Intrinsic value of Lattice Semiconductor Corporation - LSCC

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$14.39

  Intrinsic Value

$0.00

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  Rating & Target

str. sell

-100%

Previous close

$14.39

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of LSCC 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 1.9

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  407
  416
  427
  439
  452
  467
  483
  500
  519
  539
  560
  583
  607
  632
  660
  689
  719
  752
  786
  822
  860
  900
  943
  987
  1,034
  1,084
  1,136
  1,191
  1,248
  1,309
Variable operating expenses, $m
  456
  466
  478
  490
  504
  519
  536
  554
  574
  595
  588
  612
  637
  664
  693
  723
  756
  790
  826
  863
  904
  946
  990
  1,037
  1,086
  1,138
  1,193
  1,251
  1,311
  1,375
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
  456
  466
  478
  490
  504
  519
  536
  554
  574
  595
  588
  612
  637
  664
  693
  723
  756
  790
  826
  863
  904
  946
  990
  1,037
  1,086
  1,138
  1,193
  1,251
  1,311
  1,375
Operating income, $m
  -49
  -50
  -50
  -51
  -52
  -53
  -53
  -54
  -55
  -56
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -43
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
EBITDA, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
Interest expense (income), $m
  18
  19
  19
  20
  21
  22
  22
  23
  24
  26
  27
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  52
  55
  57
  60
  64
  67
  71
  74
Earnings before tax, $m
  -68
  -69
  -71
  -72
  -73
  -75
  -77
  -79
  -81
  -83
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -110
  -115
  -121
  -127
  -134
  -141
Tax expense, $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
Net income, $m
  -68
  -69
  -71
  -72
  -73
  -75
  -77
  -79
  -81
  -83
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -110
  -115
  -121
  -127
  -134
  -141

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
  568
  581
  596
  612
  631
  651
  673
  697
  723
  751
  781
  812
  846
  882
  920
  960
  1,003
  1,048
  1,096
  1,146
  1,199
  1,256
  1,315
  1,377
  1,442
  1,511
  1,584
  1,660
  1,741
  1,825
Adjusted assets (=assets-cash), $m
  568
  581
  596
  612
  631
  651
  673
  697
  723
  751
  781
  812
  846
  882
  920
  960
  1,003
  1,048
  1,096
  1,146
  1,199
  1,256
  1,315
  1,377
  1,442
  1,511
  1,584
  1,660
  1,741
  1,825
Revenue / Adjusted assets
  0.717
  0.716
  0.716
  0.717
  0.716
  0.717
  0.718
  0.717
  0.718
  0.718
  0.717
  0.718
  0.717
  0.717
  0.717
  0.718
  0.717
  0.718
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
Average production assets, $m
  193
  198
  203
  209
  215
  222
  229
  238
  246
  256
  266
  277
  288
  300
  313
  327
  342
  357
  373
  390
  409
  428
  448
  469
  491
  515
  539
  566
  593
  622
Working capital, $m
  96
  99
  101
  104
  107
  111
  114
  119
  123
  128
  133
  138
  144
  150
  156
  163
  170
  178
  186
  195
  204
  213
  223
  234
  245
  257
  269
  282
  296
  310
Total debt, $m
  267
  275
  285
  296
  308
  321
  335
  350
  367
  385
  404
  424
  446
  469
  493
  519
  547
  576
  606
  639
  673
  709
  747
  787
  829
  873
  920
  969
  1,020
  1,075
Total liabilities, $m
  364
  373
  382
  393
  405
  418
  432
  448
  464
  482
  501
  522
  543
  566
  591
  617
  644
  673
  704
  736
  770
  806
  844
  884
  926
  970
  1,017
  1,066
  1,118
  1,172
Total equity, $m
  203
  208
  213
  219
  226
  233
  241
  250
  259
  269
  280
  291
  303
  316
  329
  344
  359
  375
  392
  410
  429
  449
  471
  493
  516
  541
  567
  594
  623
  654
Total liabilities and equity, $m
  567
  581
  595
  612
  631
  651
  673
  698
  723
  751
  781
  813
  846
  882
  920
  961
  1,003
  1,048
  1,096
  1,146
  1,199
  1,255
  1,315
  1,377
  1,442
  1,511
  1,584
  1,660
  1,741
  1,826
Debt-to-equity ratio
  1.310
  1.330
  1.340
  1.350
  1.360
  1.380
  1.390
  1.400
  1.420
  1.430
  1.450
  1.460
  1.470
  1.490
  1.500
  1.510
  1.520
  1.530
  1.550
  1.560
  1.570
  1.580
  1.590
  1.600
  1.600
  1.610
  1.620
  1.630
  1.640
  1.640
Adjusted equity ratio
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -68
  -69
  -71
  -72
  -73
  -75
  -77
  -79
  -81
  -83
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -110
  -115
  -121
  -127
  -134
  -141
Depreciation, amort., depletion, $m
  51
  52
  52
  53
  54
  54
  55
  56
  57
  58
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
Funds from operations, $m
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -51
  -53
  -56
  -59
  -62
  -66
  -69
Change in working capital, $m
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
Cash from operations, $m
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -84
Maintenance CAPEX, $m
  -22
  -22
  -23
  -23
  -24
  -25
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
New CAPEX, $m
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
Cash from investing activities, $m
  -26
  -26
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -42
  -43
  -45
  -48
  -50
  -53
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -92
  -97
Free cash flow, $m
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -74
  -78
  -81
  -86
  -90
  -94
  -99
  -104
  -110
  -115
  -121
  -127
  -134
  -141
  -148
  -155
  -163
  -172
  -181
Issuance/(repayment) of debt, $m
  7
  8
  10
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
Issuance/(repurchase) of shares, $m
  72
  74
  76
  78
  80
  82
  85
  87
  90
  93
  67
  70
  74
  77
  81
  85
  90
  94
  99
  104
  109
  115
  121
  127
  133
  140
  147
  155
  163
  171
Cash from financing (excl. dividends), $m  
  79
  82
  86
  89
  92
  95
  99
  102
  107
  111
  86
  90
  96
  100
  105
  111
  117
  123
  130
  136
  143
  151
  159
  167
  175
  184
  194
  204
  215
  225
Total cash flow (excl. dividends), $m
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
  38
  40
  43
  45
Retained Cash Flow (-), $m
  -72
  -74
  -76
  -78
  -80
  -82
  -85
  -87
  -90
  -93
  -67
  -70
  -74
  -77
  -81
  -85
  -90
  -94
  -99
  -104
  -109
  -115
  -121
  -127
  -133
  -140
  -147
  -155
  -163
  -171
Prev. year cash balance distribution, $m
  59
  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
  -38
  -39
  -40
  -41
  -43
  -44
  -46
  -47
  -49
  -51
  -54
  -56
  -58
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -89
  -94
  -99
  -104
  -109
  -114
  -120
  -126
Discount rate, %
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
  21
  -35
  -33
  -32
  -31
  -30
  -28
  -27
  -25
  -24
  -22
  -20
  -19
  -17
  -15
  -14
  -12
  -10
  -9
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -1
  -1
  -1
  -1
Current shareholders' claim on cash, %
  95.3
  90.8
  86.5
  82.3
  78.4
  74.7
  71.2
  67.9
  64.7
  61.7
  59.6
  57.7
  55.7
  53.8
  52.0
  50.3
  48.5
  46.9
  45.2
  43.7
  42.1
  40.6
  39.2
  37.8
  36.5
  35.2
  33.9
  32.7
  31.5
  30.4

