Intrinsic value of Logitech International S.A. - LOGI

Previous Close

$37.03

  Intrinsic Value

$18.83

stock screener

  Rating & Target

sell

-49%

Previous close

$37.03

 
Intrinsic value

$18.83

 
Up/down potential

-49%

 
Rating

sell

We calculate the intrinsic value of LOGI 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 6.1

 

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, %
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
Revenue, $m
  2,731
  2,902
  3,080
  3,266
  3,459
  3,661
  3,871
  4,090
  4,319
  4,559
  4,809
  5,071
  5,344
  5,630
  5,930
  6,244
  6,572
  6,916
  7,276
  7,654
  8,050
  8,464
  8,899
  9,355
  9,833
  10,335
  10,861
  11,413
  11,992
  12,600
Variable operating expenses, $m
  2,478
  2,631
  2,790
  2,955
  3,128
  3,308
  3,496
  3,692
  3,897
  4,111
  4,299
  4,532
  4,777
  5,033
  5,301
  5,581
  5,874
  6,182
  6,504
  6,841
  7,195
  7,566
  7,955
  8,362
  8,790
  9,238
  9,708
  10,202
  10,719
  11,262
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
  2,478
  2,631
  2,790
  2,955
  3,128
  3,308
  3,496
  3,692
  3,897
  4,111
  4,299
  4,532
  4,777
  5,033
  5,301
  5,581
  5,874
  6,182
  6,504
  6,841
  7,195
  7,566
  7,955
  8,362
  8,790
  9,238
  9,708
  10,202
  10,719
  11,262
Operating income, $m
  254
  272
  291
  310
  331
  352
  375
  398
  422
  448
  510
  538
  567
  598
  629
  663
  698
  734
  772
  812
  854
  898
  945
  993
  1,044
  1,097
  1,153
  1,211
  1,273
  1,337
EBITDA, $m
  327
  347
  368
  390
  414
  438
  463
  489
  516
  545
  575
  606
  639
  673
  709
  747
  786
  827
  870
  915
  962
  1,012
  1,064
  1,119
  1,176
  1,236
  1,299
  1,365
  1,434
  1,506
Interest expense (income), $m
  0
  0
  2
  5
  7
  10
  13
  16
  19
  22
  26
  29
  33
  36
  40
  45
  49
  54
  58
  63
  69
  74
  80
  86
  92
  99
  106
  113
  121
  129
  137
Earnings before tax, $m
  254
  269
  286
  303
  321
  339
  359
  379
  400
  422
  481
  506
  531
  557
  585
  614
  644
  676
  709
  744
  780
  819
  859
  901
  945
  991
  1,040
  1,091
  1,144
  1,200
Tax expense, $m
  68
  73
  77
  82
  87
  92
  97
  102
  108
  114
  130
  136
  143
  150
  158
  166
  174
  182
  191
  201
  211
  221
  232
  243
  255
  268
  281
  294
  309
  324
Net income, $m
  185
  197
  209
  221
  234
  248
  262
  277
  292
  308
  351
  369
  387
  407
  427
  448
  470
  493
  518
  543
  570
  598
  627
  658
  690
  724
  759
  796
  835
  876

