Intrinsic value of Integrated Device Technology, Inc. - IDTI

Previous Close

$47.79

  Intrinsic Value

$13.58

stock screener

  Rating & Target

str. sell

-72%

Previous close

$47.79

 
Intrinsic value

$13.58

 
Up/down potential

-72%

 
Rating

str. sell

We calculate the intrinsic value of IDTI 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 6.2

 

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, %
  10.80
  10.22
  9.70
  9.23
  8.81
  8.42
  8.08
  7.77
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.07
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
Revenue, $m
  934
  1,030
  1,129
  1,234
  1,342
  1,455
  1,573
  1,695
  1,822
  1,954
  2,092
  2,234
  2,382
  2,537
  2,697
  2,864
  3,038
  3,220
  3,409
  3,606
  3,811
  4,026
  4,251
  4,485
  4,730
  4,986
  5,254
  5,535
  5,828
  6,135
Variable operating expenses, $m
  791
  871
  955
  1,042
  1,133
  1,228
  1,326
  1,429
  1,535
  1,646
  1,752
  1,872
  1,996
  2,125
  2,259
  2,399
  2,545
  2,697
  2,855
  3,020
  3,193
  3,373
  3,561
  3,757
  3,962
  4,177
  4,401
  4,636
  4,882
  5,139
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
  791
  871
  955
  1,042
  1,133
  1,228
  1,326
  1,429
  1,535
  1,646
  1,752
  1,872
  1,996
  2,125
  2,259
  2,399
  2,545
  2,697
  2,855
  3,020
  3,193
  3,373
  3,561
  3,757
  3,962
  4,177
  4,401
  4,636
  4,882
  5,139
Operating income, $m
  143
  158
  175
  192
  209
  228
  247
  266
  287
  309
  339
  363
  387
  412
  438
  465
  493
  523
  553
  585
  619
  654
  690
  728
  768
  809
  853
  898
  946
  996
EBITDA, $m
  199
  219
  241
  263
  286
  310
  335
  361
  388
  416
  446
  476
  508
  541
  575
  610
  647
  686
  726
  768
  812
  858
  906
  956
  1,008
  1,062
  1,120
  1,179
  1,242
  1,307
Interest expense (income), $m
  3
  34
  40
  45
  50
  56
  62
  68
  75
  81
  88
  96
  103
  111
  119
  128
  137
  146
  155
  165
  176
  187
  198
  210
  222
  235
  249
  263
  277
  293
  309
Earnings before tax, $m
  108
  119
  130
  141
  153
  166
  178
  192
  206
  220
  244
  259
  276
  292
  310
  328
  347
  367
  388
  409
  432
  456
  480
  506
  533
  561
  590
  621
  653
  687
Tax expense, $m
  29
  32
  35
  38
  41
  45
  48
  52
  56
  59
  66
  70
  74
  79
  84
  89
  94
  99
  105
  111
  117
  123
  130
  137
  144
  151
  159
  168
  176
  185
Net income, $m
  79
  87
  95
  103
  112
  121
  130
  140
  150
  161
  178
  189
  201
  214
  226
  240
  254
  268
  283
  299
  315
  333
  350
  369
  389
  409
  431
  453
  477
  501

