Intrinsic value of Adesto Technologies - IOTS

Previous Close

$5.15

  Intrinsic Value

$44.71

stock screener

  Rating & Target

str. buy

+768%

Previous close

$5.15

 
Intrinsic value

$44.71

 
Up/down potential

+768%

 
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 0.2

 

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, %
  35.60
  32.54
  29.79
  27.31
  25.08
  23.07
  21.26
  19.64
  18.17
  16.86
  15.67
  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
Revenue, $m
  76
  101
  131
  167
  208
  256
  311
  372
  440
  514
  594
  681
  774
  873
  978
  1,088
  1,204
  1,326
  1,453
  1,586
  1,724
  1,868
  2,018
  2,173
  2,335
  2,503
  2,678
  2,859
  3,048
  3,245
Variable operating expenses, $m
  42
  55
  72
  91
  114
  140
  169
  202
  239
  279
  322
  369
  419
  473
  529
  589
  652
  718
  787
  858
  933
  1,011
  1,092
  1,177
  1,264
  1,355
  1,450
  1,548
  1,650
  1,756
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
  74
  87
  105
  125
  149
  175
  205
  239
  277
  318
  361
  409
  460
  515
  572
  633
  697
  764
  834
  906
  982
  1,061
  1,143
  1,229
  1,317
  1,410
  1,506
  1,605
  1,708
  1,816
Operating income, $m
  3
  13
  26
  42
  60
  82
  106
  133
  163
  196
  233
  272
  314
  358
  406
  455
  508
  562
  620
  680
  742
  807
  874
  945
  1,018
  1,094
  1,173
  1,255
  1,340
  1,429
EBITDA, $m
  6
  17
  31
  48
  68
  91
  117
  146
  179
  215
  253
  295
  340
  388
  439
  492
  548
  607
  669
  733
  800
  870
  943
  1,018
  1,097
  1,178
  1,263
  1,351
  1,443
  1,538
Interest expense (income), $m
  1
  1
  1
  2
  3
  3
  4
  6
  7
  8
  10
  12
  14
  16
  18
  21
  23
  26
  29
  32
  35
  38
  42
  45
  49
  53
  57
  61
  65
  70
  74
Earnings before tax, $m
  2
  12
  24
  39
  57
  77
  100
  126
  155
  186
  221
  258
  298
  340
  385
  432
  481
  533
  588
  645
  704
  765
  829
  896
  965
  1,037
  1,112
  1,190
  1,270
  1,355
Tax expense, $m
  0
  3
  7
  11
  15
  21
  27
  34
  42
  50
  60
  70
  80
  92
  104
  117
  130
  144
  159
  174
  190
  207
  224
  242
  261
  280
  300
  321
  343
  366
Net income, $m
  1
  9
  18
  29
  42
  56
  73
  92
  113
  136
  162
  189
  217
  248
  281
  315
  351
  389
  429
  471
  514
  559
  605
  654
  704
  757
  812
  868
  927
  989

