Intrinsic value of CEVA - CEVA

Previous Close

$28.40

  Intrinsic Value

$12.93

stock screener

  Rating & Target

str. sell

-54%

Previous close

$28.40

 
Intrinsic value

$12.93

 
Up/down potential

-54%

 
Rating

str. sell

We calculate the intrinsic value of CEVA 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 0.6

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  89
  91
  94
  96
  99
  102
  106
  110
  114
  118
  123
  128
  133
  139
  145
  151
  158
  165
  172
  180
  189
  197
  207
  217
  227
  238
  249
  261
  274
  287
Variable operating expenses, $m
  72
  73
  75
  77
  79
  82
  84
  87
  90
  94
  92
  96
  100
  104
  109
  114
  119
  124
  130
  136
  142
  148
  155
  163
  171
  179
  187
  196
  206
  216
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
  72
  73
  75
  77
  79
  82
  84
  87
  90
  94
  92
  96
  100
  104
  109
  114
  119
  124
  130
  136
  142
  148
  155
  163
  171
  179
  187
  196
  206
  216
Operating income, $m
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  30
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
EBITDA, $m
  24
  25
  25
  26
  27
  28
  28
  29
  31
  32
  33
  34
  36
  37
  39
  41
  42
  44
  46
  48
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
Earnings before tax, $m
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
Tax expense, $m
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
Net income, $m
  13
  13
  13
  14
  14
  15
  15
  16
  17
  18
  22
  23
  24
  24
  25
  27
  28
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  47
  49

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
  163
  167
  171
  176
  181
  187
  194
  201
  208
  216
  224
  234
  243
  254
  265
  276
  288
  301
  315
  330
  345
  361
  378
  396
  415
  434
  455
  477
  500
  525
Adjusted assets (=assets-cash), $m
  163
  167
  171
  176
  181
  187
  194
  201
  208
  216
  224
  234
  243
  254
  265
  276
  288
  301
  315
  330
  345
  361
  378
  396
  415
  434
  455
  477
  500
  525
Revenue / Adjusted assets
  0.546
  0.545
  0.550
  0.545
  0.547
  0.545
  0.546
  0.547
  0.548
  0.546
  0.549
  0.547
  0.547
  0.547
  0.547
  0.547
  0.549
  0.548
  0.546
  0.545
  0.548
  0.546
  0.548
  0.548
  0.547
  0.548
  0.547
  0.547
  0.548
  0.547
Average production assets, $m
  31
  32
  32
  33
  34
  35
  37
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  68
  71
  75
  78
  82
  86
  90
  94
  99
Working capital, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
Total debt, $m
  0
  1
  2
  3
  4
  5
  7
  8
  9
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  43
  47
  51
  55
  59
  63
  68
  73
Total liabilities, $m
  33
  33
  34
  35
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
Total equity, $m
  131
  134
  137
  141
  145
  150
  155
  160
  166
  173
  180
  187
  195
  203
  212
  221
  231
  241
  252
  264
  276
  289
  302
  317
  332
  348
  364
  382
  400
  420
Total liabilities and equity, $m
  164
  167
  171
  176
  181
  187
  194
  200
  208
  216
  225
  234
  244
  254
  265
  276
  289
  301
  315
  330
  345
  361
  378
  396
  415
  435
  455
  477
  500
  525
Debt-to-equity ratio
  0.000
  0.010
  0.020
  0.020
  0.030
  0.040
  0.040
  0.050
  0.060
  0.060
  0.070
  0.080
  0.080
  0.090
  0.100
  0.100
  0.110
  0.120
  0.120
  0.130
  0.130
  0.140
  0.140
  0.150
  0.150
  0.160
  0.160
  0.170
  0.170
  0.170
Adjusted equity ratio
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  13
  13
  13
  14
  14
  15
  15
  16
  17
  18
  22
  23
  24
  24
  25
  27
  28
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  47
  49
Depreciation, amort., depletion, $m
  7
  7
  7
  7
  7
  7
  7
  7
  7
  7
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
Funds from operations, $m
  19
  20
  20
  21
  21
  22
  22
  23
  24
  25
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
Change in working capital, $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 operations, $m
  19
  20
  20
  21
  21
  22
  23
  23
  24
  25
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  48
  51
  53
  56
Maintenance CAPEX, $m
  -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
  -6
New CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
Cash from investing activities, $m
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -9
  -9
  -9
  -9
  -11
Free cash flow, $m
  17
  17
  18
  18
  18
  19
  19
  20
  20
  21
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  41
  43
  45
Issuance/(repayment) of debt, $m
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
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  
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
Total cash flow (excl. dividends), $m
  18
  18
  18
  19
  19
  20
  21
  21
  22
  23
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
  46
  48
  50
Retained Cash Flow (-), $m
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
Prev. year cash balance distribution, $m
  116
  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
  132
  15
  15
  15
  15
  15
  15
  16
  16
  16
  15
  16
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
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
  126
  14
  13
  12
  12
  11
  10
  10
  9
  9
  7
  7
  6
  6
  5
  5
  4
  3
  3
  3
  2
  2
  2
  1
  1
  1
  1
  0
  0
  0
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

CEVA, Inc. (CEVA) is a licensor of signal processing intellectual property (IP). The Company partners with semiconductor companies and original equipment manufacturers (OEMs) to create connected devices for a range of end markets, including mobile, consumer, automotive, industrial and Internet of things (IoT). The Company operates in the segment of licensing of intellectual property to semiconductor companies and electronic equipment manufacturers. CEVA addresses the requirements of the mobile, consumer, automotive, industrial and IoT markets by designing and licensing a range of application-specific signal processing platforms, which enable the design of solutions for developing a range of applications, including communications and connectivity, audio and voice, imaging and vision, and storage.

