Intrinsic value of AVX Corporation - AVX

Previous Close

$14.45

  Intrinsic Value

$11.07

stock screener

  Rating & Target

sell

-23%

Previous close

$14.45

 
Intrinsic value

$11.07

 
Up/down potential

-23%

 
Rating

sell

We calculate the intrinsic value of AVX 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 2.4

 

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, %
  2.50
  2.75
  2.97
  3.18
  3.36
  3.52
  3.67
  3.80
  3.92
  4.03
  4.13
  4.22
  4.29
  4.36
  4.43
  4.49
  4.54
  4.58
  4.62
  4.66
  4.70
  4.73
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
Revenue, $m
  1,601
  1,645
  1,694
  1,748
  1,807
  1,870
  1,939
  2,013
  2,092
  2,176
  2,266
  2,361
  2,463
  2,570
  2,684
  2,804
  2,932
  3,066
  3,208
  3,357
  3,515
  3,681
  3,856
  4,040
  4,234
  4,438
  4,653
  4,879
  5,117
  5,366
Variable operating expenses, $m
  1,400
  1,437
  1,479
  1,524
  1,574
  1,628
  1,686
  1,748
  1,815
  1,886
  1,918
  1,999
  2,085
  2,176
  2,272
  2,374
  2,482
  2,595
  2,715
  2,842
  2,975
  3,116
  3,264
  3,420
  3,584
  3,757
  3,939
  4,130
  4,331
  4,543
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
  1,400
  1,437
  1,479
  1,524
  1,574
  1,628
  1,686
  1,748
  1,815
  1,886
  1,918
  1,999
  2,085
  2,176
  2,272
  2,374
  2,482
  2,595
  2,715
  2,842
  2,975
  3,116
  3,264
  3,420
  3,584
  3,757
  3,939
  4,130
  4,331
  4,543
Operating income, $m
  201
  208
  216
  224
  233
  243
  253
  264
  277
  289
  348
  362
  378
  394
  412
  430
  450
  471
  492
  515
  540
  565
  592
  620
  650
  681
  714
  749
  785
  824
EBITDA, $m
  291
  299
  308
  318
  328
  340
  352
  366
  380
  395
  412
  429
  448
  467
  488
  510
  533
  557
  583
  610
  639
  669
  701
  734
  770
  807
  846
  887
  930
  975
Interest expense (income), $m
  0
  0
  1
  1
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  17
  19
  20
  22
  25
  27
  29
  32
  34
  37
  40
  43
  46
  49
  53
Earnings before tax, $m
  201
  207
  214
  222
  230
  239
  248
  259
  270
  282
  339
  352
  366
  381
  397
  414
  431
  450
  470
  491
  513
  536
  560
  586
  613
  641
  671
  703
  736
  771
Tax expense, $m
  54
  56
  58
  60
  62
  64
  67
  70
  73
  76
  91
  95
  99
  103
  107
  112
  116
  122
  127
  133
  138
  145
  151
  158
  166
  173
  181
  190
  199
  208
Net income, $m
  147
  151
  156
  162
  168
  174
  181
  189
  197
  206
  247
  257
  267
  278
  290
  302
  315
  329
  343
  358
  374
  391
  409
  428
  448
  468
  490
  513
  537
  563

