Intrinsic value of Diodes Incorporated - DIOD

Previous Close

$37.78

  Intrinsic Value

$135.63

stock screener

  Rating & Target

str. buy

+259%

Previous close

$37.78

 
Intrinsic value

$135.63

 
Up/down potential

+259%

 
Rating

str. buy

We calculate the intrinsic value of DIOD 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 2.0

 

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, %
  17.10
  15.89
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
  6.07
  5.97
  5.87
  5.78
  5.70
  5.63
  5.57
Revenue, $m
  1,422
  1,647
  1,891
  2,153
  2,431
  2,727
  3,038
  3,366
  3,710
  4,069
  4,444
  4,835
  5,242
  5,665
  6,105
  6,563
  7,038
  7,532
  8,045
  8,579
  9,134
  9,712
  10,313
  10,940
  11,592
  12,272
  12,982
  13,722
  14,495
  15,303
Variable operating expenses, $m
  746
  857
  977
  1,106
  1,244
  1,389
  1,543
  1,705
  1,874
  2,051
  2,192
  2,385
  2,585
  2,794
  3,011
  3,237
  3,471
  3,715
  3,968
  4,231
  4,505
  4,790
  5,086
  5,395
  5,717
  6,052
  6,402
  6,768
  7,149
  7,547
Fixed operating expenses, $m
  434
  444
  454
  464
  474
  484
  495
  506
  517
  528
  540
  552
  564
  576
  589
  602
  615
  629
  643
  657
  671
  686
  701
  716
  732
  748
  765
  782
  799
  816
Total operating expenses, $m
  1,180
  1,301
  1,431
  1,570
  1,718
  1,873
  2,038
  2,211
  2,391
  2,579
  2,732
  2,937
  3,149
  3,370
  3,600
  3,839
  4,086
  4,344
  4,611
  4,888
  5,176
  5,476
  5,787
  6,111
  6,449
  6,800
  7,167
  7,550
  7,948
  8,363
Operating income, $m
  241
  346
  460
  583
  714
  853
  1,000
  1,155
  1,318
  1,489
  1,712
  1,899
  2,093
  2,295
  2,505
  2,724
  2,952
  3,189
  3,435
  3,691
  3,958
  4,236
  4,526
  4,828
  5,143
  5,472
  5,815
  6,173
  6,548
  6,939
EBITDA, $m
  385
  506
  637
  778
  928
  1,088
  1,257
  1,435
  1,622
  1,818
  2,023
  2,236
  2,459
  2,691
  2,932
  3,183
  3,443
  3,715
  3,997
  4,291
  4,596
  4,915
  5,246
  5,592
  5,953
  6,329
  6,722
  7,132
  7,560
  8,008
Interest expense (income), $m
  12
  12
  17
  23
  29
  36
  43
  50
  58
  66
  75
  84
  93
  103
  113
  124
  135
  146
  158
  170
  183
  197
  210
  225
  240
  256
  272
  289
  307
  325
  345
Earnings before tax, $m
  229
  329
  437
  554
  678
  810
  950
  1,098
  1,252
  1,415
  1,629
  1,806
  1,990
  2,182
  2,382
  2,590
  2,806
  3,031
  3,265
  3,508
  3,762
  4,026
  4,301
  4,588
  4,887
  5,200
  5,526
  5,866
  6,222
  6,595
Tax expense, $m
  62
  89
  118
  149
  183
  219
  257
  296
  338
  382
  440
  488
  537
  589
  643
  699
  758
  818
  881
  947
  1,016
  1,087
  1,161
  1,239
  1,320
  1,404
  1,492
  1,584
  1,680
  1,781
Net income, $m
  167
  240
  319
  404
  495
  592
  694
  801
  914
  1,033
  1,189
  1,318
  1,453
  1,593
  1,739
  1,890
  2,048
  2,212
  2,383
  2,561
  2,746
  2,939
  3,140
  3,349
  3,568
  3,796
  4,034
  4,282
  4,542
  4,814

