Intrinsic value of Integrated Device Technology - IDTI

Previous Close

$46.71

  Intrinsic Value

$27.05

stock screener

  Rating & Target

sell

-42%

Previous close

$46.71

 
Intrinsic value

$27.05

 
Up/down potential

-42%

 
Rating

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 6.0

 

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, %
  16.20
  15.08
  14.07
  13.16
  12.35
  11.61
  10.95
  10.36
  9.82
  9.34
  8.91
  8.51
  8.16
  7.85
  7.56
  7.31
  7.08
  6.87
  6.68
  6.51
  6.36
  6.23
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.59
  5.53
Revenue, $m
  979
  1,127
  1,286
  1,455
  1,634
  1,824
  2,024
  2,234
  2,453
  2,682
  2,921
  3,170
  3,428
  3,697
  3,977
  4,268
  4,570
  4,883
  5,210
  5,549
  5,902
  6,269
  6,652
  7,051
  7,466
  7,900
  8,352
  8,824
  9,317
  9,832
Variable operating expenses, $m
  821
  935
  1,059
  1,190
  1,330
  1,477
  1,632
  1,795
  1,965
  2,143
  2,269
  2,462
  2,663
  2,872
  3,089
  3,315
  3,549
  3,793
  4,046
  4,310
  4,584
  4,869
  5,167
  5,476
  5,799
  6,136
  6,487
  6,853
  7,236
  7,636
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
  821
  935
  1,059
  1,190
  1,330
  1,477
  1,632
  1,795
  1,965
  2,143
  2,269
  2,462
  2,663
  2,872
  3,089
  3,315
  3,549
  3,793
  4,046
  4,310
  4,584
  4,869
  5,167
  5,476
  5,799
  6,136
  6,487
  6,853
  7,236
  7,636
Operating income, $m
  159
  192
  227
  265
  305
  347
  392
  439
  488
  539
  652
  708
  766
  826
  888
  953
  1,020
  1,090
  1,163
  1,239
  1,318
  1,400
  1,485
  1,574
  1,667
  1,764
  1,865
  1,970
  2,080
  2,195
EBITDA, $m
  268
  309
  352
  399
  448
  500
  555
  612
  672
  735
  801
  869
  940
  1,013
  1,090
  1,170
  1,252
  1,338
  1,428
  1,521
  1,618
  1,718
  1,823
  1,932
  2,046
  2,165
  2,289
  2,418
  2,553
  2,694
Interest expense (income), $m
  3
  34
  42
  50
  59
  68
  78
  89
  100
  111
  123
  136
  149
  163
  177
  192
  207
  223
  240
  257
  275
  294
  313
  333
  354
  376
  399
  423
  448
  474
  501
Earnings before tax, $m
  124
  150
  177
  206
  237
  269
  303
  339
  377
  416
  516
  559
  603
  649
  696
  746
  797
  851
  906
  964
  1,024
  1,087
  1,152
  1,220
  1,291
  1,365
  1,442
  1,522
  1,606
  1,694
Tax expense, $m
  34
  40
  48
  56
  64
  73
  82
  92
  102
  112
  139
  151
  163
  175
  188
  201
  215
  230
  245
  260
  277
  293
  311
  329
  349
  368
  389
  411
  434
  457
Net income, $m
  91
  109
  129
  150
  173
  196
  221
  248
  275
  303
  377
  408
  440
  474
  508
  544
  582
  621
  662
  704
  748
  793
  841
  891
  942
  996
  1,052
  1,111
  1,173
  1,237