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
  2,193
  2,254
  2,321
  2,394
  2,475
  2,562
  2,656
  2,757
  2,865
  2,981
  3,104
  3,235
  3,374
  3,521
  3,677
  3,842
  4,016
  4,200
  4,394
  4,599
  4,815
  5,043
  5,282
  5,535
  5,800
  6,080
  6,374
  6,684
  7,009
  7,351
Adjusted assets (=assets-cash), $m
  2,193
  2,254
  2,321
  2,394
  2,475
  2,562
  2,656
  2,757
  2,865
  2,981
  3,104
  3,235
  3,374
  3,521
  3,677
  3,842
  4,016
  4,200
  4,394
  4,599
  4,815
  5,043
  5,282
  5,535
  5,800
  6,080
  6,374
  6,684
  7,009
  7,351
Revenue / Adjusted assets
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
Average production assets, $m
  520
  535
  551
  568
  587
  608
  630
  654
  680
  707
  736
  767
  800
  835
  872
  911
  953
  996
  1,043
  1,091
  1,142
  1,196
  1,253
  1,313
  1,376
  1,442
  1,512
  1,586
  1,663
  1,744
Working capital, $m
  594
  610
  628
  648
  670
  694
  719
  747
  776
  807
  841
  876
  914
  954
  996
  1,040
  1,088
  1,137
  1,190
  1,246
  1,304
  1,366
  1,431
  1,499
  1,571
  1,647
  1,726
  1,810
  1,898
  1,991
Total debt, $m
  12
  24
  37
  52
  68
  86
  105
  125
  147
  170
  195
  221
  249
  278
  310
  343
  378
  415
  454
  495
  538
  584
  632
  683
  737
  793
  852
  914
  980
  1,048
Total liabilities, $m
  441
  453
  466
  481
  497
  515
  534
  554
  576
  599
  624
  650
  678
  708
  739
  772
  807
  844
  883
  924
  968
  1,014
  1,062
  1,112
  1,166
  1,222
  1,281
  1,343
  1,409
  1,478
Total equity, $m
  1,752
  1,801
  1,854
  1,913
  1,977
  2,047
  2,122
  2,203
  2,289
  2,382
  2,480
  2,584
  2,695
  2,813
  2,938
  3,069
  3,209
  3,356
  3,511
  3,675
  3,847
  4,029
  4,221
  4,422
  4,635
  4,858
  5,093
  5,340
  5,600
  5,874
Total liabilities and equity, $m
  2,193
  2,254
  2,320
  2,394
  2,474
  2,562
  2,656
  2,757
  2,865
  2,981
  3,104
  3,234
  3,373
  3,521
  3,677
  3,841
  4,016
  4,200
  4,394
  4,599
  4,815
  5,043
  5,283
  5,534
  5,801
  6,080
  6,374
  6,683
  7,009
  7,352
Debt-to-equity ratio
  0.010
  0.010
  0.020
  0.030
  0.030
  0.040
  0.050
  0.060
  0.060
  0.070
  0.080
  0.090
  0.090
  0.100
  0.110
  0.110
  0.120
  0.120
  0.130
  0.130
  0.140
  0.150
  0.150
  0.150
  0.160
  0.160
  0.170
  0.170
  0.170
  0.180
Adjusted equity ratio
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  147
  151
  156
  162
  168
  174
  181
  189
  197
  206
  247
  257
  267
  278
  290
  302
  315
  329
  343
  358
  374
  391
  409
  428
  448
  468
  490
  513
  537
  563
Depreciation, amort., depletion, $m
  90
  91
  92
  94
  96
  97
  99
  101
  104
  106
  64
  67
  70
  73
  76
  79
  83
  87
  91
  95
  99
  104
  109
  114
  120
  125
  132
  138
  145
  152
Funds from operations, $m
  237
  242
  249
  256
  263
  272
  281
  290
  301
  312
  311
  324
  337
  351
  366
  381
  398
  415
  434
  453
  474
  495
  518
  542
  567
  594
  622
  651
  682
  714
Change in working capital, $m
  14
  16
  18
  20
  22
  24
  25
  27
  29
  31
  33
  35
  38
  40
  42
  45
  47
  50
  53
  55
  58
  62
  65
  68
  72
  76
  80
  84
  88
  93
Cash from operations, $m
  222
  226
  231
  236
  242
  248
  255
  263
  271
  280
  278
  288
  299
  311
  323
  337
  351
  365
  381
  398
  415
  434
  453
  474
  495
  518
  542
  567
  594
  622
Maintenance CAPEX, $m
  -44
  -45
  -46
  -48
  -49
  -51
  -53
  -55
  -57
  -59
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -120
  -125
  -132
  -138
  -145
New CAPEX, $m
  -13
  -14
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
Cash from investing activities, $m
  -57
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -86
  -90
  -95
  -100
  -105
  -110
  -115
  -120
  -127
  -133
  -140
  -146
  -153
  -161
  -169
  -177
  -186
  -195
  -205
  -215
  -226
Free cash flow, $m
  165
  166
  168
  170
  173
  176
  180
  184
  189
  194
  187
  193
  200
  206
  214
  222
  230
  239
  248
  258
  269
  280
  292
  305
  318
  332
  347
  362
  379
  396
Issuance/(repayment) of debt, $m
  12
  12
  13
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  65
  69
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  12
  12
  13
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  65
  69
Total cash flow (excl. dividends), $m
  176
  179
  182
  185
  189
  194
  199
  204
  210
  217
  212
  219
  227
  236
  245
  255
  265
  276
  287
  300
  312
  326
  340
  355
  371
  388
  406
  424
  444
  465
Retained Cash Flow (-), $m
  -42
  -48
  -54
  -59
  -64
  -70
  -75
  -81
  -86
  -92
  -98
  -105
  -111
  -118
  -125
  -132
  -139
  -147
  -155
  -164
  -173
  -182
  -192
  -202
  -212
  -223
  -235
  -247
  -260
  -273
Prev. year cash balance distribution, $m
  533
  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
  667
  130
  128
  126
  125
  124
  124
  124
  124
  125
  114
  115
  116
  118
  121
  123
  126
  129
  132
  136
  140
  144
  149
  154
  159
  165
  171
  177
  184
  191
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
  640
  119
  112
  104
  97
  90
  84
  77
  71
  65
  54
  49
  44
  40
  35
  31
  27
  24
  20
  17
  14
  12
  10
  8
  6
  5
  4
  3
  2
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

