Intrinsic value of Entegris, Inc. - ENTG

Previous Close

$36.65

  Intrinsic Value

$44.72

stock screener

  Rating & Target

buy

+22%

Previous close

$36.65

 
Intrinsic value

$44.72

 
Up/down potential

+22%

 
Rating

buy

We calculate the intrinsic value of ENTG 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 4.9

 

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, %
  14.60
  13.64
  12.78
  12.00
  11.30
  10.67
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
Revenue, $m
  1,776
  2,019
  2,276
  2,550
  2,838
  3,140
  3,458
  3,789
  4,135
  4,496
  4,871
  5,262
  5,667
  6,089
  6,527
  6,983
  7,456
  7,948
  8,460
  8,993
  9,547
  10,125
  10,727
  11,354
  12,009
  12,692
  13,406
  14,151
  14,929
  15,743
Variable operating expenses, $m
  1,339
  1,515
  1,704
  1,903
  2,113
  2,334
  2,566
  2,808
  3,060
  3,324
  3,556
  3,840
  4,137
  4,444
  4,764
  5,097
  5,442
  5,801
  6,175
  6,564
  6,969
  7,390
  7,830
  8,288
  8,765
  9,264
  9,785
  10,329
  10,897
  11,491
Fixed operating expenses, $m
  88
  90
  92
  94
  96
  98
  100
  102
  105
  107
  109
  112
  114
  117
  119
  122
  124
  127
  130
  133
  136
  139
  142
  145
  148
  151
  155
  158
  162
  165
Total operating expenses, $m
  1,427
  1,605
  1,796
  1,997
  2,209
  2,432
  2,666
  2,910
  3,165
  3,431
  3,665
  3,952
  4,251
  4,561
  4,883
  5,219
  5,566
  5,928
  6,305
  6,697
  7,105
  7,529
  7,972
  8,433
  8,913
  9,415
  9,940
  10,487
  11,059
  11,656
Operating income, $m
  350
  413
  481
  553
  629
  708
  792
  879
  970
  1,065
  1,206
  1,309
  1,417
  1,528
  1,644
  1,764
  1,889
  2,019
  2,155
  2,296
  2,443
  2,596
  2,755
  2,922
  3,095
  3,277
  3,466
  3,664
  3,871
  4,087
EBITDA, $m
  491
  568
  650
  737
  829
  926
  1,027
  1,133
  1,243
  1,359
  1,479
  1,603
  1,733
  1,868
  2,009
  2,154
  2,306
  2,464
  2,628
  2,799
  2,976
  3,162
  3,355
  3,556
  3,767
  3,986
  4,215
  4,455
  4,705
  4,967
Interest expense (income), $m
  32
  51
  61
  72
  84
  96
  109
  123
  137
  152
  168
  184
  201
  219
  237
  256
  276
  297
  318
  340
  364
  388
  413
  439
  466
  495
  524
  555
  588
  621
  657
Earnings before tax, $m
  299
  353
  409
  469
  533
  599
  669
  742
  818
  898
  1,022
  1,108
  1,198
  1,291
  1,388
  1,488
  1,593
  1,701
  1,815
  1,932
  2,055
  2,183
  2,316
  2,456
  2,601
  2,752
  2,911
  3,076
  3,249
  3,430
Tax expense, $m
  81
  95
  110
  127
  144
  162
  181
  200
  221
  242
  276
  299
  323
  349
  375
  402
  430
  459
  490
  522
  555
  589
  625
  663
  702
  743
  786
  831
  877
  926
Net income, $m
  218
  257
  299
  343
  389
  437
  488
  542
  597
  655
  746
  809
  874
  942
  1,013
  1,086
  1,163
  1,242
  1,325
  1,411
  1,500
  1,594
  1,691
  1,793
  1,899
  2,009
  2,125
  2,246
  2,372
  2,504