Lattice Semiconductor Corporation is a United States-based company, which develops semiconductor technologies that it monetizes through products, solutions and licenses. The Company operates through two segments: the core Lattice (Core) business, which includes intellectual property (IP) and semiconductor devices, and Qterics, a discrete software-as-a-service business unit in the Lattice legal entity structure. The Company is a provider of customizable smart connectivity solutions based on its low power field programmable gate array (FPGA), video application specific standard product (ASSP), 60 gigahertz millimeter wave, and IP products to the consumer, communications, industrial, computing and automotive markets across the world. Its products include iCE40 Ultra/UltraLite, iCE40 LP/HX/LM, MachXO3, MachXO2, MachXO, HDMI Transmitters, HDMI Receivers, USB Type-C Port Controllers, Port Processors, Analog to HDMI/MHL Converters, MHL Transmitters, UltraGig 6400 and 802.11ad Chipsets.

FINANCIAL RATIOS  of  Lattice Semiconductor Corporation (LSCC)

Valuation Ratios
P/E Ratio -32.4
Price to Sales 4.1
Price to Book 6.5
Price to Tangible Book
Price to Cash Flow 41.7
Price to Free Cash Flow 70
Growth Rates
Sales Growth Rate 5.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -5.6%
Cap. Spend. - 3 Yr. Gr. Rate 5.5%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 111.5%
Total Debt to Equity 124.1%
Interest Coverage -1
Management Effectiveness
Return On Assets -4.1%
Ret/ On Assets - 3 Yr. Avg. -5.4%
Return On Total Capital -8.6%
Ret/ On T. Cap. - 3 Yr. Avg. -8.7%
Return On Equity -18.8%
Return On Equity - 3 Yr. Avg. -16.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 57.6%
Gross Margin - 3 Yr. Avg. 56.1%
EBITDA Margin 8.7%
EBITDA Margin - 3 Yr. Avg. 4.4%
Operating Margin -6.3%
Oper. Margin - 3 Yr. Avg. -7.2%
Pre-Tax Margin -10.1%
Pre-Tax Margin - 3 Yr. Avg. -9.8%
Net Profit Margin -12.6%
Net Profit Margin - 3 Yr. Avg. -12.8%
Effective Tax Rate -23.3%
Eff/ Tax Rate - 3 Yr. Avg. -21.1%
Payout Ratio 0%

LSCC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LSCC stock intrinsic value calculation we used $399 million for the last fiscal year's total revenue generated by Lattice Semiconductor Corporation. The default revenue input number comes from 0001 income statement of Lattice Semiconductor 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 LSCC stock valuation model: a) initial revenue growth rate of 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 4.9%, whose default value for LSCC is calculated based on our internal credit rating of Lattice Semiconductor 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 Lattice Semiconductor 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 LSCC stock the variable cost ratio is equal to 112.3%.

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 LSCC 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 7.3% for Lattice Semiconductor Corporation.

Corporate tax rate of 27% is the nominal tax rate for Lattice Semiconductor 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 LSCC 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 LSCC are equal to 47.5%.

Life of production assets of 8.7 years is the average useful life of capital assets used in Lattice Semiconductor 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 LSCC is equal to 23.7%. 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 - $258.457 million for Lattice Semiconductor 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 131.681 million for Lattice Semiconductor 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 Lattice Semiconductor Corporation at the current share price and the inputted number of shares is $1.9 billion.

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