AVX Corporation (AVX) is a manufacturer and supplier and reseller of a line of passive electronic components, interconnect devices and related products. AVX operates in three segments: Passive Components, Kyocera Electronic Devices (KED Resale) and Interconnect. The Passive Components segment consists of surface mount and leaded ceramic capacitors, surface mount and leaded tantalum capacitors, surface mount and leaded film capacitors, thick and thin film packages of multiple passive integrated components, thermistors, inductors and resistive products. The KED Resale segment consists of ceramic capacitors, frequency control devices, surface acoustic wave (SAW) devices, sensor products, radio frequency (RF) modules, actuators, acoustic devices and connectors produced by Kyocera and resold by AVX. The Interconnect segment consists primarily of AVX Interconnect automotive, telecom and memory connectors manufactured by AVX Interconnect or purchased from other manufacturers for resale.

FINANCIAL RATIOS  of  AVX Corporation (AVX)

Valuation Ratios
P/E Ratio 19.3
Price to Sales 1.8
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 12.4
Price to Free Cash Flow 18.8
Growth Rates
Sales Growth Rate 9.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 37.5%
Cap. Spend. - 3 Yr. Gr. Rate 19.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.2%
Ret/ On Assets - 3 Yr. Avg. 6.2%
Return On Total Capital 5.7%
Ret/ On T. Cap. - 3 Yr. Avg. 7.1%
Return On Equity 5.7%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 21.7%
Gross Margin - 3 Yr. Avg. 23.4%
EBITDA Margin 16.6%
EBITDA Margin - 3 Yr. Avg. 16.7%
Operating Margin 12.5%
Oper. Margin - 3 Yr. Avg. 12.9%
Pre-Tax Margin 13.3%
Pre-Tax Margin - 3 Yr. Avg. 13.5%
Net Profit Margin 9.6%
Net Profit Margin - 3 Yr. Avg. 11.6%
Effective Tax Rate 28%
Eff/ Tax Rate - 3 Yr. Avg. 15.8%
Payout Ratio 57.1%

AVX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AVX stock intrinsic value calculation we used $1562 million for the last fiscal year's total revenue generated by AVX Corporation. The default revenue input number comes from 0001 income statement of AVX Corporation. 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 AVX stock valuation model: a) initial revenue growth rate of 2.5% 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 AVX is calculated based on our internal credit rating of AVX Corporation, 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 AVX Corporation.
    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 AVX stock the variable cost ratio is equal to 87.5%.

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 AVX 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 AVX Corporation.

Corporate tax rate of 27% is the nominal tax rate for AVX Corporation. 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 AVX 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 AVX are equal to 32.5%.

Life of production assets of 11.5 years is the average useful life of capital assets used in AVX Corporation 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 AVX is equal to 37.1%. 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 - $2243.443 million for AVX Corporation - 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 168.874 million for AVX Corporation 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 AVX Corporation at the current share price and the inputted number of shares is $2.4 billion.

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