Intrinsic value of Everspin Technologies - MRAM

Previous Close

$7.80

  Intrinsic Value

$0.16

stock screener

  Rating & Target

str. sell

-98%

Previous close

$7.80

 
Intrinsic value

$0.16

 
Up/down potential

-98%

 
Rating

str. sell

We calculate the intrinsic value of MRAM 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 0.1

 

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, %
  20.60
  19.04
  17.64
  16.37
  15.24
  14.21
  13.29
  12.46
  11.72
  11.04
  10.44
  9.90
  9.41
  8.97
  8.57
  8.21
  7.89
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
Revenue, $m
  43
  52
  61
  71
  81
  93
  105
  118
  132
  147
  162
  178
  195
  213
  231
  250
  269
  290
  311
  333
  356
  380
  405
  431
  458
  486
  515
  545
  577
  610
Variable operating expenses, $m
  66
  79
  93
  108
  124
  142
  161
  181
  202
  224
  248
  272
  298
  325
  353
  382
  412
  443
  476
  509
  544
  581
  619
  658
  700
  742
  787
  833
  882
  932
Fixed operating expenses, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Total operating expenses, $m
  68
  81
  95
  110
  126
  144
  163
  183
  204
  226
  251
  275
  301
  328
  356
  385
  415
  446
  479
  512
  547
  584
  622
  661
  703
  746
  791
  837
  886
  936
Operating income, $m
  -25
  -29
  -34
  -39
  -45
  -51
  -58
  -65
  -72
  -80
  -88
  -97
  -106
  -115
  -125
  -135
  -145
  -156
  -167
  -179
  -191
  -204
  -217
  -231
  -245
  -260
  -276
  -292
  -309
  -326
EBITDA, $m
  -24
  -28
  -33
  -38
  -44
  -50
  -56
  -63
  -70
  -78
  -86
  -94
  -102
  -112
  -121
  -131
  -141
  -151
  -162
  -174
  -186
  -198
  -211
  -224
  -238
  -252
  -267
  -283
  -299
  -316
Interest expense (income), $m
  1
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  15
  16
  17
  18
  20
Earnings before tax, $m
  -26
  -30
  -36
  -41
  -47
  -54
  -61
  -68
  -76
  -84
  -93
  -102
  -111
  -121
  -132
  -142
  -153
  -165
  -177
  -189
  -202
  -216
  -230
  -245
  -260
  -275
  -292
  -309
  -327
  -346
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
  -26
  -30
  -36
  -41
  -47
  -54
  -61
  -68
  -76
  -84
  -93
  -102
  -111
  -121
  -132
  -142
  -153
  -165
  -177
  -189
  -202
  -216
  -230
  -245
  -260
  -275
  -292
  -309
  -327
  -346

