Intrinsic value of MaxLinear, Inc - MXL

Previous Close

$23.02

  Intrinsic Value

$1.98

stock screener

  Rating & Target

str. sell

-91%

Previous close

$23.02

 
Intrinsic value

$1.98

 
Up/down potential

-91%

 
Rating

str. sell

We calculate the intrinsic value of MXL 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 1.6

 

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
  393
  402
  412
  424
  436
  451
  466
  483
  500
  520
  540
  562
  585
  610
  637
  664
  694
  725
  758
  793
  830
  869
  909
  953
  998
  1,046
  1,096
  1,149
  1,204
  1,263
Variable operating expenses, $m
  412
  421
  430
  441
  453
  466
  480
  495
  512
  530
  501
  521
  542
  565
  590
  616
  643
  672
  703
  735
  769
  805
  843
  883
  925
  969
  1,015
  1,064
  1,116
  1,170
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
  412
  421
  430
  441
  453
  466
  480
  495
  512
  530
  501
  521
  542
  565
  590
  616
  643
  672
  703
  735
  769
  805
  843
  883
  925
  969
  1,015
  1,064
  1,116
  1,170
Operating income, $m
  -19
  -19
  -18
  -17
  -16
  -15
  -14
  -13
  -12
  -10
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  80
  84
  88
  93
EBITDA, $m
  71
  72
  74
  76
  79
  81
  84
  87
  90
  94
  97
  101
  106
  110
  115
  120
  125
  131
  137
  143
  150
  157
  164
  172
  180
  188
  197
  207
  217
  228
Interest expense (income), $m
  0
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
Earnings before tax, $m
  -33
  -33
  -33
  -32
  -32
  -31
  -31
  -31
  -30
  -29
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
Net income, $m
  -33
  -33
  -33
  -32
  -32
  -31
  -31
  -31
  -30
  -29
  14
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29

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
  751
  768
  788
  810
  835
  862
  891
  923
  957
  994
  1,033
  1,075
  1,119
  1,167
  1,217
  1,271
  1,327
  1,387
  1,450
  1,516
  1,587
  1,661
  1,739
  1,821
  1,908
  1,999
  2,095
  2,196
  2,303
  2,415
Adjusted assets (=assets-cash), $m
  751
  768
  788
  810
  835
  862
  891
  923
  957
  994
  1,033
  1,075
  1,119
  1,167
  1,217
  1,271
  1,327
  1,387
  1,450
  1,516
  1,587
  1,661
  1,739
  1,821
  1,908
  1,999
  2,095
  2,196
  2,303
  2,415
Revenue / Adjusted assets
  0.523
  0.523
  0.523
  0.523
  0.522
  0.523
  0.523
  0.523
  0.522
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.522
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
Average production assets, $m
  285
  292
  299
  308
  317
  327
  338
  350
  363
  377
  392
  408
  425
  443
  462
  482
  504
  527
  550
  576
  602
  631
  660
  692
  724
  759
  796
  834
  874
  917
Working capital, $m
  37
  38
  39
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  75
  78
  82
  85
  90
  94
  98
  103
  108
  113
  119
Total debt, $m
  263
  271
  280
  290
  302
  314
  328
  342
  358
  375
  393
  412
  433
  455
  478
  503
  529
  556
  585
  616
  648
  682
  719
  756
  796
  839
  883
  929
  978
  1,030
Total liabilities, $m
  346
  354
  363
  373
  385
  397
  411
  425
  441
  458
  476
  495
  516
  538
  561
  586
  612
  639
  668
  699
  731
  766
  802
  840
  880
  922
  966
  1,013
  1,062
  1,113
Total equity, $m
  405
  414
  425
  437
  450
  464
  480
  497
  516
  536
  557
  579
  603
  629
  656
  685
  715
  747
  781
  817
  855
  895
  937
  982
  1,028
  1,078
  1,129
  1,184
  1,241
  1,302
Total liabilities and equity, $m
  751
  768
  788
  810
  835
  861
  891
  922
  957
  994
  1,033
  1,074
  1,119
  1,167
  1,217
  1,271
  1,327
  1,386
  1,449
  1,516
  1,586
  1,661
  1,739
  1,822
  1,908
  2,000
  2,095
  2,197
  2,303
  2,415
Debt-to-equity ratio
  0.650
  0.650
  0.660
  0.660
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
  0.710
  0.710
  0.720
  0.720
  0.730
  0.730
  0.740
  0.740
  0.750
  0.750
  0.760
  0.760
  0.770
  0.770
  0.770
  0.780
  0.780
  0.790
  0.790
  0.790
Adjusted equity ratio
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -33
  -33
  -33
  -32
  -32
  -31
  -31
  -31
  -30
  -29
  14
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
Depreciation, amort., depletion, $m
  90
  91
  92
  94
  95
  96
  98
  100
  102
  104
  58
  60
  63
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  117
  123
  129
  135
Funds from operations, $m
  57
  58
  60
  61
  63
  65
  67
  69
  72
  74
  72
  75
  78
  81
  84
  88
  91
  95
  100
  104
  109
  114
  119
  124
  130
  136
  143
  149
  157
  164
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
Cash from operations, $m
  56
  57
  59
  60
  62
  64
  66
  68
  70
  73
  70
  73
  75
  78
  82
  85
  89
  93
  97
  101
  105
  110
  115
  120
  126
  132
  138
  144
  151
  158
Maintenance CAPEX, $m
  -41
  -42
  -43
  -44
  -45
  -47
  -48
  -50
  -52
  -53
  -55
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -117
  -123
  -129
New CAPEX, $m
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
Cash from investing activities, $m
  -47
  -49
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -67
  -70
  -74
  -77
  -81
  -84
  -88
  -92
  -97
  -101
  -106
  -112
  -117
  -123
  -128
  -135
  -142
  -148
  -155
  -163
  -171
Free cash flow, $m
  10
  9
  8
  8
  7
  7
  6
  6
  6
  5
  0
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
Issuance/(repayment) of debt, $m
  7
  8
  9
  10
  11
  12
  14
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
Issuance/(repurchase) of shares, $m
  41
  42
  43
  44
  45
  46
  47
  48
  48
  49
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  29
  31
Cash from financing (excl. dividends), $m  
  48
  50
  52
  54
  56
  58
  61
  63
  64
  66
  25
  27
  30
  32
  34
  37
  39
  42
  44
  47
  50
  53
  56
  60
  63
  67
  70
  75
  78
  83
Total cash flow (excl. dividends), $m
  58
  59
  61
  62
  64
  65
  67
  68
  70
  71
  25
  26
  28
  30
  32
  33
  35
  37
  40
  42
  44
  46
  49
  52
  54
  57
  60
  63
  67
  70
Retained Cash Flow (-), $m
  -41
  -42
  -43
  -44
  -45
  -46
  -47
  -48
  -48
  -49
  -21
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
Prev. year cash balance distribution, $m
  3
  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
  20
  17
  17
  18
  19
  19
  20
  21
  21
  22
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
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
  19
  15
  15
  15
  14
  14
  13
  13
  12
  12
  2
  2
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  97.5
  95.0
  92.6
  90.2
  87.9
  85.7
  83.6
  81.6
  79.6
  77.8
  77.5
  77.3
  77.0
  76.6
  76.3
  76.0
  75.6
  75.2
  74.8
  74.5
  74.1
  73.6
  73.2
  72.8
  72.4
  72.0
  71.5
  71.1
  70.6
  70.2

