49,977
  53,527
  57,216
  61,051
  65,040
  69,189
  73,507
  78,004
  82,689
  87,572
  92,663
  97,976
  103,521
  109,312
  115,362
  121,685
  128,296
  135,210
  142,445
  150,017
Variable operating expenses, $m
  20,705
  22,983
  25,374
  27,877
  30,492
  33,218
  36,057
  39,011
  42,083
  45,275
  48,541
  51,988
  55,571
  59,296
  63,170
  67,200
  71,394
  75,762
  80,312
  85,054
  90,000
  95,159
  100,545
  106,170
  112,045
  118,187
  124,608
  131,323
  138,350
  145,704
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
  20,705
  22,983
  25,374
  27,877
  30,492
  33,218
  36,057
  39,011
  42,083
  45,275
  48,541
  51,988
  55,571
  59,296
  63,170
  67,200
  71,394
  75,762
  80,312
  85,054
  90,000
  95,159
  100,545
  106,170
  112,045
  118,187
  124,608
  131,323
  138,350
  145,704
Operating income, $m
  559
  626
  697
  771
  849
  929
  1,013
  1,101
  1,192
  1,286
  1,437
  1,539
  1,645
  1,755
  1,870
  1,989
  2,113
  2,242
  2,377
  2,517
  2,664
  2,817
  2,976
  3,142
  3,316
  3,498
  3,688
  3,887
  4,095
  4,313
EBITDA, $m
  780
  866
  957
  1,051
  1,150
  1,253
  1,360
  1,472
  1,588
  1,709
  1,834
  1,964
  2,100
  2,240
  2,387
  2,539
  2,697
  2,862
  3,034
  3,214
  3,400
  3,595
  3,799
  4,011
  4,233
  4,465
  4,708
  4,962
  5,227
  5,505
Interest expense (income), $m
  116
  99
  134
  170
  208
  248
  290
  333
  379
  426
  475
  526
  578
  633
  690
  750
  812
  876
  943
  1,012
  1,085
  1,161
  1,239
  1,322
  1,407
  1,497
  1,591
  1,689
  1,791
  1,898
  2,010
Earnings before tax, $m
  460
  493
  527
  563
  600
  640
  680
  722
  766
  812
  911
  960
  1,011
  1,065
  1,120
  1,177
  1,237
  1,300
  1,365
  1,433
  1,503
  1,577
  1,654
  1,735
  1,819
  1,907
  1,999
  2,096
  2,197
  2,302
Tax expense, $m
  124
  133
  142
  152
  162
  173
  184
  195
  207
  219
  246
  259
  273
  287
  302
  318
  334
  351
  368
  387
  406
  426
  447
  468
  491
  515
  540
  566
  593
  622
Net income, $m
  336
  360
  385
  411
  438
  467
  496
  527
  559
  592
  665
  701
  738
  777
  817
  859
  903
  949
  996
  1,046
  1,097
  1,151
  1,208
  1,267
  1,328
  1,392
  1,460
  1,530
  1,604
  1,681

