Intrinsic value of Himax Technologies ADR - HIMX

Previous Close

$4.03

  Intrinsic Value

$0.62

stock screener

  Rating & Target

str. sell

-85%

Previous close

$4.03

 
Intrinsic value

$0.62

 
Up/down potential

-85%

 
Rating

str. sell

We calculate the intrinsic value of HIMX 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 0.7

 

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, %
  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
  699
  715
  733
  754
  777
  802
  829
  859
  891
  925
  961
  1,000
  1,042
  1,086
  1,133
  1,183
  1,235
  1,291
  1,349
  1,411
  1,477
  1,546
  1,619
  1,695
  1,776
  1,861
  1,950
  2,044
  2,143
  2,248
Variable operating expenses, $m
  395
  404
  414
  426
  438
  453
  468
  484
  502
  521
  539
  561
  584
  609
  635
  663
  692
  724
  756
  791
  828
  867
  907
  950
  996
  1,043
  1,093
  1,146
  1,202
  1,260
Fixed operating expenses, $m
  303
  309
  316
  323
  330
  337
  345
  352
  360
  368
  376
  384
  393
  401
  410
  419
  429
  438
  448
  457
  467
  478
  488
  499
  510
  521
  533
  544
  556
  569
Total operating expenses, $m
  698
  713
  730
  749
  768
  790
  813
  836
  862
  889
  915
  945
  977
  1,010
  1,045
  1,082
  1,121
  1,162
  1,204
  1,248
  1,295
  1,345
  1,395
  1,449
  1,506
  1,564
  1,626
  1,690
  1,758
  1,829
Operating income, $m
  2
  2
  3
  5
  8
  12
  17
  22
  28
  35
  46
  55
  65
  76
  88
  100
  114
  129
  145
  163
  181
  202
  223
  246
  270
  296
  324
  354
  385
  419
EBITDA, $m
  19
  20
  21
  24
  27
  32
  37
  43
  50
  57
  66
  76
  86
  98
  111
  125
  140
  156
  173
  192
  212
  233
  256
  281
  307
  335
  364
  396
  429
  465
Interest expense (income), $m
  1
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
Earnings before tax, $m
  -6
  -6
  -5
  -3
  -1
  2
  6
  11
  17
  24
  34
  42
  51
  61
  72
  84
  97
  111
  126
  142
  160
  179
  199
  220
  243
  268
  294
  322
  352
  384
Tax expense, $m
  0
  0
  0
  0
  0
  1
  2
  3
  5
  6
  9
  11
  14
  17
  19
  23
  26
  30
  34
  38
  43
  48
  54
  59
  66
  72
  79
  87
  95
  104
Net income, $m
  -6
  -6
  -5
  -3
  -1
  2
  5
  8
  12
  17
  25
  31
  37
  45
  53
  61
  71
  81
  92
  104
  117
  130
  145
  161
  178
  196
  215
  235
  257
  280