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
  1,784
  1,896
  2,012
  2,133
  2,259
  2,391
  2,528
  2,672
  2,821
  2,978
  3,141
  3,312
  3,491
  3,678
  3,873
  4,078
  4,293
  4,517
  4,753
  4,999
  5,258
  5,529
  5,813
  6,111
  6,423
  6,751
  7,094
  7,455
  7,833
  8,230
Adjusted assets (=assets-cash), $m
  1,784
  1,896
  2,012
  2,133
  2,259
  2,391
  2,528
  2,672
  2,821
  2,978
  3,141
  3,312
  3,491
  3,678
  3,873
  4,078
  4,293
  4,517
  4,753
  4,999
  5,258
  5,529
  5,813
  6,111
  6,423
  6,751
  7,094
  7,455
  7,833
  8,230
Revenue / Adjusted assets
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
  1.531
Average production assets, $m
  268
  284
  302
  320
  339
  359
  379
  401
  423
  447
  471
  497
  524
  552
  581
  612
  644
  678
  713
  750
  789
  830
  872
  917
  964
  1,013
  1,064
  1,118
  1,175
  1,235
Working capital, $m
  -46
  -49
  -52
  -56
  -59
  -62
  -66
  -70
  -73
  -78
  -82
  -86
  -91
  -96
  -101
  -106
  -112
  -118
  -124
  -130
  -137
  -144
  -151
  -159
  -167
  -176
  -185
  -194
  -204
  -214
Total debt, $m
  44
  90
  138
  188
  241
  295
  352
  411
  473
  537
  605
  675
  749
  826
  907
  992
  1,080
  1,173
  1,270
  1,372
  1,479
  1,591
  1,708
  1,831
  1,960
  2,095
  2,237
  2,386
  2,542
  2,706
Total liabilities, $m
  737
  783
  831
  881
  933
  987
  1,044
  1,103
  1,165
  1,230
  1,297
  1,368
  1,442
  1,519
  1,600
  1,684
  1,773
  1,866
  1,963
  2,065
  2,171
  2,283
  2,401
  2,524
  2,653
  2,788
  2,930
  3,079
  3,235
  3,399
Total equity, $m
  1,047
  1,113
  1,181
  1,252
  1,326
  1,403
  1,484
  1,568
  1,656
  1,748
  1,844
  1,944
  2,049
  2,159
  2,274
  2,394
  2,520
  2,652
  2,790
  2,935
  3,086
  3,245
  3,412
  3,587
  3,770
  3,963
  4,164
  4,376
  4,598
  4,831
Total liabilities and equity, $m
  1,784
  1,896
  2,012
  2,133
  2,259
  2,390
  2,528
  2,671
  2,821
  2,978
  3,141
  3,312
  3,491
  3,678
  3,874
  4,078
  4,293
  4,518
  4,753
  5,000
  5,257
  5,528
  5,813
  6,111
  6,423
  6,751
  7,094
  7,455
  7,833
  8,230
Debt-to-equity ratio
  0.040
  0.080
  0.120
  0.150
  0.180
  0.210
  0.240
  0.260
  0.290
  0.310
  0.330
  0.350
  0.370
  0.380
  0.400
  0.410
  0.430
  0.440
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.530
  0.540
  0.550
  0.550
  0.560
Adjusted equity ratio
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  185
  197
  209
  221
  234
  248
  262
  277
  292
  308
  351
  369
  387
  407
  427
  448
  470
  493
  518
  543
  570
  598
  627
  658
  690
  724
  759
  796
  835
  876
Depreciation, amort., depletion, $m
  73
  75
  78
  80
  83
  85
  88
  91
  94
  98
  65
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
  114
  119
  126
  132
  139
  146
  153
  161
  169
Funds from operations, $m
  258
  272
  286
  301
  317
  333
  350
  368
  386
  406
  416
  437
  459
  482
  507
  532
  558
  586
  615
  646
  678
  711
  746
  783
  822
  862
  905
  949
  996
  1,045
Change in working capital, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
Cash from operations, $m
  261
  275
  289
  304
  320
  337
  354
  372
  390
  410
  420
  442
  464
  487
  512
  537
  564
  592
  621
  652
  684
  718
  754
  791
  830
  871
  914
  959
  1,006
  1,056
Maintenance CAPEX, $m
  -34
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -119
  -126
  -132
  -139
  -146
  -153
  -161
New CAPEX, $m
  -17
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
Cash from investing activities, $m
  -51
  -54
  -56
  -59
  -63
  -66
  -70
  -74
  -77
  -81
  -86
  -91
  -95
  -100
  -105
  -111
  -116
  -122
  -128
  -135
  -142
  -149
  -157
  -164
  -173
  -181
  -191
  -200
  -210
  -221
Free cash flow, $m
  210
  221
  233
  245
  257
  270
  284
  298
  313
  328
  335
  351
  369
  387
  407
  427
  448
  470
  493
  517
  543
  570
  597
  627
  657
  690
  723
  759
  796
  835
Issuance/(repayment) of debt, $m
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  67
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  117
  123
  129
  135
  142
  149
  156
  164
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  
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  67
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  117
  123
  129
  135
  142
  149
  156
  164
Total cash flow (excl. dividends), $m
  254
  268
  281
  295
  309
  325
  341
  357
  375
  393
  402
  422
  443
  465
  487
  511
  537
  563
  590
  619
  650
  681
  715
  750
  786
  825
  865
  908
  952
  999
Retained Cash Flow (-), $m
  -63
  -66
  -68
  -71
  -74
  -77
  -81
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
  -175
  -183
  -192
  -202
  -212
  -222
  -233
Prev. year cash balance distribution, $m
  66
  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
  257
  202
  213
  224
  235
  247
  260
  273
  287
  301
  306
  322
  338
  355
  373
  391
  411
  431
  452
  475
  498
  522
  548
  575
  603
  633
  664
  696
  730
  766
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
  247
  185
  185
  184
  182
  180
  176
  171
  165
  158
  145
  137
  128
  119
  109
  99
  89
  79
  70
  60
  51
  43
  36
  29
  23
  18
  14
  11
  8
  6
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