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
  1,178
  1,298
  1,424
  1,556
  1,693
  1,835
  1,983
  2,138
  2,298
  2,464
  2,637
  2,817
  3,004
  3,199
  3,401
  3,612
  3,831
  4,060
  4,298
  4,547
  4,806
  5,077
  5,360
  5,656
  5,965
  6,288
  6,626
  6,979
  7,349
  7,737
Adjusted assets (=assets-cash), $m
  1,178
  1,298
  1,424
  1,556
  1,693
  1,835
  1,983
  2,138
  2,298
  2,464
  2,637
  2,817
  3,004
  3,199
  3,401
  3,612
  3,831
  4,060
  4,298
  4,547
  4,806
  5,077
  5,360
  5,656
  5,965
  6,288
  6,626
  6,979
  7,349
  7,737
Revenue / Adjusted assets
  0.793
  0.794
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
  0.793
Average production assets, $m
  375
  413
  453
  495
  538
  584
  631
  680
  731
  784
  839
  896
  955
  1,017
  1,082
  1,149
  1,218
  1,291
  1,367
  1,446
  1,528
  1,615
  1,704
  1,798
  1,897
  1,999
  2,107
  2,219
  2,337
  2,460
Working capital, $m
  87
  96
  105
  115
  125
  135
  146
  158
  169
  182
  195
  208
  222
  236
  251
  266
  283
  299
  317
  335
  354
  374
  395
  417
  440
  464
  489
  515
  542
  571
Total debt, $m
  564
  640
  718
  800
  886
  975
  1,067
  1,163
  1,263
  1,367
  1,475
  1,588
  1,704
  1,826
  1,952
  2,083
  2,220
  2,363
  2,512
  2,667
  2,829
  2,998
  3,174
  3,359
  3,551
  3,753
  3,964
  4,184
  4,415
  4,657
Total liabilities, $m
  735
  810
  889
  971
  1,056
  1,145
  1,238
  1,334
  1,434
  1,538
  1,646
  1,758
  1,875
  1,996
  2,122
  2,254
  2,391
  2,533
  2,682
  2,837
  2,999
  3,168
  3,345
  3,529
  3,722
  3,923
  4,134
  4,355
  4,586
  4,828
Total equity, $m
  443
  488
  535
  585
  636
  690
  746
  804
  864
  927
  992
  1,059
  1,130
  1,203
  1,279
  1,358
  1,441
  1,527
  1,616
  1,710
  1,807
  1,909
  2,015
  2,127
  2,243
  2,364
  2,491
  2,624
  2,763
  2,909
Total liabilities and equity, $m
  1,178
  1,298
  1,424
  1,556
  1,692
  1,835
  1,984
  2,138
  2,298
  2,465
  2,638
  2,817
  3,005
  3,199
  3,401
  3,612
  3,832
  4,060
  4,298
  4,547
  4,806
  5,077
  5,360
  5,656
  5,965
  6,287
  6,625
  6,979
  7,349
  7,737
Debt-to-equity ratio
  1.270
  1.310
  1.340
  1.370
  1.390
  1.410
  1.430
  1.450
  1.460
  1.480
  1.490
  1.500
  1.510
  1.520
  1.530
  1.530
  1.540
  1.550
  1.550
  1.560
  1.570
  1.570
  1.570
  1.580
  1.580
  1.590
  1.590
  1.590
  1.600
  1.600
Adjusted equity ratio
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  79
  87
  95
  103
  112
  121
  130
  140
  150
  161
  178
  189
  201
  214
  226
  240
  254
  268
  283
  299
  315
  333
  350
  369
  389
  409
  431
  453
  477
  501
Depreciation, amort., depletion, $m
  56
  61
  66
  71
  77
  83
  89
  95
  101
  108
  106
  113
  121
  129
  137
  145
  154
  163
  173
  183
  193
  204
  216
  228
  240
  253
  267
  281
  296
  311
Funds from operations, $m
  135
  148
  161
  174
  189
  203
  219
  235
  251
  269
  284
  303
  322
  342
  363
  385
  408
  431
  456
  482
  509
  537
  566
  597
  629
  662
  697
  734
  773
  813
Change in working capital, $m
  8
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
Cash from operations, $m
  127
  139
  152
  165
  179
  193
  208
  223
  240
  256
  271
  289
  308
  328
  348
  370
  392
  415
  439
  464
  490
  517
  545
  575
  606
  639
  673
  708
  745
  784
Maintenance CAPEX, $m
  -43
  -47
  -52
  -57
  -63
  -68
  -74
  -80
  -86
  -92
  -99
  -106
  -113
  -121
  -129
  -137
  -145
  -154
  -163
  -173
  -183
  -193
  -204
  -216
  -228
  -240
  -253
  -267
  -281
  -296
New CAPEX, $m
  -36
  -38
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -118
  -123
Cash from investing activities, $m
  -79
  -85
  -92
  -99
  -107
  -113
  -121
  -129
  -137
  -145
  -154
  -163
  -172
  -183
  -193
  -204
  -215
  -227
  -239
  -252
  -265
  -279
  -294
  -310
  -326
  -343
  -360
  -379
  -399
  -419
Free cash flow, $m
  48
  53
  59
  66
  72
  79
  87
  94
  102
  111
  117
  126
  135
  145
  155
  166
  176
  188
  199
  212
  224
  237
  251
  265
  280
  296
  312
  329
  347
  365
Issuance/(repayment) of debt, $m
  72
  75
  79
  82
  85
  89
  93
  96
  100
  104
  108
  112
  117
  121
  126
  131
  137
  143
  149
  155
  162
  169
  177
  184
  193
  202
  211
  221
  231
  242
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  
  72
  75
  79
  82
  85
  89
  93
  96
  100
  104
  108
  112
  117
  121
  126
  131
  137
  143
  149
  155
  162
  169
  177
  184
  193
  202
  211
  221
  231
  242
Total cash flow (excl. dividends), $m
  120
  128
  138
  148
  158
  168
  179
  191
  202
  215
  225
  238
  252
  267
  281
  297
  313
  330
  348
  367
  386
  406
  428
  450
  473
  497
  523
  550
  578
  607
Retained Cash Flow (-), $m
  -43
  -45
  -47
  -49
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -83
  -86
  -90
  -93
  -98
  -102
  -106
  -111
  -116
  -121
  -127
  -133
  -139
  -146
Prev. year cash balance distribution, $m
  245
  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
  322
  83
  90
  98
  106
  115
  124
  133
  142
  152
  160
  171
  182
  193
  205
  218
  231
  244
  258
  273
  289
  305
  321
  339
  357
  376
  396
  417
  438
  461
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
  309
  76
  79
  81
  82
  83
  83
  83
  82
  80
  76
  73
  69
  65
  60
  55
  50
  45
  40
  35
  30
  25
  21
  17
  14
  11
  8
  6
  5
  3
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