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
  710
  727
  745
  766
  789
  815
  843
  873
  905
  940
  977
  1,017
  1,059
  1,104
  1,151
  1,202
  1,255
  1,312
  1,371
  1,434
  1,501
  1,571
  1,645
  1,723
  1,805
  1,891
  1,982
  2,078
  2,178
  2,284
Adjusted assets (=assets-cash), $m
  710
  727
  745
  766
  789
  815
  843
  873
  905
  940
  977
  1,017
  1,059
  1,104
  1,151
  1,202
  1,255
  1,312
  1,371
  1,434
  1,501
  1,571
  1,645
  1,723
  1,805
  1,891
  1,982
  2,078
  2,178
  2,284
Revenue / Adjusted assets
  0.985
  0.983
  0.984
  0.984
  0.985
  0.984
  0.983
  0.984
  0.985
  0.984
  0.984
  0.983
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
Average production assets, $m
  85
  87
  89
  91
  94
  97
  100
  104
  108
  112
  116
  121
  126
  131
  137
  143
  149
  156
  163
  171
  179
  187
  196
  205
  215
  225
  236
  247
  259
  272
Working capital, $m
  179
  183
  188
  193
  199
  205
  212
  220
  228
  237
  246
  256
  267
  278
  290
  303
  316
  330
  345
  361
  378
  396
  414
  434
  455
  476
  499
  523
  549
  575
Total debt, $m
  152
  157
  164
  171
  179
  188
  197
  208
  219
  231
  243
  257
  272
  287
  303
  321
  339
  359
  379
  401
  424
  448
  473
  500
  528
  558
  589
  622
  657
  693
Total liabilities, $m
  244
  250
  256
  264
  272
  280
  290
  300
  311
  323
  336
  350
  364
  380
  396
  413
  432
  451
  472
  493
  516
  540
  566
  593
  621
  651
  682
  715
  749
  786
Total equity, $m
  466
  477
  489
  503
  518
  535
  553
  573
  594
  617
  641
  667
  695
  724
  755
  788
  823
  860
  900
  941
  985
  1,031
  1,079
  1,130
  1,184
  1,241
  1,300
  1,363
  1,429
  1,498
Total liabilities and equity, $m
  710
  727
  745
  767
  790
  815
  843
  873
  905
  940
  977
  1,017
  1,059
  1,104
  1,151
  1,201
  1,255
  1,311
  1,372
  1,434
  1,501
  1,571
  1,645
  1,723
  1,805
  1,892
  1,982
  2,078
  2,178
  2,284
Debt-to-equity ratio
  0.330
  0.330
  0.330
  0.340
  0.350
  0.350
  0.360
  0.360
  0.370
  0.370
  0.380
  0.390
  0.390
  0.400
  0.400
  0.410
  0.410
  0.420
  0.420
  0.430
  0.430
  0.430
  0.440
  0.440
  0.450
  0.450
  0.450
  0.460
  0.460
  0.460
Adjusted equity ratio
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  -6
  -5
  -3
  -1
  2
  5
  8
  12
  17
  25
  31
  37
  45
  53
  61
  71
  81
  92
  104
  117
  130
  145
  161
  178
  196
  215
  235
  257
  280
Depreciation, amort., depletion, $m
  17
  18
  18
  18
  19
  19
  20
  21
  21
  22
  20
  21
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
Funds from operations, $m
  11
  11
  13
  15
  18
  21
  25
  29
  34
  39
  44
  51
  59
  67
  76
  86
  96
  107
  120
  133
  147
  162
  178
  196
  214
  234
  255
  277
  301
  326
Change in working capital, $m
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
Cash from operations, $m
  7
  7
  8
  10
  12
  15
  18
  21
  26
  30
  35
  41
  48
  56
  64
  73
  83
  93
  105
  117
  130
  144
  160
  176
  193
  212
  232
  253
  275
  299
Maintenance CAPEX, $m
  -14
  -14
  -15
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
New CAPEX, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
Cash from investing activities, $m
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -21
  -22
  -22
  -23
  -25
  -26
  -26
  -28
  -29
  -30
  -32
  -33
  -36
  -37
  -38
  -41
  -42
  -45
  -46
  -49
  -51
  -54
  -57
Free cash flow, $m
  -8
  -9
  -9
  -8
  -6
  -4
  -2
  1
  4
  8
  12
  17
  23
  29
  36
  44
  52
  61
  71
  82
  93
  106
  119
  134
  149
  165
  183
  202
  222
  243
Issuance/(repayment) of debt, $m
  5
  6
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
Issuance/(repurchase) of shares, $m
  16
  17
  18
  17
  16
  15
  13
  11
  9
  6
  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  
  21
  23
  24
  24
  24
  24
  23
  21
  20
  18
  13
  14
  15
  15
  16
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
Total cash flow (excl. dividends), $m
  12
  14
  15
  17
  18
  20
  21
  23
  24
  26
  25
  30
  37
  44
  52
  61
  70
  81
  92
  103
  116
  130
  145
  160
  177
  195
  214
  235
  256
  279
Retained Cash Flow (-), $m
  -16
  -17
  -18
  -17
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -69
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
  -4
  -3
  -2
  -1
  2
  3
  3
  3
  3
  3
  0
  4
  9
  15
  21
  28
  35
  44
  52
  62
  73
  84
  96
  109
  123
  138
  155
  172
  190
  210
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
  -4
  -3
  -2
  0
  2
  2
  2
  2
  2
  1
  0
  2
  4
  5
  6
  7
  8
  8
  8
  8
  8
  7
  6
  6
  5
  4
  3
  3
  2
  2
Current shareholders' claim on cash, %
  97.8
  95.5
  93.3
  91.1
  89.2
  87.6
  86.2
  85.0
  84.1
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6
  83.6

Himax Technologies, Inc. is a fabless semiconductor solution provider. The Company is engaged in display driver integrated circuits (IC) and timing controllers used in televisions, laptops, monitors, mobile phones, tablets, digital cameras, car navigation and other consumer electronics devices. The Company operates through two segments: Driver IC and Non-driver products. In addition, the Company designs and provides controllers for touch sensor displays, liquid crystal on silicon micro-displays used in palm-size projectors and head-mounted displays, light-emitting diode driver ICs, power management ICs, scaler products for monitors and projectors, video processing IC solutions and silicon IPs. It also offers digital camera solutions, including complementary metal-oxide-semiconductor image sensors and wafer level optics, which are used in a range of applications, such as mobile phone, tablet, laptop, televisions, personal computer camera, automobile, security and medical devices.