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
  10,718
  11,900
  13,141
  14,440
  15,797
  17,211
  18,685
  20,218
  21,812
  23,468
  25,190
  26,979
  28,839
  30,772
  32,782
  34,873
  37,050
  39,317
  41,678
  44,139
  46,705
  49,383
  52,178
  55,097
  58,146
  61,333
  64,665
  68,150
  71,797
  75,613
Adjusted assets (=assets-cash), $m
  10,718
  11,900
  13,141
  14,440
  15,797
  17,211
  18,685
  20,218
  21,812
  23,468
  25,190
  26,979
  28,839
  30,772
  32,782
  34,873
  37,050
  39,317
  41,678
  44,139
  46,705
  49,383
  52,178
  55,097
  58,146
  61,333
  64,665
  68,150
  71,797
  75,613
Revenue / Adjusted assets
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
  1.984
Average production assets, $m
  1,318
  1,464
  1,616
  1,776
  1,943
  2,117
  2,298
  2,487
  2,683
  2,887
  3,099
  3,319
  3,547
  3,785
  4,032
  4,290
  4,557
  4,836
  5,127
  5,429
  5,745
  6,075
  6,418
  6,777
  7,152
  7,544
  7,954
  8,383
  8,832
  9,301
Working capital, $m
  4,678
  5,194
  5,736
  6,303
  6,895
  7,512
  8,156
  8,825
  9,520
  10,244
  10,995
  11,776
  12,588
  13,431
  14,309
  15,222
  16,172
  17,161
  18,192
  19,266
  20,386
  21,555
  22,775
  24,049
  25,380
  26,771
  28,225
  29,746
  31,338
  33,004
Total debt, $m
  2,230
  2,836
  3,471
  4,136
  4,831
  5,555
  6,309
  7,094
  7,910
  8,759
  9,640
  10,556
  11,508
  12,498
  13,527
  14,598
  15,712
  16,873
  18,082
  19,342
  20,656
  22,027
  23,458
  24,952
  26,514
  28,145
  29,851
  31,636
  33,503
  35,457
Total liabilities, $m
  5,488
  6,093
  6,728
  7,393
  8,088
  8,812
  9,567
  10,351
  11,168
  12,016
  12,897
  13,813
  14,765
  15,755
  16,784
  17,855
  18,970
  20,130
  21,339
  22,599
  23,913
  25,284
  26,715
  28,210
  29,771
  31,403
  33,109
  34,893
  36,760
  38,714
Total equity, $m
  5,230
  5,807
  6,413
  7,047
  7,709
  8,399
  9,118
  9,866
  10,644
  11,453
  12,293
  13,166
  14,073
  15,017
  15,998
  17,018
  18,080
  19,186
  20,339
  21,540
  22,792
  24,099
  25,463
  26,887
  28,375
  29,931
  31,557
  33,257
  35,037
  36,899
Total liabilities and equity, $m
  10,718
  11,900
  13,141
  14,440
  15,797
  17,211
  18,685
  20,217
  21,812
  23,469
  25,190
  26,979
  28,838
  30,772
  32,782
  34,873
  37,050
  39,316
  41,678
  44,139
  46,705
  49,383
  52,178
  55,097
  58,146
  61,334
  64,666
  68,150
  71,797
  75,613
Debt-to-equity ratio
  0.430
  0.490
  0.540
  0.590
  0.630
  0.660
  0.690
  0.720
  0.740
  0.760
  0.780
  0.800
  0.820
  0.830
  0.850
  0.860
  0.870
  0.880
  0.890
  0.900
  0.910
  0.910
  0.920
  0.930
  0.930
  0.940
  0.950
  0.950
  0.960
  0.960
Adjusted equity ratio
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  336
  360
  385
  411
  438
  467
  496
  527
  559
  592
  665
  701
  738
  777
  817
  859
  903
  949
  996
  1,046
  1,097
  1,151
  1,208
  1,267
  1,328
  1,392
  1,460
  1,530
  1,604
  1,681
Depreciation, amort., depletion, $m
  221
  240
  260
  280
  301
  324
  347
  371
  396
  422
  397
  425
  455
  485
  517
  550
  584
  620
  657
  696
  737
  779
  823
  869
  917
  967
  1,020
  1,075
  1,132
  1,192
Funds from operations, $m
  557
  600
  644
  691
  740
  791
  843
  898
  956
  1,015
  1,062
  1,127
  1,193
  1,262
  1,334
  1,409
  1,487
  1,569
  1,654
  1,742
  1,834
  1,930
  2,031
  2,135