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
  32
  39
  45
  53
  61
  69
  79
  88
  99
  110
  121
  133
  146
  159
  172
  186
  201
  216
  232
  249
  266
  284
  302
  322
  342
  363
  384
  407
  431
  455
Adjusted assets (=assets-cash), $m
  32
  39
  45
  53
  61
  69
  79
  88
  99
  110
  121
  133
  146
  159
  172
  186
  201
  216
  232
  249
  266
  284
  302
  322
  342
  363
  384
  407
  431
  455
Revenue / Adjusted assets
  1.344
  1.333
  1.356
  1.340
  1.328
  1.348
  1.329
  1.341
  1.333
  1.336
  1.339
  1.338
  1.336
  1.340
  1.343
  1.344
  1.338
  1.343
  1.341
  1.337
  1.338
  1.338
  1.341
  1.339
  1.339
  1.339
  1.341
  1.339
  1.339
  1.341
Average production assets, $m
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  19
  20
  22
  23
  25
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  49
Working capital, $m
  7
  9
  10
  12
  14
  16
  18
  20
  22
  25
  27
  30
  33
  36
  39
  42
  46
  49
  53
  56
  60
  64
  68
  73
  77
  82
  87
  92
  98
  103
Total debt, $m
  16
  19
  23
  28
  33
  38
  44
  50
  56
  63
  70
  78
  85
  93
  102
  110
  119
  129
  139
  149
  159
  170
  182
  194
  206
  219
  232
  246
  261
  276
Total liabilities, $m
  20
  24
  28
  32
  37
  43
  48
  54
  61
  68
  75
  82
  90
  98
  106
  115
  124
  133
  143
  153
  164
  175
  186
  198
  210
  223
  237
  251
  265
  281
Total equity, $m
  12
  15
  17
  20
  23
  27
  30
  34
  38
  42
  46
  51
  56
  61
  66
  72
  77
  83
  89
  96
  102
  109
  116
  123
  131
  139
  148
  156
  165
  175
Total liabilities and equity, $m
  32
  39
  45
  52
  60
  70
  78
  88
  99
  110
  121
  133
  146
  159
  172
  187
  201
  216
  232
  249
  266
  284
  302
  321
  341
  362
  385
  407
  430
  456
Debt-to-equity ratio
  1.250
  1.310
  1.350
  1.390
  1.420
  1.440
  1.460
  1.470
  1.490
  1.500
  1.510
  1.520
  1.530
  1.530
  1.540
  1.540
  1.550
  1.550
  1.550
  1.560
  1.560
  1.560
  1.570
  1.570
  1.570
  1.570
  1.570
  1.580
  1.580
  1.580
Adjusted equity ratio
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -26
  -30
  -36
  -41
  -47
  -54
  -61
  -68
  -76
  -84
  -93
  -102
  -111
  -121
  -132
  -142
  -153
  -165
  -177
  -189
  -202
  -216
  -230
  -245
  -260
  -275
  -292
  -309
  -327
  -346
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
Funds from operations, $m
  -25
  -30
  -35
  -40
  -46
  -52
  -59
  -66
  -74
  -82
  -90
  -99
  -108
  -118
  -128
  -138
  -149
  -160
  -172
  -184
  -197
  -210
  -223
  -238
  -252
  -268
  -284
  -300
  -318
  -336
Change in working capital, $m
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
Cash from operations, $m
  -26
  -31
  -36
  -42
  -48
  -54
  -61
  -69
  -76
  -84
  -93
  -102
  -111
  -121
  -131
  -141
  -152
  -164
  -176
  -188
  -201
  -214
  -228
  -242
  -257
  -272
  -289
  -305
  -323
  -341
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
Cash from investing activities, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -12
  -12
Free cash flow, $m
  -28
  -32
  -38
  -44
  -50
  -57
  -64
  -71
  -79
  -88
  -97
  -106
  -115
  -125
  -136
  -147
  -158
  -170
  -182
  -195
  -208
  -222
  -236
  -251
  -266
  -282
  -299
  -316
  -334
  -353
Issuance/(repayment) of debt, $m
  3
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  15
  15
Issuance/(repurchase) of shares, $m
  28
  33
  38
  44
  50
  57
  64
  72
  80
  88
  97
  107
  116
  126
  137
  148
  159
  171
  183
  196
  209
  223
  237
  252
  267
  284
  300
  318
  336
  355
Cash from financing (excl. dividends), $m  
  31
  37
  42
  49
  55
  62
  70
  78
  86
  95
  104
  114
  124
  134
  145
  157
  168
  180
  193
  206
  220
  234
  248
  264
  279
  297
  313
  332
  351
  370
Total cash flow (excl. dividends), $m
  3
  4
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
Retained Cash Flow (-), $m
  -28
  -33
  -38
  -44
  -50
  -57
  -64
  -72
  -80
  -88
  -97
  -107
  -116
  -126
  -137
  -148
  -159
  -171
  -183
  -196
  -209
  -223
  -237
  -252
  -267
  -284
  -300
  -318
  -336
  -355
Prev. year cash balance distribution, $m
  1
  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
  -24
  -29
  -34
  -39
  -45
  -51
  -58
  -65
  -73
  -81
  -89
  -98
  -108
  -117
  -128
  -138
  -149
  -160
  -172
  -184
  -197
  -211
  -224
  -239
  -254
  -269
  -285
  -302
  -320
  -338
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
  -23
  -26
  -29
  -32
  -35
  -37
  -39
  -41
  -42
  -42
  -42
  -42
  -41
  -39
  -37
  -35
  -32
  -30
  -27
  -23
  -20
  -17
  -15
  -12
  -10
  -8
  -6
  -5
  -3
  -3
Current shareholders' claim on cash, %
  78.7
  62.2
  49.4
  39.4
  31.6
  25.4
  20.4
  16.5
  13.3
  10.8
  8.8
  7.1
  5.8
  4.8
  3.9
  3.2
  2.6
  2.1
  1.7
  1.4
  1.2
  1.0
  0.8
  0.6
  0.5
  0.4
  0.4
  0.3
  0.2
  0.2

Everspin Technologies, Inc. is a United States-based provider of magnetoresistive random-access memory (MRAM) solutions. The Company is engaged in designing, manufacturing and shipping discrete and embedded MRAM and spin-torque MRAM (ST-MRAM) into markets and applications. The Company's products include 8-bit/16-bit Parallel Interface MRAM, Serial Peripheral Interface (SPI), Quad SPI and Double Data Rate (DDR) 3 dynamic random-access memory (DRAM) Compatible MRAM - Spin Torque Technology. The Company's MR10Q010 Quad SPI MRAM is a memory solution for applications that store and retrieve data and programs. Its DDR3 DRAM Compatible MRAM - Spin Torque Technology is designed to comply with all DDR3 DRAM features, such as on-device termination (ODT) and internal ZQ calibration. Its family of both parallel asynchronous input/output (I/O) and serial peripheral interface (SPI) products in densities ranging from 256 kilobyte (Kb) to 16 megabyte (Mb) is available in die form.