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
  2,407
  2,735
  3,085
  3,455
  3,845
  4,255
  4,685
  5,135
  5,604
  6,092
  6,601
  7,129
  7,679
  8,251
  8,844
  9,461
  10,103
  10,770
  11,463
  12,185
  12,937
  13,719
  14,535
  15,385
  16,273
  17,198
  18,165
  19,175
  20,230
  21,333
Adjusted assets (=assets-cash), $m
  2,407
  2,735
  3,085
  3,455
  3,845
  4,255
  4,685
  5,135
  5,604
  6,092
  6,601
  7,129
  7,679
  8,251
  8,844
  9,461
  10,103
  10,770
  11,463
  12,185
  12,937
  13,719
  14,535
  15,385
  16,273
  17,198
  18,165
  19,175
  20,230
  21,333
Revenue / Adjusted assets
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
  0.738
Average production assets, $m
  844
  959
  1,081
  1,211
  1,348
  1,492
  1,642
  1,800
  1,964
  2,136
  2,314
  2,499
  2,692
  2,892
  3,100
  3,317
  3,542
  3,775
  4,018
  4,272
  4,535
  4,809
  5,095
  5,393
  5,704
  6,029
  6,368
  6,722
  7,091
  7,478
Working capital, $m
  323
  367
  414
  464
  516
  572
  629
  690
  753
  818
  887
  958
  1,031
  1,108
  1,188
  1,271
  1,357
  1,447
  1,540
  1,637
  1,738
  1,843
  1,952
  2,067
  2,186
  2,310
  2,440
  2,575
  2,717
  2,865
Total debt, $m
  1,127
  1,330
  1,547
  1,776
  2,017
  2,271
  2,537
  2,816
  3,106
  3,408
  3,723
  4,050
  4,391
  4,744
  5,112
  5,494
  5,891
  6,304
  6,733
  7,180
  7,645
  8,130
  8,634
  9,161
  9,710
  10,283
  10,881
  11,506
  12,159
  12,842
Total liabilities, $m
  1,490
  1,693
  1,909
  2,139
  2,380
  2,634
  2,900
  3,178
  3,469
  3,771
  4,086
  4,413
  4,753
  5,107
  5,475
  5,857
  6,254
  6,666
  7,096
  7,543
  8,008
  8,492
  8,997
  9,524
  10,073
  10,646
  11,244
  11,869
  12,522
  13,205
Total equity, $m
  917
  1,042
  1,175
  1,316
  1,465
  1,621
  1,785
  1,956
  2,135
  2,321
  2,515
  2,716
  2,926
  3,143
  3,370
  3,605
  3,849
  4,103
  4,368
  4,643
  4,929
  5,227
  5,538
  5,862
  6,200
  6,553
  6,921
  7,305
  7,707
  8,128
Total liabilities and equity, $m
  2,407
  2,735
  3,084
  3,455
  3,845
  4,255
  4,685
  5,134
  5,604
  6,092
  6,601
  7,129
  7,679
  8,250
  8,845
  9,462
  10,103
  10,769
  11,464
  12,186
  12,937
  13,719
  14,535
  15,386
  16,273
  17,199
  18,165
  19,174
  20,229
  21,333
Debt-to-equity ratio
  1.230
  1.280
  1.320
  1.350
  1.380
  1.400
  1.420
  1.440
  1.450
  1.470
  1.480
  1.490
  1.500
  1.510
  1.520
  1.520
  1.530
  1.540
  1.540
  1.550
  1.550
  1.560
  1.560
  1.560
  1.570
  1.570
  1.570
  1.580
  1.580
  1.580
Adjusted equity ratio
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  218
  257
  299
  343
  389
  437
  488
  542
  597
  655
  746
  809
  874
  942
  1,013
  1,086
  1,163
  1,242
  1,325
  1,411
  1,500
  1,594
  1,691
  1,793
  1,899
  2,009
  2,125
  2,246
  2,372
  2,504
Depreciation, amort., depletion, $m
  141
  155
  169
  184
  201
  217
  235
  254
  273
  293
  272
  294
  317
  340
  365
  390
  417
  444
  473
  503
  534
  566
  599
  635
  671
  709
  749
  791
  834
  880
Funds from operations, $m
  360
  412
  468
  527
  589
  655
  724
  795
  870
  949
  1,019
  1,103
  1,191
  1,283
  1,378
  1,477
  1,579
  1,686
  1,797
  1,913
  2,034
  2,159
  2,290
  2,427
  2,570
  2,719
  2,874
  3,036
  3,206
  3,384
Change in working capital, $m
  41
  44
  47
  50
  52
  55
  58
  60
  63
  66
  68
  71
  74
  77
  80
  83
  86
  90
  93
  97
  101
  105
  110
  114
  119
  124
  130
  136
  142
  148
Cash from operations, $m
  318
  368
  421
  477
  537
  600
  666
  735
  807
  883
  950
  1,032
  1,117
  1,206
  1,298
  1,394
  1,493
  1,597
  1,704
  1,816
  1,933
  2,054
  2,181
  2,313
  2,451
  2,594
  2,744
  2,901
  3,065
  3,236
Maintenance CAPEX, $m
  -87
  -99
  -113
  -127
  -142
  -159
  -175
  -193
  -212
  -231
  -251
  -272
  -294
  -317
  -340
  -365
  -390
  -417
  -444
  -473
  -503
  -534
  -566
  -599
  -635
  -671
  -709
  -749
  -791
  -834
New CAPEX, $m
  -107
  -115
  -122
  -130
  -137
  -144
  -151
  -158
  -164
  -171
  -178
  -185
  -193
  -200
  -208
  -216
  -225
  -234
  -243
  -253
  -263
  -274
  -286
  -298
  -311
  -325
  -339
  -354
  -370
  -387
Cash from investing activities, $m
  -194
  -214
  -235
  -257
  -279
  -303
  -326
  -351
  -376
  -402
  -429
  -457
  -487
  -517
  -548
  -581
  -615
  -651
  -687
  -726
  -766
  -808
  -852
  -897
  -946
  -996
  -1,048
  -1,103
  -1,161
  -1,221
Free cash flow, $m
  125
  154
  186
  220
  258
  297
  340
  384
  431
  481
  521
  575
  631
  689
  750
  813
  878
  946
  1,017
  1,090
  1,167
  1,246
  1,329
  1,415
  1,505
  1,599
  1,696
  1,798
  1,904
  2,015
Issuance/(repayment) of debt, $m
  188
  203
  216
  229
  242
  254
  266
  278
  290
  302
  315
  327
  340
  354
  368
  382
  397
  413
  429
  447
  465
  485
  505
  526
  549
  573
  598
  625
  653
  683
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  
  188
  203
  216
  229
  242
  254
  266
  278
  290
  302
  315
  327
  340
  354
  368
  382
  397
  413
  429
  447
  465
  485
  505
  526
  549
  573
  598
  625
  653
  683
Total cash flow (excl. dividends), $m
  313
  357
  402
  450
  499
  551
  606
  663
  722
  783
  836
  902
  971
  1,043
  1,117
  1,195
  1,275
  1,359
  1,446
  1,537
  1,632
  1,731
  1,834
  1,942
  2,054
  2,172
  2,294
  2,423
  2,557
  2,698
Retained Cash Flow (-), $m
  -117
  -125
  -133
  -141
  -149
  -156
  -164
  -171
  -179
  -186
  -194
  -202
  -209
  -218
  -226
  -235
  -244
  -254
  -264
  -275
  -286
  -298
  -311
  -324
  -338
  -353
  -368
  -385
  -402
  -420
Prev. year cash balance distribution, $m
  212
  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
  408
  232
  269
  308
  351
  395
  442
  491
  543
  597
  642
  700
  761
  825
  891
  959
  1,031
  1,105
  1,182
  1,262
  1,346
  1,433
  1,523
  1,618
  1,716
  1,819
  1,926
  2,038
  2,155
  2,277
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
  391
  212
  234
  254
  272
  287
  299
  307
  312
  313
  305
  299
  289
  277
  262
  244
  224
  203
  182
  160
  139
  119
  100
  82
  67
  53
  41
  32
  24
  17
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