FINANCIAL RATIOS  of  Himax Technologies ADR (HIMX)

Valuation Ratios
P/E Ratio 27.2
Price to Sales 1.7
Price to Book 3
Price to Tangible Book
Price to Cash Flow 16.3
Price to Free Cash Flow 18
Growth Rates
Sales Growth Rate 16%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -20%
Cap. Spend. - 3 Yr. Gr. Rate -15%
Financial Strength
Quick Ratio 1
Current Ratio 0.4
LT Debt to Equity 0%
Total Debt to Equity 29.5%
Interest Coverage 60
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. 6%
Return On Total Capital 8.3%
Ret/ On T. Cap. - 3 Yr. Avg. 8%
Return On Equity 11.2%
Return On Equity - 3 Yr. Avg. 10.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 24.2%
Gross Margin - 3 Yr. Avg. 24.1%
EBITDA Margin 9.2%
EBITDA Margin - 3 Yr. Avg. 9.4%
Operating Margin 7.3%
Oper. Margin - 3 Yr. Avg. 6.8%
Pre-Tax Margin 7.3%
Pre-Tax Margin - 3 Yr. Avg. 7.4%
Net Profit Margin 6.4%
Net Profit Margin - 3 Yr. Avg. 6%
Effective Tax Rate 16.9%
Eff/ Tax Rate - 3 Yr. Avg. 26%
Payout Ratio 43.1%

HIMX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HIMX stock intrinsic value calculation we used $685.167 million for the last fiscal year's total revenue generated by Himax Technologies ADR. The default revenue input number comes from 0001 income statement of Himax Technologies ADR. 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 HIMX 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 HIMX is calculated based on our internal credit rating of Himax Technologies ADR, 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 Himax Technologies ADR.
    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 HIMX stock the variable cost ratio is equal to 56.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $296 million in the base year in the intrinsic value calculation for HIMX 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 Himax Technologies ADR.

Corporate tax rate of 27% is the nominal tax rate for Himax Technologies ADR. 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 HIMX 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 HIMX are equal to 12.1%.

Life of production assets of 5.9 years is the average useful life of capital assets used in Himax Technologies ADR 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 HIMX is equal to 25.6%. 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 - $456.648 million for Himax Technologies ADR - 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 172.104 million for Himax Technologies ADR 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 Himax Technologies ADR at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ Himax: 3Q Earnings Snapshot   [Nov-08-18 06:50AM  Associated Press]
▶ CORRECTION: Himax Technologies Article 9/6/2018   [Sep-10-18 01:40PM  Motley Fool]
▶ Why Himax Technologies Is Struggling   [Sep-06-18 04:27PM  Motley Fool]
▶ Himax: 2Q Earnings Snapshot   [Aug-09-18 06:34AM  Associated Press]
▶ Himax Technologies, Inc. Declares Cash Dividend for FY2017   [Jun-19-18 05:30AM  GlobeNewswire]
▶ Himax: 1Q Earnings Snapshot   [06:35AM  Associated Press]
▶ Lumentum Holdings Is Just Getting Started   [May-05-18 02:04PM  Motley Fool]
▶ 4 Ways to Invest in the Computer Vision Market   [Apr-16-18 10:31AM  Motley Fool]
▶ Why Himax Technologies, Inc. Stock Lost 24.6% in March   [Apr-13-18 11:31AM  Motley Fool]
▶ Better Buy: Ambarella vs. Himax Technologies   [Mar-17-18 10:17AM  Motley Fool]
▶ Better Buy: Himax Technologies, Inc. vs. NVIDIA   [Mar-07-18 10:45AM  Motley Fool]
▶ Will VR Stocks Disrupt the Travel Industry?   [Mar-01-18 09:30AM  Insider Monkey]
▶ Himax Technologies Is Down, but Not Out   [Feb-25-18 03:12PM  Motley Fool]
▶ Don't Lose Faith in Himax Technologies   [Feb-19-18 04:13PM  GuruFocus.com]
▶ Himax misses Street 4Q forecasts   [05:29AM  Associated Press]
▶ Why Himax Technologies, Inc. Stock Lost 18.1% in January   [Feb-12-18 04:25PM  Motley Fool]
▶ 3 Top Stocks for Next-Gen Technologies   [01:04PM  Motley Fool]
▶ Where Will Himax Technologies, Inc. Be in 5 Years?   [Jan-31-18 05:23PM  Motley Fool]
▶ 3 Unknown but Amazing Dividend Stocks   [Jan-29-18 03:55PM  Motley Fool]

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