Integrated Device Technology, Inc. develops system-level solutions that optimize its customers' applications. The Company operates through two segments: the Communications, and the Computing, Consumer and Industrial. It offers products in radio frequency (RF), timing, wireless power transfer, serial switching, interfaces and sensing solutions. It offers a range of mixed-signal solutions for the communications, computing, consumer, automotive and industrial segments. These products are used for development in areas, such as fourth generation (4G) infrastructure, network communications, cloud datacenters and power management for computing and mobile devices. It offers solutions in designing communications, computing, consumer, automotive and industrial applications. It markets its products to original equipment manufacturers (OEMs) through a range of channels, including direct sales, distributors and electronic manufacturing suppliers (EMSs).

FINANCIAL RATIOS  of  Integrated Device Technology, Inc. (IDTI)

Valuation Ratios
P/E Ratio 57.9
Price to Sales 8.7
Price to Book 8.2
Price to Tangible Book
Price to Cash Flow 37.7
Price to Free Cash Flow 46.5
Growth Rates
Sales Growth Rate 4.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 18.5%
Cap. Spend. - 3 Yr. Gr. Rate 13.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 37%
Total Debt to Equity 37%
Interest Coverage 34
Management Effectiveness
Return On Assets 9.9%
Ret/ On Assets - 3 Yr. Avg. 13.4%
Return On Total Capital 11%
Ret/ On T. Cap. - 3 Yr. Avg. 15.3%
Return On Equity 15.2%
Return On Equity - 3 Yr. Avg. 18%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 57.8%
Gross Margin - 3 Yr. Avg. 59.5%
EBITDA Margin 20.2%
EBITDA Margin - 3 Yr. Avg. 23%
Operating Margin 15.1%
Oper. Margin - 3 Yr. Avg. 18%
Pre-Tax Margin 13.6%
Pre-Tax Margin - 3 Yr. Avg. 17.7%
Net Profit Margin 15.1%
Net Profit Margin - 3 Yr. Avg. 19.8%
Effective Tax Rate -10.1%
Eff/ Tax Rate - 3 Yr. Avg. -18.3%
Payout Ratio 0%

IDTI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IDTI stock intrinsic value calculation we used $843 million for the last fiscal year's total revenue generated by Integrated Device Technology, Inc.. The default revenue input number comes from 0001 income statement of Integrated Device Technology, 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 IDTI stock valuation model: a) initial revenue growth rate of 10.8% 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 IDTI is calculated based on our internal credit rating of Integrated Device Technology, 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 Integrated Device Technology, 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 IDTI stock the variable cost ratio is equal to 84.8%.

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 IDTI 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 7% for Integrated Device Technology, Inc..

Corporate tax rate of 27% is the nominal tax rate for Integrated Device Technology, 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 IDTI 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 IDTI are equal to 40.1%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Integrated Device Technology, 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 IDTI is equal to 9.3%. 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 - $645.372 million for Integrated Device Technology, 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 129.193 million for Integrated Device Technology, 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 Integrated Device Technology, Inc. at the current share price and the inputted number of shares is $6.2 billion.

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