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
  1,749
  2,026
  2,326
  2,648
  2,990
  3,354
  3,737
  4,140
  4,563
  5,005
  5,466
  5,947
  6,448
  6,968
  7,510
  8,072
  8,657
  9,264
  9,896
  10,552
  11,235
  11,946
  12,685
  13,456
  14,258
  15,095
  15,968
  16,879
  17,830
  18,823
Adjusted assets (=assets-cash), $m
  1,749
  2,026
  2,326
  2,648
  2,990
  3,354
  3,737
  4,140
  4,563
  5,005
  5,466
  5,947
  6,448
  6,968
  7,510
  8,072
  8,657
  9,264
  9,896
  10,552
  11,235
  11,946
  12,685
  13,456
  14,258
  15,095
  15,968
  16,879
  17,830
  18,823
Revenue / Adjusted assets
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
  0.813
Average production assets, $m
  695
  806
  925
  1,053
  1,189
  1,333
  1,486
  1,646
  1,814
  1,990
  2,173
  2,364
  2,563
  2,770
  2,986
  3,209
  3,442
  3,683
  3,934
  4,195
  4,467
  4,749
  5,043
  5,349
  5,669
  6,001
  6,348
  6,710
  7,088
  7,483
Working capital, $m
  317
  367
  422
  480
  542
  608
  678
  751
  827
  907
  991
  1,078
  1,169
  1,263
  1,362
  1,463
  1,569
  1,680
  1,794
  1,913
  2,037
  2,166
  2,300
  2,440
  2,585
  2,737
  2,895
  3,060
  3,232
  3,413
Total debt, $m
  321
  425
  539
  660
  789
  926
  1,070
  1,222
  1,382
  1,548
  1,722
  1,904
  2,092
  2,289
  2,493
  2,705
  2,925
  3,154
  3,392
  3,640
  3,897
  4,165
  4,444
  4,734
  5,037
  5,352
  5,681
  6,025
  6,383
  6,758
Total liabilities, $m
  659
  764
  877
  998
  1,127
  1,264
  1,409
  1,561
  1,720
  1,887
  2,061
  2,242
  2,431
  2,627
  2,831
  3,043
  3,264
  3,493
  3,731
  3,978
  4,236
  4,504
  4,782
  5,073
  5,375
  5,691
  6,020
  6,363
  6,722
  7,096
Total equity, $m
  1,089
  1,262
  1,449
  1,650
  1,863
  2,089
  2,328
  2,579
  2,843
  3,118
  3,405
  3,705
  4,017
  4,341
  4,679
  5,029
  5,393
  5,772
  6,165
  6,574
  7,000
  7,442
  7,903
  8,383
  8,883
  9,404
  9,948
  10,515
  11,108
  11,726
Total liabilities and equity, $m
  1,748
  2,026
  2,326
  2,648
  2,990
  3,353
  3,737
  4,140
  4,563
  5,005
  5,466
  5,947
  6,448
  6,968
  7,510
  8,072
  8,657
  9,265
  9,896
  10,552
  11,236
  11,946
  12,685
  13,456
  14,258
  15,095
  15,968
  16,878
  17,830
  18,822
Debt-to-equity ratio
  0.290
  0.340
  0.370
  0.400
  0.420
  0.440
  0.460
  0.470
  0.490
  0.500
  0.510
  0.510
  0.520
  0.530
  0.530
  0.540
  0.540
  0.550
  0.550
  0.550
  0.560
  0.560
  0.560
  0.560
  0.570
  0.570
  0.570
  0.570
  0.570
  0.580
Adjusted equity ratio
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  167
  240
  319
  404
  495
  592
  694
  801
  914
  1,033
  1,189
  1,318
  1,453
  1,593
  1,739
  1,890
  2,048
  2,212
  2,383
  2,561
  2,746
  2,939
  3,140
  3,349
  3,568
  3,796
  4,034
  4,282
  4,542
  4,814
Depreciation, amort., depletion, $m
  144
  160
  177
  195
  215
  235
  257
  280
  304
  329
  310
  338
  366
  396
  427
  458
  492
  526
  562
  599
  638
  678
  720
  764
  810
  857
  907
  959
  1,013
  1,069
Funds from operations, $m
  311
  400
  496
  599
  710
  827
  951
  1,081
  1,218
  1,362
  1,499
  1,656
  1,819
  1,989
  2,165
  2,349
  2,540
  2,739
  2,945
  3,160
  3,384
  3,617
  3,860
  4,113
  4,377
  4,653
  4,941
  5,241
  5,555
  5,883
Change in working capital, $m
  46
  50
  54
  58
  62
  66
  69
  73
  77
  80
  84
  87
  91
  94
  98
  102
  106
  110
  114
  119
  124
  129
  134
  140
  146
  152
  158
  165
  172
  180
Cash from operations, $m
  265
  350
  442
  541
  647
  761
  881
  1,008
  1,141
  1,281
  1,416
  1,569
  1,728
  1,894
  2,067
  2,247
  2,434
  2,628
  2,831
  3,041
  3,260
  3,488
  3,726
  3,974
  4,232
  4,501
  4,782
  5,076
  5,383
  5,703
Maintenance CAPEX, $m
  -85
  -99
  -115
  -132
  -150
  -170
  -190
  -212
  -235
  -259
  -284
  -310
  -338
  -366
  -396
  -427
  -458
  -492
  -526
  -562
  -599
  -638
  -678
  -720
  -764
  -810
  -857
  -907
  -959
  -1,013
New CAPEX, $m
  -102
  -110
  -119
  -128
  -136
  -144
  -152
  -160
  -168
  -176
  -183
  -191
  -199
  -207
  -215
  -224
  -232
  -242
  -251
  -261
  -271
  -282
  -294
  -306
  -319
  -333
  -347
  -362
  -378
  -395
Cash from investing activities, $m
  -187
  -209
  -234
  -260
  -286
  -314
  -342
  -372
  -403
  -435
  -467
  -501
  -537
  -573
  -611
  -651
  -690
  -734
  -777
  -823
  -870
  -920
  -972
  -1,026
  -1,083
  -1,143
  -1,204
  -1,269
  -1,337
  -1,408
Free cash flow, $m
  78
  140
  207
  281
  361
  447
  538
  635
  738
  847
  948
  1,067
  1,191
  1,321
  1,456
  1,597
  1,743
  1,895
  2,053
  2,218
  2,390
  2,568
  2,754
  2,947
  3,149
  3,359
  3,578
  3,807
  4,046
  4,296
Issuance/(repayment) of debt, $m
  97
  105
  113
  121
  129
  137
  145
  152
  159
  167
  174
  181
  189
  196
  204
  212
  220
  229
  238
  248
  257
  268
  279
  290
  303
  315
  329
  343
  358
  374
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  
  97
  105
  113
  121
  129
  137
  145
  152
  159
  167
  174
  181
  189
  196
  204
  212
  220
  229
  238
  248
  257
  268
  279
  290
  303
  315
  329
  343
  358
  374
Total cash flow (excl. dividends), $m
  175
  245
  320
  402
  490
  584
  683
  787
  898
  1,013
  1,122
  1,248
  1,380
  1,517
  1,660
  1,809
  1,963
  2,124
  2,292
  2,466
  2,647
  2,836
  3,032
  3,237
  3,451
  3,674
  3,907
  4,150
  4,404
  4,670
Retained Cash Flow (-), $m
  -158
  -173
  -187
  -200
  -213
  -226
  -239
  -251
  -263
  -275
  -287
  -300
  -312
  -324
  -337
  -350
  -364
  -378
  -393
  -409
  -425
  -443
  -461
  -480
  -500
  -521
  -544
  -567
  -592
  -619
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
  17
  72
  134
  202
  277
  357
  444
  536
  634
  738
  835
  949
  1,068
  1,193
  1,323
  1,458
  1,599
  1,746
  1,898
  2,057
  2,222
  2,393
  2,572
  2,758
  2,951
  3,153
  3,363
  3,583
  3,812
  4,051
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
  17
  65
  116
  166
  214
  259
  300
  335
  364
  387
  396
  405
  406
  400
  388
  371
  348
  321
  292
  261
  230
  199
  169
  140
  115
  92
  72
  55
  42
  31
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