  2,245
  2,360
  2,479
  2,605
  2,736
  2,873
Change in working capital, $m
  490
  516
  542
  567
  592
  618
  643
  669
  696
  723
  751
  781
  812
  844
  877
  913
  950
  989
  1,031
  1,074
  1,120
  1,169
  1,220
  1,274
  1,331
  1,391
  1,454
  1,521
  1,592
  1,666
Cash from operations, $m
  67
  84
  103
  124
  148
  173
  200
  229
  260
  292
  311
  346
  382
  419
  457
  497
  537
  580
  623
  668
  714
  761
  811
  861
  914
  969
  1,025
  1,083
  1,144
  1,207
Maintenance CAPEX, $m
  -151
  -169
  -188
  -207
  -228
  -249
  -271
  -295
  -319
  -344
  -370
  -397
  -425
  -455
  -485
  -517
  -550
  -584
  -620
  -657
  -696
  -737
  -779
  -823
  -869
  -917
  -967
  -1,020
  -1,075
  -1,132
New CAPEX, $m
  -141
  -145
  -153
  -160
  -167
  -174
  -181
  -189
  -196
  -204
  -212
  -220
  -229
  -238
  -247
  -257
  -268
  -279
  -290
  -303
  -316
  -329
  -344
  -359
  -375
  -392
  -410
  -429
  -449
  -469
Cash from investing activities, $m
  -292
  -314
  -341
  -367
  -395
  -423
  -452
  -484
  -515
  -548
  -582
  -617
  -654
  -693
  -732
  -774
  -818
  -863
  -910
  -960
  -1,012
  -1,066
  -1,123
  -1,182
  -1,244
  -1,309
  -1,377
  -1,449
  -1,524
  -1,601
Free cash flow, $m
  -225
  -231
  -238
  -243
  -247
  -250
  -252
  -254
  -255
  -256
  -271
  -272
  -273
  -274
  -276
  -278
  -280
  -284
  -288
  -292
  -298
  -305
  -312
  -320
  -330
  -340
  -352
  -365
  -379
  -394
Issuance/(repayment) of debt, $m
  576
  605
  635
  665
  695
  724
  754
  785
  816
  848
  882
  916
  952
  990
  1,029
  1,071
  1,114
  1,160
  1,209
  1,260
  1,314
  1,371
  1,431
  1,494
  1,561
  1,632
  1,706
  1,784
  1,867
  1,954
Issuance/(repurchase) of shares, $m
  210
  217
  221
  223
  224
  224
  223
  221
  219
  216
  175
  172
  169
  166
  164
  161
  159
  157
  156
  155
  155
  155
  156
  158
  160
  163
  167
  171
  176
  182
Cash from financing (excl. dividends), $m  
  786
  822
  856
  888
  919
  948
  977
  1,006
  1,035
  1,064
  1,057
  1,088
  1,121
  1,156
  1,193
  1,232
  1,273
  1,317
  1,365
  1,415
  1,469
  1,526
  1,587
  1,652
  1,721
  1,795
  1,873
  1,955
  2,043
  2,136
Total cash flow (excl. dividends), $m
  561
  592
  618
  645
  671
  698
  725
  752
  780
  808
  786
  816
  848
  882
  917
  954
  993
  1,034
  1,077
  1,123
  1,171
  1,222
  1,275
  1,332
  1,391
  1,454
  1,520
  1,590
  1,664
  1,741
Retained Cash Flow (-), $m
  -545
  -577
  -606
  -634
  -662
  -690
  -719
  -748
  -778
  -808
  -840
  -873
  -907
  -943
  -981
  -1,021
  -1,062
  -1,106
  -1,152
  -1,201
  -1,252
  -1,307
  -1,364
  -1,424
  -1,488
  -1,555
  -1,626
  -1,701
  -1,779
  -1,862
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
  16
  15
  13
  11
  9
  7
  6
  4
  2
  0
  -55
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -89
  -93
  -97
  -101
  -106
  -111
  -116
  -121
Discount rate, %
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
  15
  13
  11
  9
  7
  5
  4
  2
  1
  0
  -23
  -21
  -19
  -17
  -15
  -13
  -11
  -10
  -8
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
Current shareholders' claim on cash, %
  95.7
  91.9
  88.5
  85.5
  82.8
  80.5
  78.4
  76.5
  74.9
  73.4
  72.3
  71.3
  70.3
  69.5
  68.8
  68.1
  67.4
  66.9
  66.3
  65.8
  65.3
  64.9
  64.5
  64.1
  63.7
  63.3
  63.0
  62.6
  62.3
  62.0

