Intrinsic value of Adesto Technologies Corporation - IOTS

Previous Close

$9.87

  Intrinsic Value

$78.53

stock screener

  Rating & Target

str. buy

+696%

Previous close

$9.87

 
Intrinsic value

$78.53

 
Up/down potential

+696%

 
Rating

str. buy

We calculate the intrinsic value of IOTS 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 0.3

 

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, %
  43.90
  40.01
  36.51
  33.36
  30.52
  27.97
  25.67
  23.61
  21.75
  20.07
  18.56
  17.21
  15.99
  14.89
  13.90
  13.01
  12.21
  11.49
  10.84
  10.25
  9.73
  9.26
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.04
  6.83
Revenue, $m
  81
  113
  154
  205
  268
  343
  431
  533
  649
  779
  924
  1,083
  1,256
  1,443
  1,643
  1,857
  2,084
  2,323
  2,575
  2,839
  3,115
  3,403
  3,704
  4,017
  4,342
  4,680
  5,032
  5,397
  5,777
  6,172
Variable operating expenses, $m
  44
  62
  84
  112
  146
  186
  234
  289
  352
  423
  500
  586
  680
  781
  890
  1,005
  1,128
  1,258
  1,394
  1,537
  1,687
  1,843
  2,006
  2,175
  2,351
  2,534
  2,725
  2,923
  3,128
  3,342
Fixed operating expenses, $m
  32
  32
  33
  34
  35
  35
  36
  37
  38
  39
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  60
Total operating expenses, $m
  76
  94
  117
  146
  181
  221
  270
  326
  390
  462
  539
  626
  721
  823
  933
  1,049
  1,173
  1,304
  1,441
  1,585
  1,736
  1,893
  2,057
  2,227
  2,404
  2,589
  2,781
  2,980
  3,186
  3,402
Operating income, $m
  5
  19
  37
  60
  88
  121
  161
  207
  259
  318
  384
  456
  535
  619
  710
  807
  910
  1,019
  1,134
  1,254
  1,379
  1,510
  1,647
  1,789
  1,937
  2,091
  2,251
  2,418
  2,591
  2,770
EBITDA, $m
  8
  23
  43
  67
  97
  134
  176
  225
  282
  345
  415
  493
  577
  668
  766
  870
  981
  1,098
  1,221
  1,350
  1,485
  1,625
  1,772
  1,925
  2,084
  2,250
  2,422
  2,600
  2,786
  2,979
Interest expense (income), $m
  1
  1
  1
  2
  3
  4
  6
  8
  10
  12
  15
  18
  22
  26
  30
  35
  40
  45
  50
  56
  63
  69
  76
  83
  90
  98
  106
  114
  123
  132
  141
Earnings before tax, $m
  4
  17
  35
  57
  83
  115
  153
  197
  247
  303
  366
  434
  509
  589
  676
  768
  865
  969
  1,077
  1,191
  1,310
  1,435
  1,564
  1,699
  1,839
  1,985
  2,137
  2,295
  2,459
  2,629
Tax expense, $m
  1
  5
  9
  15
  22
  31
  41
  53
  67
  82
  99
  117
  137
  159
  182
  207
  234
  262
  291
  322
  354
  387
  422
  459
  497
  536
  577
  620
  664
  710
Net income, $m
  3
  13
  25
  41
  61
  84
  112
  144
  180
  221
  267
  317
  371
  430
  493
  560
  632
  707
  786
  869
  956
  1,047
  1,142
  1,240
  1,343
  1,449
  1,560
  1,675
  1,795
  1,919