FINANCIAL RATIOS  of  CEVA (CEVA)

Valuation Ratios
P/E Ratio 46.5
Price to Sales 8.3
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 43.1
Price to Free Cash Flow 50.3
Growth Rates
Sales Growth Rate 21.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
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 5.7%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital 6.5%
Ret/ On T. Cap. - 3 Yr. Avg. 3.1%
Return On Equity 6.5%
Return On Equity - 3 Yr. Avg. 3.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 91.8%
Gross Margin - 3 Yr. Avg. 90.7%
EBITDA Margin 24.7%
EBITDA Margin - 3 Yr. Avg. 15.8%
Operating Margin 20.5%
Oper. Margin - 3 Yr. Avg. 12%
Pre-Tax Margin 21.9%
Pre-Tax Margin - 3 Yr. Avg. 12.5%
Net Profit Margin 17.8%
Net Profit Margin - 3 Yr. Avg. 8.6%
Effective Tax Rate 18.8%
Eff/ Tax Rate - 3 Yr. Avg. 61%
Payout Ratio 0%

CEVA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CEVA stock intrinsic value calculation we used $87.507 million for the last fiscal year's total revenue generated by CEVA. The default revenue input number comes from 0001 income statement of CEVA. 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 CEVA stock valuation model: a) initial revenue growth rate of 2% 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 CEVA is calculated based on our internal credit rating of CEVA, 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 CEVA.
    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 CEVA stock the variable cost ratio is equal to 80.7%.

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 CEVA 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 CEVA.

Corporate tax rate of 27% is the nominal tax rate for CEVA. 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 CEVA 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 CEVA are equal to 34.5%.

Life of production assets of 16.9 years is the average useful life of capital assets used in CEVA 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 CEVA is equal to -2.9%. 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 - $244.67 million for CEVA - 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 22.031 million for CEVA 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 CEVA at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

▶ CEVA, Inc. to Present at Upcoming Investor Conferences   [Aug-07-18 04:15PM  PR Newswire]
▶ Ceva: 2Q Earnings Snapshot   [08:19AM  Associated Press]
▶ CEVA, Inc. to Host Earnings Call   [06:30AM  ACCESSWIRE]
▶ Is It The Right Time To Buy CEVA Inc (NASDAQ:CEVA)?   [Jun-24-18 10:30AM  Simply Wall St.]
▶ Ceva: 1Q Earnings Snapshot   [07:31AM  Associated Press]
▶ Ceva Logistics: books oversubscribed   [Apr-26-18 12:05PM  Reuters]
▶ Ceva plans May 4 flotation as bookbuild set wide   [Apr-20-18 08:18AM  Reuters]
▶ Chip Stocks That Will Thrive on the AI Boom   [Apr-06-18 06:00AM  Investopedia]
▶ CEVA and Nokia Collaborate for 4.9G and 5G Technologies   [Mar-01-18 02:00AM  PR Newswire]
▶ Ceva Logistics aims for pre-summer IPO -sources   [Feb-26-18 09:07AM  Reuters]
▶ CEVA Announces Industry's First 802.11ax Wi-Fi IPs   [Feb-20-18 07:00AM  PR Newswire]
▶ Ceva posts 4Q profit   [07:33AM  Associated Press]
▶ CEVA, Inc. to Host Earnings Call   [06:45AM  ACCESSWIRE]
▶ ETFs with exposure to CEVA, Inc. : December 25, 2017   [Dec-25-17 11:45AM  Capital Cube]
▶ Is This Apple Inc.'s Secret New Chip Supplier?   [Dec-22-17 08:00AM  Motley Fool]
▶ Top 10 Logistics Companies In The World In 2017   [Dec-13-17 10:20AM  Insider Monkey]
▶ ETFs with exposure to CEVA, Inc. : December 12, 2017   [Dec-12-17 12:56PM  Capital Cube]
▶ These 9 Tech Stocks Could Outshine the FAANGs   [Nov-10-17 12:00PM  Investopedia]
▶ CEVA, Inc. to Present at Upcoming Investor Conferences   [Nov-08-17 07:00AM  PR Newswire]
▶ Ceva tops Street 3Q forecasts   [07:21AM  Associated Press]
▶ CEVA INC to Host Earnings Call   [06:50AM  ACCESSWIRE]
▶ CEVA, Inc. Value Analysis (NASDAQ:CEVA) : October 6, 2017   [Oct-06-17 11:20AM  Capital Cube]
▶ ETFs with exposure to CEVA, Inc. : October 3, 2017   [Oct-03-17 11:02AM  Capital Cube]
▶ ETFs with exposure to CEVA, Inc. : September 6, 2017   [Sep-05-17 08:32PM  Capital Cube]
▶ CEVA, Inc. to Present at Upcoming Investor Conferences   [Aug-23-17 07:00AM  PR Newswire]
▶ CEVA, Inc. Value Analysis (NASDAQ:CEVA) : August 17, 2017   [Aug-16-17 08:10PM  Capital Cube]

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