MaxLinear, Inc. is a provider of radio frequency (RF) and mixed-signal integrated circuits for cable and satellite broadband communications and the connected home, and wired and wireless infrastructure markets. The Company's RF receiver products capture and process digital and analog broadband signals to be decoded for various applications. These products include both RF receivers and RF receiver systems-on-chip (SoCs), which incorporate its radio system architecture and the functionality necessary to receive and demodulate broadband signals, modem solutions, and physical medium devices that provide a constant current source, current-to-voltage regulation, and data alignment and retiming functionality in optical interconnect applications. It provides semiconductor solutions for the connected home, specifically Multimedia over Coax Alliance (MoCA) solutions. It sells its products to original equipment manufacturers (OEMs), module makers and original design manufacturers (ODMs).

FINANCIAL RATIOS  of  MaxLinear, Inc (MXL)

Valuation Ratios
P/E Ratio 24.5
Price to Sales 3.9
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow 12.8
Price to Free Cash Flow 213.9
Growth Rates
Sales Growth Rate 29.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1471.4%
Cap. Spend. - 3 Yr. Gr. Rate 94%
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 16.1%
Ret/ On Assets - 3 Yr. Avg. -2.4%
Return On Total Capital 19.8%
Ret/ On T. Cap. - 3 Yr. Avg. -3.6%
Return On Equity 19.8%
Return On Equity - 3 Yr. Avg. -3.6%
Asset Turnover 1
Profitability Ratios
Gross Margin 59.3%
Gross Margin - 3 Yr. Avg. 57.5%
EBITDA Margin 23.5%
EBITDA Margin - 3 Yr. Avg. 6.6%
Operating Margin 16.2%
Oper. Margin - 3 Yr. Avg. -1.7%
Pre-Tax Margin 16.5%
Pre-Tax Margin - 3 Yr. Avg. -1.5%
Net Profit Margin 15.7%
Net Profit Margin - 3 Yr. Avg. -1.2%
Effective Tax Rate 4.7%
Eff/ Tax Rate - 3 Yr. Avg. 9.7%
Payout Ratio 0%

MXL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MXL stock intrinsic value calculation we used $385 million for the last fiscal year's total revenue generated by MaxLinear, Inc. The default revenue input number comes from 0001 income statement of MaxLinear, Inc. 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 MXL 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 4.3%, whose default value for MXL is calculated based on our internal credit rating of MaxLinear, Inc, 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 MaxLinear, Inc.
    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 MXL stock the variable cost ratio is equal to 105.2%.

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 MXL 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 MaxLinear, Inc.

Corporate tax rate of 27% is the nominal tax rate for MaxLinear, Inc. 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 MXL 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 MXL are equal to 72.6%.

Life of production assets of 6.8 years is the average useful life of capital assets used in MaxLinear, Inc 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 MXL is equal to 9.4%. 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 - $399.936 million for MaxLinear, Inc - 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 69.373 million for MaxLinear, Inc 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 MaxLinear, Inc at the current share price and the inputted number of shares is $1.6 billion.

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