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
  62
  86
  118
  157
  205
  262
  329
  407
  496
  595
  706
  827
  959
  1,102
  1,255
  1,419
  1,592
  1,775
  1,967
  2,169
  2,380
  2,600
  2,829
  3,068
  3,317
  3,576
  3,844
  4,123
  4,413
  4,715
Adjusted assets (=assets-cash), $m
  62
  86
  118
  157
  205
  262
  329
  407
  496
  595
  706
  827
  959
  1,102
  1,255
  1,419
  1,592
  1,775
  1,967
  2,169
  2,380
  2,600
  2,829
  3,068
  3,317
  3,576
  3,844
  4,123
  4,413
  4,715
Revenue / Adjusted assets
  1.306
  1.314
  1.305
  1.306
  1.307
  1.309
  1.310
  1.310
  1.308
  1.309
  1.309
  1.310
  1.310
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
  1.309
Average production assets, $m
  15
  21
  29
  38
  50
  64
  80
  99
  121
  145
  172
  201
  234
  268
  306
  345
  388
  432
  479
  528
  579
  633
  689
  747
  808
  871
  936
  1,004
  1,075
  1,148
Working capital, $m
  5
  7
  10
  13
  17
  21
  27
  33
  40
  48
  57
  67
  78
  89
  102
  115
  129
  144
  160
  176
  193
  211
  230
  249
  269
  290
  312
  335
  358
  383
Total debt, $m
  25
  39
  58
  81
  110
  144
  184
  230
  283
  342
  408
  480
  559
  644
  735
  832
  935
  1,044
  1,158
  1,278
  1,404
  1,535
  1,671
  1,814
  1,962
  2,115
  2,275
  2,441
  2,614
  2,793
Total liabilities, $m
  37
  51
  70
  93
  122
  156
  196
  242
  295
  354
  420
  492
  571
  656
  747
  844
  947
  1,056
  1,170
  1,290
  1,416
  1,547
  1,683
  1,826
  1,974
  2,127
  2,287
  2,453
  2,626
  2,805
Total equity, $m
  25
  35
  48
  64
  83
  106
  133
  165
  201
  241
  286
  335
  388
  446
  508
  574
  645
  719
  797
  878
  964
  1,053
  1,146
  1,243
  1,343
  1,448
  1,557
  1,670
  1,787
  1,910
Total liabilities and equity, $m
  62
  86
  118
  157
  205
  262
  329
  407
  496
  595
  706
  827
  959
  1,102
  1,255
  1,418
  1,592
  1,775
  1,967
  2,168
  2,380
  2,600
  2,829
  3,069
  3,317
  3,575
  3,844
  4,123
  4,413
  4,715
Debt-to-equity ratio
  0.980
  1.120
  1.220
  1.280
  1.320
  1.360
  1.380
  1.400
  1.410
  1.420
  1.430
  1.430
  1.440
  1.440
  1.450
  1.450
  1.450
  1.450
  1.450
  1.460
  1.460
  1.460
  1.460
  1.460
  1.460
  1.460
  1.460
  1.460
  1.460
  1.460
Adjusted equity ratio
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3
  13
  25
  41
  61
  84
  112
  144
  180
  221
  267
  317
  371
  430
  493
  560
  632
  707
  786
  869
  956
  1,047
  1,142
  1,240
  1,343
  1,449
  1,560
  1,675
  1,795
  1,919
Depreciation, amort., depletion, $m
  3
  5
  6
  8
  10
  12
  15
  19
  23
  27
  31
  37
  42
  49
  56
  63
  70
  79
  87
  96
  105
  115
  125
  136
  147
  158
  170
  183
  195
  209
Funds from operations, $m
  6
  17
  31
  49
  71
  97
  127
  162
  203
  248
  298
  353
  414
  479
  549
  623
  702
  786
  873
  965
  1,062
  1,162
  1,267
  1,376
  1,490
  1,608
  1,730
  1,858
  1,990
  2,128
Change in working capital, $m
  2
  2
  3
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  24
Cash from operations, $m
  5
  15
  29
  46
  67
  92
  122
  156
  196
  240
  289
  344
  403
  467
  536
  610
  688
  771
  858
  949
  1,045
  1,144
  1,248
  1,357
  1,469
  1,587
  1,709
  1,835
  1,967
  2,104
Maintenance CAPEX, $m
  -2
  -3
  -4
  -5
  -7
  -9
  -12
  -15
  -18
  -22
  -26
  -31
  -37
  -42
  -49
  -56
  -63
  -70
  -79
  -87
  -96
  -105
  -115
  -125
  -136
  -147
  -158
  -170
  -183
  -195
New CAPEX, $m
  -5
  -6
  -8
  -10
  -12
  -14
  -16
  -19
  -22
  -24
  -27
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -47
  -49
  -51
  -54
  -56
  -58
  -61
  -63
  -65
  -68
  -71
  -73
Cash from investing activities, $m
  -7
  -9
  -12
  -15
  -19
  -23
  -28
  -34
  -40
  -46
  -53
  -61
  -69
  -77
  -86
  -96
  -105
  -115
  -126
  -136
  -147
  -159
  -171
  -183
  -197
  -210
  -223
  -238
  -254
  -268
Free cash flow, $m
  -2
  6
  17
  31
  48
  69
  94
  123
  156
  194
  236
  283
  334
  390
  450
  515
  583
  656
  732
  813
  897
  985
  1,077
  1,173
  1,273
  1,377
  1,485
  1,597
  1,714
  1,835
Issuance/(repayment) of debt, $m
  11
  15
  19
  23
  28
  34
  40
  46
  53
  59
  66
  72
  79
  85
  91
  97
  103
  109
  114
  120
  126
  131
  137
  142
  148
  154
  160
  166
  173
  179
Issuance/(repurchase) of shares, $m
  5
  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  
  16
  15
  19
  23
  28
  34
  40
  46
  53
  59
  66
  72
  79
  85
  91
  97
  103
  109
  114
  120
  126
  131
  137
  142
  148
  154
  160
  166
  173
  179
Total cash flow (excl. dividends), $m
  14
  21
  36
  54
  77
  103
  134
  169
  209
  253
  302
  355
  413
  475
  541
  612
  686
  765
  847
  933
  1,023
  1,116
  1,214
  1,316
  1,421
  1,531
  1,645
  1,763
  1,886
  2,014
Retained Cash Flow (-), $m
  -8
  -10
  -13
  -16
  -19
  -23
  -27
  -31
  -36
  -40
  -45
  -49
  -54
  -58
  -62
  -66
  -70
  -74
  -78
  -82
  -85
  -89
  -93
  -97
  -101
  -105
  -109
  -113
  -117
  -122
Prev. year cash balance distribution, $m
  16
  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
  22
  11
  23
  38
  57
  80
  106
  137
  173
  213
  257
  306
  359
  417
  479
  546
  616
  691
  769
  851
  937
  1,027
  1,121
  1,219
  1,320
  1,426
  1,536
  1,650
  1,769
  1,892
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
  21
  10
  20
  32
  44
  58
  72
  86
  99
  111
  122
  131
  137
  140
  141
  139
  134
  127
  118
  108
  97
  85
  73
  62
  51
  42
  33
  26
  19
  14
Current shareholders' claim on cash, %
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0
  97.0