Logitech International S.A. is a holding company. The Company designs, manufactures and markets products that allow people to connect through music, gaming, video, computing, and other digital platforms. The Company operates through peripheral segment. The Company offers its products to a network of domestic and international customers, including direct sales to retailers, e-tailers, and indirect sales through distributors. The Company's retail network across the world includes consumer electronics distributors, retailers, mass merchandisers, specialty electronics stores, computer and telecommunications stores, value-added resellers and online merchants. Its music solutions are focused primarily on mobile speakers, including its UE BOOM family of mobile wireless speakers, its Jaybird wireless audio wearables for sports and active lifestyles, and its custom in-ear headphones. It offers a range of gaming gear for gamers, including mice, keyboards, headsets, gamepads and steering wheels.

FINANCIAL RATIOS  of  Logitech International S.A. (LOGI)

Valuation Ratios
P/E Ratio 29.2
Price to Sales 2.7
Price to Book 7
Price to Tangible Book
Price to Cash Flow 21.6
Price to Free Cash Flow 24.3
Growth Rates
Sales Growth Rate 10.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -43.9%
Cap. Spend. - 3 Yr. Gr. Rate -7.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 14.6%
Ret/ On Assets - 3 Yr. Avg. 8%
Return On Total Capital 25.5%
Ret/ On T. Cap. - 3 Yr. Avg. 14.1%
Return On Equity 25.5%
Return On Equity - 3 Yr. Avg. 14.1%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 36.9%
Gross Margin - 3 Yr. Avg. 35.3%
EBITDA Margin 11.9%
EBITDA Margin - 3 Yr. Avg. 10.4%
Operating Margin 9.5%
Oper. Margin - 3 Yr. Avg. 7.8%
Pre-Tax Margin 9.7%
Pre-Tax Margin - 3 Yr. Avg. 7.9%
Net Profit Margin 9.3%
Net Profit Margin - 3 Yr. Avg. 5.2%
Effective Tax Rate 4.2%
Eff/ Tax Rate - 3 Yr. Avg. 3.2%
Payout Ratio 45.1%

LOGI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LOGI stock intrinsic value calculation we used $2567 million for the last fiscal year's total revenue generated by Logitech International S.A.. The default revenue input number comes from 0001 income statement of Logitech International S.A.. 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 LOGI stock valuation model: a) initial revenue growth rate of 6.4% 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 LOGI is calculated based on our internal credit rating of Logitech International S.A., 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 Logitech International S.A..
    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 LOGI stock the variable cost ratio is equal to 90.8%.

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 LOGI 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 Logitech International S.A..

Corporate tax rate of 27% is the nominal tax rate for Logitech International S.A.. 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 LOGI 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 LOGI are equal to 9.8%.

Life of production assets of 7.3 years is the average useful life of capital assets used in Logitech International S.A. 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 LOGI is equal to -1.7%. 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 - $1050.557 million for Logitech International S.A. - 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 165.847 million for Logitech International S.A. 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 Logitech International S.A. at the current share price and the inputted number of shares is $6.1 billion.

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