Diodes Incorporated is a manufacturer and supplier of application-specific standard products within the discrete, logic, analog and mixed-signal semiconductor markets, serving the consumer electronics, computing, communications, industrial and automotive markets. The Company's products include diodes; rectifiers; transistors; metal-oxide semiconductor field-effect transistors (MOSFETs); protection devices; amplifiers and comparators; Hall-effect and temperature sensors, and power management devices, including light emitting diode (LED) drivers, alternating current (AC)-direct current (DC) and DC-DC switching, linear voltage regulators and voltage references, along with special function devices, such as universal serial bus (USB) power switches, load switches, voltage supervisors and motor controllers. It also holds interests in Pericom Semiconductor Corporation, which designs, develops and markets integrated circuits (ICs) and frequency control products (FCPs).

FINANCIAL RATIOS  of  Diodes Incorporated (DIOD)

Valuation Ratios
P/E Ratio 111.1
Price to Sales 1.9
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 14.2
Price to Free Cash Flow 26.9
Growth Rates
Sales Growth Rate 11%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -55.6%
Cap. Spend. - 3 Yr. Gr. Rate 4.7%
Financial Strength
Quick Ratio 20
Current Ratio 0
LT Debt to Equity 53.2%
Total Debt to Equity 55%
Interest Coverage 3
Management Effectiveness
Return On Assets 1.6%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital 1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 2%
Return On Equity - 3 Yr. Avg. 4.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 30.5%
Gross Margin - 3 Yr. Avg. 30.3%
EBITDA Margin 14.3%
EBITDA Margin - 3 Yr. Avg. 15.9%
Operating Margin 3.7%
Oper. Margin - 3 Yr. Avg. 6.1%
Pre-Tax Margin 2.7%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. 3.9%
Effective Tax Rate 28%
Eff/ Tax Rate - 3 Yr. Avg. 28.5%
Payout Ratio 0%

DIOD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DIOD stock intrinsic value calculation we used $1214 million for the last fiscal year's total revenue generated by Diodes Incorporated. The default revenue input number comes from 0001 income statement of Diodes Incorporated. 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 DIOD stock valuation model: a) initial revenue growth rate of 17.1% 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 DIOD is calculated based on our internal credit rating of Diodes Incorporated, 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 Diodes Incorporated.
    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 DIOD stock the variable cost ratio is equal to 53%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $425 million in the base year in the intrinsic value calculation for DIOD 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 Diodes Incorporated.

Corporate tax rate of 27% is the nominal tax rate for Diodes Incorporated. 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 DIOD 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 DIOD are equal to 48.9%.

Life of production assets of 7 years is the average useful life of capital assets used in Diodes Incorporated 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 DIOD is equal to 22.3%. 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 - $931.463 million for Diodes Incorporated - 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 51.779 million for Diodes Incorporated 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 Diodes Incorporated at the current share price and the inputted number of shares is $2.0 billion.

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