Avnet, Inc. is a distributor of electronic components, enterprise computer, networking and storage products and software, and embedded subsystems. The Company operates through Electronics Marketing (EM) segment. The EM segment markets and sells semiconductors; interconnect, passive and electromechanical devices (IP&E), and embedded products to a customer base serving various end markets. The Company creates a link in the technology supply chain that connects electronic component and computer product manufacturers and software developers with a customer base of original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), systems integrators (SIs), independent software vendors (ISVs) and value-added resellers (VARs). The Company distributes electronic components, computer products and software, as received from its suppliers or through a customized solution, and offers assembly and other services.

FINANCIAL RATIOS  of  Avnet, Inc. (AVT)

Valuation Ratios
P/E Ratio 10.1
Price to Sales 0.3
Price to Book 1
Price to Tangible Book
Price to Cash Flow -14.3
Price to Free Cash Flow -10.8
Growth Rates
Sales Growth Rate 4.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -12.4%
Cap. Spend. - 3 Yr. Gr. Rate -0.5%
Financial Strength
Quick Ratio 22
Current Ratio 0
LT Debt to Equity 33.4%
Total Debt to Equity 34.3%
Interest Coverage 4
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 5.8%
Return On Total Capital 7.4%
Ret/ On T. Cap. - 3 Yr. Avg. 7.7%
Return On Equity 10.6%
Return On Equity - 3 Yr. Avg. 11.1%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 13.6%
Gross Margin - 3 Yr. Avg. 12.8%
EBITDA Margin 3.3%
EBITDA Margin - 3 Yr. Avg. 3.9%
Operating Margin 2.9%
Oper. Margin - 3 Yr. Avg. 3.3%
Pre-Tax Margin 1.8%
Pre-Tax Margin - 3 Yr. Avg. 2.6%
Net Profit Margin 3%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 15.2%
Eff/ Tax Rate - 3 Yr. Avg. 16.2%
Payout Ratio 17%

AVT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AVT stock intrinsic value calculation we used $19037 million for the last fiscal year's total revenue generated by Avnet, Inc.. The default revenue input number comes from 0001 income statement of Avnet, Inc.. 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 AVT stock valuation model: a) initial revenue growth rate of 11.7% 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 5.1%, whose default value for AVT is calculated based on our internal credit rating of Avnet, Inc., 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 Avnet, Inc..
    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 AVT stock the variable cost ratio is equal to 97.4%.

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 AVT 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 6% for Avnet, Inc..

Corporate tax rate of 27% is the nominal tax rate for Avnet, Inc.. 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 AVT 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 AVT are equal to 6.2%.

Life of production assets of 7.8 years is the average useful life of capital assets used in Avnet, Inc. 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 AVT is equal to 22%. 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 - $4685.081 million for Avnet, Inc. - 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 108.318 million for Avnet, Inc. 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 Avnet, Inc. at the current share price and the inputted number of shares is $4.7 billion.

RELATED COMPANIES Price Int.Val. Rating
ARW Arrow Electron 69.75 138.63  str.buy
RELL Richardson Ele 5.38 10.10  buy
BOSC B.O.S. Better 2.55 7.76  str.buy
TAIT Taitron Compon 3.21 0.52  str.sell
TECD Tech Data Corp 100.60 347.83  str.buy
SCSC ScanSource, In 32.08 38.03  hold

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.