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
  1,235
  1,421
  1,621
  1,835
  2,061
  2,300
  2,552
  2,817
  3,093
  3,382
  3,683
  3,997
  4,323
  4,663
  5,015
  5,382
  5,762
  6,158
  6,570
  6,998
  7,443
  7,906
  8,389
  8,891
  9,415
  9,962
  10,532
  11,127
  11,749
  12,398
Adjusted assets (=assets-cash), $m
  1,235
  1,421
  1,621
  1,835
  2,061
  2,300
  2,552
  2,817
  3,093
  3,382
  3,683
  3,997
  4,323
  4,663
  5,015
  5,382
  5,762
  6,158
  6,570
  6,998
  7,443
  7,906
  8,389
  8,891
  9,415
  9,962
  10,532
  11,127
  11,749
  12,398
Revenue / Adjusted assets
  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
  0.793
  0.793
Average production assets, $m
  393
  452
  516
  583
  655
  732
  812
  896
  984
  1,076
  1,171
  1,271
  1,375
  1,483
  1,595
  1,711
  1,832
  1,958
  2,089
  2,225
  2,367
  2,514
  2,667
  2,827
  2,994
  3,168
  3,349
  3,538
  3,736
  3,942
Working capital, $m
  91
  105
  120
  135
  152
  170
  188
  208
  228
  249
  272
  295
  319
  344
  370
  397
  425
  454
  485
  516
  549
  583
  619
  656
  694
  735
  777
  821
  866
  914
Total debt, $m
  600
  716
  841
  974
  1,116
  1,265
  1,422
  1,587
  1,760
  1,940
  2,128
  2,324
  2,527
  2,739
  2,959
  3,188
  3,425
  3,672
  3,929
  4,196
  4,474
  4,763
  5,064
  5,378
  5,705
  6,046
  6,401
  6,773
  7,161
  7,566
Total liabilities, $m
  771
  887
  1,012
  1,145
  1,286
  1,435
  1,593
  1,758
  1,930
  2,111
  2,298
  2,494
  2,698
  2,910
  3,130
  3,358
  3,596
  3,843
  4,099
  4,366
  4,644
  4,933
  5,234
  5,548
  5,875
  6,216
  6,572
  6,943
  7,331
  7,736
Total equity, $m
  464
  534
  610
  690
  775
  865
  960
  1,059
  1,163
  1,272
  1,385
  1,503
  1,626
  1,753
  1,886
  2,024
  2,167
  2,315
  2,470
  2,631
  2,798
  2,973
  3,154
  3,343
  3,540
  3,746
  3,960
  4,184
  4,417
  4,662
Total liabilities and equity, $m
  1,235
  1,421
  1,622
  1,835
  2,061
  2,300
  2,553
  2,817
  3,093
  3,383
  3,683
  3,997
  4,324
  4,663
  5,016
  5,382
  5,763
  6,158
  6,569
  6,997
  7,442
  7,906
  8,388
  8,891
  9,415
  9,962
  10,532
  11,127
  11,748
  12,398
Debt-to-equity ratio
  1.290
  1.340
  1.380
  1.410
  1.440
  1.460
  1.480
  1.500
  1.510
  1.530
  1.540
  1.550
  1.550
  1.560
  1.570
  1.580
  1.580
  1.590
  1.590
  1.590
  1.600
  1.600
  1.610
  1.610
  1.610
  1.610
  1.620
  1.620
  1.620
  1.620
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
  91
  109
  129
  150
  173
  196
  221
  248
  275
  303
  377
  408
  440
  474
  508
  544
  582
  621
  662
  704
  748
  793
  841
  891
  942
  996
  1,052
  1,111
  1,173
  1,237
Depreciation, amort., depletion, $m
  110
  117
  125
  134
  143
  153
  163
  173
  185
  196
  148
  161
  174
  188
  202
  217
  232
  248
  264
  282
  300
  318
  338
  358
  379
  401
  424
  448
  473
  499
Funds from operations, $m
  200
  226
  254
  284
  316
  349
  384
  421
  460
  500
  525
  569
  614
  661
  710
  761
  814
  869
  926
  985
  1,047
  1,112
  1,179
  1,248
  1,321
  1,397
  1,476
  1,559
  1,646
  1,736
Change in working capital, $m
  13
  14
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
Cash from operations, $m
  188
  213
  240
  268
  299
  332
  366
  402
  439
  478
  503
  546
  590
  636
  684
  734
  786
  840
  896
  954
  1,014
  1,077
  1,143
  1,211
  1,283
  1,357
  1,434
  1,515
  1,600
  1,688
Maintenance CAPEX, $m
  -43
  -50
  -57
  -65
  -74
  -83
  -93
  -103
  -113
  -125
  -136
  -148
  -161
  -174
  -188
  -202
  -217
  -232
  -248
  -264
  -282
  -300
  -318
  -338
  -358
  -379
  -401
  -424
  -448
  -473
New CAPEX, $m
  -55
  -59
  -64
  -68
  -72
  -76
  -80
  -84
  -88
  -92
  -96
  -100
  -104
  -108
  -112
  -117
  -121
  -126
  -131
  -136
  -142
  -147
  -153
  -160
  -167
  -174
  -181
  -189
  -198
  -207
Cash from investing activities, $m
  -98
  -109
  -121
  -133
  -146
  -159
  -173
  -187
  -201
  -217
  -232
  -248
  -265
  -282
  -300
  -319
  -338
  -358
  -379
  -400
  -424
  -447
  -471
  -498
  -525
  -553
  -582
  -613
  -646
  -680
Free cash flow, $m
  90
  104
  119
  135
  153
  172
  193
  215
  238
  262
  271
  298
  325
  354
  384
  416
  448
  482
  517
  553
  591
  631
  671
  714
  758
  804
  852
  902
  954
  1,008
Issuance/(repayment) of debt, $m
  107
  116
  125
  133
  141
  149
  157
  165
  173
  180
  188
  196
  204
  212
  220
  229
  238
  247
  257
  267
  278
  289
  301
  314
  327
  341
  356
  371
  388
  405
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  
  107
  116
  125
  133
  141
  149
  157
  165
  173
  180
  188
  196
  204
  212
  220
  229
  238
  247
  257
  267
  278
  289
  301
  314
  327
  341
  356
  371
  388
  405
Total cash flow (excl. dividends), $m
  198
  220
  244
  269
  295
  322
  350
  380
  410
  442
  459
  493
  529
  566
  604
  644
  686
  729
  774
  820
  869
  920
  972
  1,028
  1,085
  1,145
  1,208
  1,273
  1,342
  1,414
Retained Cash Flow (-), $m
  -64
  -70
  -75
  -80
  -85
  -90
  -95
  -99
  -104
  -109
  -113
  -118
  -123
  -128
  -133
  -138
  -143
  -149
  -155
  -161
  -167
  -174
  -181
  -189
  -197
  -205
  -214
  -224
  -234
  -244
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
  379
  150
  168
  188
  209
  232
  255
  280
  306
  334
  346
  375
  406
  438
  472
  507
  543
  580
  619
  659
  702
  745
  791
  839
  888
  940
  993
  1,050
  1,108
  1,170
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
  363
  137
  147
  155
  162
  168
  173
  175
  176
  175
  164
  160
  155
  147
  139
  129
  118
  107
  95
  84
  73
  62
  52
  43
  35
  27
  21
  16
  12
  9
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 (IDTI)