Entegris, Inc. is a global developer, manufacturer and supplier of microcontamination control products, specialty chemicals and materials handling solutions for manufacturing processes in the semiconductor and other high-technology industries. The Company operates in three business segments: Specialty Chemicals and Engineered Materials (SCEM), Advanced Materials Handling (AMH) and Microcontamination Control (MC). The SCEM segment provides process chemistries, gases, materials and delivery systems to support semiconductor and other manufacturing processes. The AMH segment develops solutions to monitor, protect, transport, and deliver critical liquid chemistries and substrates for a set of applications in the semiconductor industry and other high-technology industries. AMH offers wafer solutions, chemical containers and fluidics. MC offers solutions to purify critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.

FINANCIAL RATIOS  of  Entegris, Inc. (ENTG)

Valuation Ratios
P/E Ratio 53.4
Price to Sales 4.4
Price to Book 5.8
Price to Tangible Book
Price to Cash Flow 24.9
Price to Free Cash Flow 36.2
Growth Rates
Sales Growth Rate 8.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.7%
Cap. Spend. - 3 Yr. Gr. Rate 1.6%
Financial Strength
Quick Ratio 4
Current Ratio 0.2
LT Debt to Equity 53.9%
Total Debt to Equity 65.1%
Interest Coverage 5
Management Effectiveness
Return On Assets 7.3%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 6.6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 11.4%
Return On Equity - 3 Yr. Avg. 7.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 43.3%
Gross Margin - 3 Yr. Avg. 42%
EBITDA Margin 21.4%
EBITDA Margin - 3 Yr. Avg. 17.4%
Operating Margin 13.2%
Oper. Margin - 3 Yr. Avg. 8.8%
Pre-Tax Margin 10.2%
Pre-Tax Margin - 3 Yr. Avg. 5.8%
Net Profit Margin 8.3%
Net Profit Margin - 3 Yr. Avg. 5.5%
Effective Tax Rate 19.2%
Eff/ Tax Rate - 3 Yr. Avg. 63.9%
Payout Ratio 0%

ENTG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENTG stock intrinsic value calculation we used $1550 million for the last fiscal year's total revenue generated by Entegris, Inc.. The default revenue input number comes from 0001 income statement of Entegris, 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 ENTG stock valuation model: a) initial revenue growth rate of 14.6% 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 ENTG is calculated based on our internal credit rating of Entegris, 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 Entegris, 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 ENTG stock the variable cost ratio is equal to 75.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $86 million in the base year in the intrinsic value calculation for ENTG 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 Entegris, Inc..

Corporate tax rate of 27% is the nominal tax rate for Entegris, 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 ENTG 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 ENTG are equal to 47.5%.

Life of production assets of 8.5 years is the average useful life of capital assets used in Entegris, 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 ENTG is equal to 18.2%. 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 - $1012.025 million for Entegris, 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 134.975 million for Entegris, 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 Entegris, Inc. at the current share price and the inputted number of shares is $4.9 billion.

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