Adesto Technologies Corporation is a provider of application-specific and ultra-low power non-volatile memory products. The Company optimizes its non-volatile memory products for Internet of Things (IoT), applications, including current and next-generation Internet-connected devices in the consumer, industrial, medical and wearables markets. It operates in application-specific and feature-rich, ultra-low power non-volatile memory (NVM) products segment. It combines its non-volatile memory design capabilities with intellectual property and differentiated technology platforms to deliver products that manage the overall energy consumption of its customers' systems and battery life. Its products feature embedded intelligence in a small form factor. It sells its products directly to original equipment manufacturers and original design manufacturers, respectively that manufacture products for its end customers.

FINANCIAL RATIOS  of  Adesto Technologies Corporation (IOTS)

Valuation Ratios
P/E Ratio -12.7
Price to Sales 3.5
Price to Book 9.6
Price to Tangible Book
Price to Cash Flow -30.6
Price to Free Cash Flow -21.8
Growth Rates
Sales Growth Rate 2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 75%
Total Debt to Equity 112.5%
Interest Coverage -11
Management Effectiveness
Return On Assets -22.9%
Ret/ On Assets - 3 Yr. Avg. -20.5%
Return On Total Capital -33.8%
Ret/ On T. Cap. - 3 Yr. Avg. -32.6%
Return On Equity -60%
Return On Equity - 3 Yr. Avg. -60.7%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 47.7%
Gross Margin - 3 Yr. Avg. 42.9%
EBITDA Margin -20.5%
EBITDA Margin - 3 Yr. Avg. -14.8%
Operating Margin -22.7%
Oper. Margin - 3 Yr. Avg. -20.3%
Pre-Tax Margin -27.3%
Pre-Tax Margin - 3 Yr. Avg. -22.6%
Net Profit Margin -27.3%
Net Profit Margin - 3 Yr. Avg. -22.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IOTS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IOTS stock intrinsic value calculation we used $56 million for the last fiscal year's total revenue generated by Adesto Technologies Corporation. The default revenue input number comes from 0001 income statement of Adesto Technologies Corporation. 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 IOTS stock valuation model: a) initial revenue growth rate of 43.9% 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 IOTS is calculated based on our internal credit rating of Adesto Technologies Corporation, 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 Adesto Technologies Corporation.
    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 IOTS stock the variable cost ratio is equal to 55.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $31 million in the base year in the intrinsic value calculation for IOTS 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 Adesto Technologies Corporation.

Corporate tax rate of 27% is the nominal tax rate for Adesto Technologies Corporation. 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 IOTS 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 IOTS are equal to 18.6%.

Life of production assets of 5.5 years is the average useful life of capital assets used in Adesto Technologies Corporation 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 IOTS is equal to 6.2%. 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 - $32.95 million for Adesto Technologies Corporation - 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 29.435 million for Adesto Technologies Corporation 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 Adesto Technologies Corporation at the current share price and the inputted number of shares is $0.3 billion.

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