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
  58
  77
  100
  127
  159
  196
  238
  284
  336
  393
  454
  520
  591
  667
  747
  831
  920
  1,013
  1,110
  1,212
  1,317
  1,427
  1,542
  1,660
  1,784
  1,912
  2,046
  2,184
  2,329
  2,479
Adjusted assets (=assets-cash), $m
  58
  77
  100
  127
  159
  196
  238
  284
  336
  393
  454
  520
  591
  667
  747
  831
  920
  1,013
  1,110
  1,212
  1,317
  1,427
  1,542
  1,660
  1,784
  1,912
  2,046
  2,184
  2,329
  2,479
Revenue / Adjusted assets
  1.310
  1.312
  1.310
  1.315
  1.308
  1.306
  1.307
  1.310
  1.310
  1.308
  1.308
  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
  14
  19
  24
  31
  39
  48
  58
  69
  82
  96
  111
  127
  144
  162
  182
  202
  224
  247
  270
  295
  321
  347
  375
  404
  434
  466
  498
  532
  567
  603
Working capital, $m
  5
  6
  8
  10
  13
  16
  19
  23
  27
  32
  37
  42
  48
  54
  61
  67
  75
  82
  90
  98
  107
  116
  125
  135
  145
  155
  166
  177
  189
  201
Total debt, $m
  22
  34
  47
  64
  83
  104
  129
  157
  188
  221
  258
  298
  340
  385
  432
  483
  535
  591
  648
  709
  772
  837
  905
  976
  1,049
  1,126
  1,205
  1,288
  1,373
  1,463
Total liabilities, $m
  35
  46
  59
  76
  95
  117
  141
  169
  200
  234
  270
  310
  352
  397
  444
  495
  547
  603
  661
  721
  784
  849
  917
  988
  1,061
  1,138
  1,217
  1,300
  1,386
  1,475
Total equity, $m
  24
  31
  40
  52
  64
  79
  96
  115
  136
  159
  184
  211
  239
  270
  303
  337
  373
  410
  450
  491
  533
  578
  624
  672
  723
  775
  829
  885
  943
  1,004
Total liabilities and equity, $m
  59
  77
  99
  128
  159
  196
  237
  284
  336
  393
  454
  521
  591
  667
  747
  832
  920
  1,013
  1,111
  1,212
  1,317
  1,427
  1,541
  1,660
  1,784
  1,913
  2,046
  2,185
  2,329
  2,479
Debt-to-equity ratio
  0.960
  1.080
  1.170
  1.230
  1.280
  1.320
  1.340
  1.360
  1.380
  1.390
  1.400
  1.410
  1.420
  1.420
  1.430
  1.430
  1.440
  1.440
  1.440
  1.440
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  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
  1
  9
  18
  29
  42
  56
  73
  92
  113
  136
  162
  189
  217
  248
  281
  315
  351
  389
  429
  471
  514
  559
  605
  654
  704
  757
  812
  868
  927
  989
Depreciation, amort., depletion, $m
  3
  4
  5
  6
  8
  9
  11
  13
  16
  18
  20
  23
  26
  30
  33
  37
  41
  45
  49
  54
  58
  63
  68
  74
  79
  85
  91
  97
  103
  110
Funds from operations, $m
  5
  13
  23
  35
  49
  66
  84
  105
  129
  154
  182
  212
  244
  278
  314
  352
  392
  434
  478
  524
  572
  622
  674
  727
  783
  842
  902
  965
  1,030
  1,099
Change in working capital, $m
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
Cash from operations, $m
  3
  11
  21
  33
  47
  63
  81
  102
  124
  149
  177
  206
  238
  272
  307
  345
  385
  427
  470
  516
  563
  613
  664
  718
  773
  831
  891
  954
  1,019
  1,086
Maintenance CAPEX, $m
  -2
  -3
  -3
  -4
  -6
  -7
  -9
  -11
  -13
  -15
  -17
  -20
  -23
  -26
  -30
  -33
  -37
  -41
  -45
  -49
  -54
  -58
  -63
  -68
  -74
  -79
  -85
  -91
  -97
  -103
New CAPEX, $m
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
Cash from investing activities, $m
  -6
  -8
  -9
  -11
  -14
  -16
  -19
  -22
  -26
  -29
  -32
  -36
  -40
  -44
  -49
  -54
  -59
  -64
  -69
  -74
  -80
  -85
  -91
  -97
  -104
  -110
  -117
  -125
  -132
  -140
Free cash flow, $m
  -2
  4
  12
  22
  33
  47
  62
  80
  99
  121
  144
  170
  198
  227
  258
  292
  327
  363
  402
  442
  484
  528
  573
  621
  670
  721
  774
  829
  887
  947
Issuance/(repayment) of debt, $m
  9
  11
  14
  16
  19
  22
  25
  28
  31
  34
  37
  39
  42
  45
  48
  50
  53
  55
  58
  60
  63
  65
  68
  71
  74
  76
  79
  83
  86
  89
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  
  14
  11
  14
  16
  19
  22
  25
  28
  31
  34
  37
  39
  42
  45
  48
  50
  53
  55
  58
  60
  63
  65
  68
  71
  74
  76
  79
  83
  86
  89
Total cash flow (excl. dividends), $m
  11
  15
  26
  38
  52
  69
  87
  107
  130
  155
  181
  209
  240
  272
  306
  342
  379
  419
  460
  502
  547
  593
  641
  691
  743
  797
  854
  912
  973
  1,036
Retained Cash Flow (-), $m
  -6
  -8
  -9
  -11
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
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
  21
  8
  16
  27
  39
  54
  70
  89
  109
  132
  156
  183
  211
  241
  274
  308
  343
  381
  420
  461
  504
  549
  595
  643
  693
  745
  800
  856
  914
  975
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
  20
  7
  14
  22
  31
  39
  47
  55
  63
  69
  74
  78
  80
  81
  80
  78
  75
  70
  65
  59
  52
  46
  39
  33
  27
  22
  17
  13
  10
  7
Current shareholders' claim on cash, %
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2
  94.2

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 (IOTS)

Valuation Ratios
P/E Ratio -6.6
Price to Sales 1.8
Price to Book 5
Price to Tangible Book
Price to Cash Flow -16
Price to Free Cash Flow -11.4
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 $56.112 million for the last fiscal year's total revenue generated by Adesto Technologies. The default revenue input number comes from 0001 income statement of Adesto Technologies. 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 35.6% 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 IOTS is calculated based on our internal credit rating of Adesto Technologies, 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.
    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.

Corporate tax rate of 27% is the nominal tax rate for Adesto Technologies. 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 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 - 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 29.268 million for Adesto Technologies 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 at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Adesto Tech: 3Q Earnings Snapshot   [05:06AM  Associated Press]
▶ Adesto Completes Acquisition Of Echelon   [Sep-14-18 08:48AM  PR Newswire]
▶ Adesto Completes Acquisition of Echelon   [08:43AM  GlobeNewswire]
▶ Adesto Tech: 2Q Earnings Snapshot   [05:08AM  Associated Press]
▶ Adesto Technologies Corporations (NASDAQ:IOTS) Profit Outlook   [Jun-27-18 12:24PM  Simply Wall St.]
▶ Adesto Tech: 1Q Earnings Snapshot   [May-09-18 04:59PM  Associated Press]
▶ Adesto Technologies Corp Is Set Up to Rally   [Mar-12-18 01:03PM  InvestorPlace]
▶ Adesto Tech reports 4Q loss   [Feb-13-18 06:07PM  Associated Press]
▶ Adesto Tech reports 3Q loss   [Nov-08-17 06:45PM  Associated Press]
▶ 3 Hot Stocks Under $10   [Oct-09-17 12:32PM  Investopedia]
▶ Adesto Tech reports 2Q loss   [Aug-05-17 01:04AM  Associated Press]

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