FINANCIAL RATIOS  of  Everspin Technologies (MRAM)

Valuation Ratios
P/E Ratio -5.7
Price to Sales 3.6
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow -5.1
Price to Free Cash Flow -4.9
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 8
Current Ratio 0
LT Debt to Equity 14.8%
Total Debt to Equity 29.6%
Interest Coverage -16
Management Effectiveness
Return On Assets -61.5%
Ret/ On Assets - 3 Yr. Avg. -98.9%
Return On Total Capital -91.9%
Ret/ On T. Cap. - 3 Yr. Avg. -161.9%
Return On Equity -161.9%
Return On Equity - 3 Yr. Avg. -420.6%
Asset Turnover 1
Profitability Ratios
Gross Margin 55.6%
Gross Margin - 3 Yr. Avg. 53.1%
EBITDA Margin -55.6%
EBITDA Margin - 3 Yr. Avg. -51.5%
Operating Margin -59.3%
Oper. Margin - 3 Yr. Avg. -54.1%
Pre-Tax Margin -63%
Pre-Tax Margin - 3 Yr. Avg. -56.5%
Net Profit Margin -63%
Net Profit Margin - 3 Yr. Avg. -56.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

MRAM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MRAM stock intrinsic value calculation we used $35.936 million for the last fiscal year's total revenue generated by Everspin Technologies. The default revenue input number comes from 0001 income statement of Everspin 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 MRAM stock valuation model: a) initial revenue growth rate of 20.6% 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 MRAM is calculated based on our internal credit rating of Everspin 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 Everspin 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 MRAM stock the variable cost ratio is equal to 152.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for MRAM 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 7.5% for Everspin Technologies.

Corporate tax rate of 27% is the nominal tax rate for Everspin 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 MRAM 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 MRAM are equal to 8.1%.

Life of production assets of 2.5 years is the average useful life of capital assets used in Everspin 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 MRAM is equal to 16.9%. 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 - $10.884 million for Everspin 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 16.904 million for Everspin 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 Everspin Technologies at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Everspin to Participate at Upcoming Investor Conferences   [Oct-31-18 09:00AM  Business Wire]
▶ Everspin reports record revenue in latest quarter   [May-10-18 02:10AM  American City Business Journals]
▶ Everspin Reports First Quarter 2018 Financial Results   [May-09-18 04:09PM  GlobeNewswire]
▶ Everspin reports record fourth quarter and 2017 revenue growth   [Mar-15-18 06:15PM  American City Business Journals]
▶ Everspin Jumps 5% Despite Lower Q1 View   [04:29PM  Barrons.com]
▶ Everspin Accelerates FinTech with nvNITRO Collaboration   [Jan-18-18 08:00AM  GlobeNewswire]
▶ Everspin Begins 40nm STT-MRAM Volume Production   [Jan-17-18 12:09PM  Business Wire]
▶ Everspin to Present at Needham Growth Conference   [Jan-04-18 04:05PM  GlobeNewswire]
▶ Buy Micron Technology, Inc. (MU) Stock on the Weakness   [Aug-22-17 12:12PM  InvestorPlace]
▶ Everspin Announces Second Quarter 2017 Financial Results   [Aug-10-17 05:55AM  GlobeNewswire]
▶ Everspin Demonstrates Breakthrough Technologies at FMS 2017   [Aug-07-17 08:03AM  Business Wire]
▶ Just Another Non-Manic Market Monday   [Jul-10-17 04:27PM  TheStreet.com]
▶ Pattern Continues of Listless Day Following a Strong One   [Jun-20-17 10:45AM  TheStreet.com]
▶ No Headlines? No Problem for This Market   [Jun-19-17 11:26AM  TheStreet.com]
▶ Everspin to participate in two investor conferences in June   [May-22-17 09:00AM  GlobeNewswire]
▶ [$$] Impinj and Everspin Could Be the Next Big Thing   [May-20-17 01:23AM  Barrons.com]
▶ Everspin Announces First Quarter 2017 Financial Results   [May-12-17 06:00AM  GlobeNewswire]
▶ Everspin to Announce First Quarter Results on May 12   [Apr-27-17 04:05PM  GlobeNewswire]

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