Valuation Ratios
P/E Ratio 56.6
Price to Sales 8.5
Price to Book 8
Price to Tangible Book
Price to Cash Flow 36.8
Price to Free Cash Flow 45.4
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 $842.764 million for the last fiscal year's total revenue generated by Integrated Device Technology. The default revenue input number comes from 0001 income statement of Integrated Device Technology. 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 16.2% 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 IDTI is calculated based on our internal credit rating of Integrated Device Technology, 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.
    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.

Corporate tax rate of 27% is the nominal tax rate for Integrated Device Technology. 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 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 - 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 129.265 million for Integrated Device Technology 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 at the current share price and the inputted number of shares is $6.0 billion.

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COMPANY NEWS

▶ IDT Releases FPGA-based Cloud AVC Encoder   [Oct-25-18 06:33AM  PR Newswire]
▶ Company News For Sep 12, 2018   [09:55AM  Zacks]
▶ Stocks End Higher on Strength in Tech   [04:06PM  TheStreet.com]
▶ Closing Bell: LIVE MARKETS BLOG   [04:04PM  TheStreet.com]
▶ IDT Wins Prestigious Inspur Best Support Award 2018   [Aug-22-18 06:33AM  PR Newswire]
▶ IBD Stock Of The Day: Nvidia Nears Buy Zone On Next-Generation Chip Debut   [Aug-14-18 04:11PM  Investor's Business Daily]
▶ IDT To Present At Upcoming Investor Conferences   [Aug-10-18 06:33AM  PR Newswire]
▶ IDT and RFMW Ltd. Announce New Franchise   [Jun-04-18 03:33AM  PR Newswire]
▶ Chip Stocks Notch Solid Gains After Latest Earnings Reports   [May-01-18 07:40PM  Investor's Business Daily]

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