Intrinsic value of MaxLinear - MXL

Previous Close

$19.07

  Intrinsic Value

$12.25

stock screener

  Rating & Target

sell

-36%

Previous close

$19.07

 
Intrinsic value

$12.25

 
Up/down potential

-36%

 
Rating

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 1.3

 

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
  429
  439
  450
  463
  477
  492
  509
  527
  546
  567
  590
  614
  639
  666
  695
  725
  758
  792
  828
  866
  906
  948
  993
  1,040
  1,089
  1,142
  1,196
  1,254
  1,315
  1,379
Variable operating expenses, $m
  358
  365
  373
  382
  392
  403
  415
  427
  441
  456
  417
  434
  452
  471
  491
  512
  535
  559
  585
  612
  640
  670
  701
  735
  770
  806
  845
  886
  929
  974
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
  358
  365
  373
  382
  392
  403
  415
  427
  441
  456
  417
  434
  452
  471
  491
  512
  535
  559
  585
  612
  640
  670
  701
  735
  770
  806
  845
  886
  929
  974
Operating income, $m
  71
  73
  77
  80
  85
  89
  94
  99
  105
  111
  173
  180
  188
  196
  204
  213
  222
  232
  243
  254
  266
  278
  291
  305
  320
  335
  351
  368
  386
  405
EBITDA, $m
  162
  166
  170
  175
  180
  186
  192
  199
  206
  214
  223
  232
  241
  252
  263
  274
  286
  299
  313
  327
  342
  358
  375
  393
  411
  431
  452
  474
  497
  521
Interest expense (income), $m
  0
  21
  21
  22
  23
  24
  24
  25
  26
  28
  29
  30
  31
  33
  35
  36
  38
  40
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  69
  73
  77
Earnings before tax, $m
  50
  52
  55
  58
  61
  65
  69
  73
  78
  83
  143
  149
  155
  161
  168
  175
  183
  190
  199
  208
  217
  227
  238
  249
  260
  272
  285
  299
  313
  328
Tax expense, $m
  13
  14
  15
  16
  16
  17
  19
  20
  21
  22
  39
  40
  42
  43
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  70
  74
  77
  81
  85
  89
Net income, $m
  36
  38
  40
  42
  45
  47
  50
  53
  57
  60
  104
  109
  113
  118
  122
  128
  133
  139
  145
  152
  159
  166
  173
  182
  190
  199
  208
  218
  229
  239

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
  842
  862
  884
  909
  936
  966
  999
  1,035
  1,073
  1,115
  1,159
  1,206
  1,256
  1,309
  1,365
  1,425
  1,489
  1,556
  1,626
  1,701
  1,780
  1,863
  1,951
  2,043
  2,140
  2,243
  2,350
  2,464
  2,583
  2,709
Adjusted assets (=assets-cash), $m
  842
  862
  884
  909
  936
  966
  999
  1,035
  1,073
  1,115
  1,159
  1,206
  1,256
  1,309
  1,365
  1,425
  1,489
  1,556
  1,626
  1,701
  1,780
  1,863
  1,951
  2,043
  2,140
  2,243
  2,350
  2,464
  2,583
  2,709
Revenue / Adjusted assets
  0.510
  0.509
  0.509
  0.509
  0.510
  0.509
  0.510
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
Average production assets, $m
  209
  214
  220
  226
  233
  240
  248
  257
  267
  277
  288
  299
  312
  325
  339
  354
  370
  386
  404
  423
  442
  463
  485
  507
  532
  557
  584
  612
  642
  673
Working capital, $m
  53
  54
  55
  57
  59
  61
  63
  65
  67
  70
  73
  75
  79
  82
  85
  89
  93
  97
  102
  106
  111
  117
  122
  128
  134
  140
  147
  154
  162
  170
Total debt, $m
  357
  367
  379
  392
  406
  422
  440
  459
  479
  501
  524
  549
  576
  604
  634
  666
  699
  735
  772
  812
  854
  898
  944
  993
  1,045
  1,099
  1,156
  1,216
  1,279
  1,346
Total liabilities, $m
  446
  457
  468
  482
  496
  512
  530
  549
  569
  591
  614
  639
  666
  694
  724
  755
  789
  824
  862
  902
  943
  987
  1,034
  1,083
  1,134
  1,189
  1,246
  1,306
  1,369
  1,436
Total equity, $m
  396
  405
  415
  427
  440
  454
  470
  486
  504
  524
  545
  567
  590
  615
  642
  670
  700
  731
  764
  799
  837
  876
  917
  960
  1,006
  1,054
  1,105
  1,158
  1,214
  1,273
Total liabilities and equity, $m
  842
  862
  883
  909
  936
  966
  1,000
  1,035
  1,073
  1,115
  1,159
  1,206
  1,256
  1,309
  1,366
  1,425
  1,489
  1,555
  1,626
  1,701
  1,780
  1,863
  1,951
  2,043
  2,140
  2,243
  2,351
  2,464
  2,583
  2,709
Debt-to-equity ratio
  0.900
  0.910
  0.910
  0.920
  0.920
  0.930
  0.940
  0.940
  0.950
  0.960
  0.960
  0.970
  0.980
  0.980
  0.990
  0.990
  1.000
  1.000
  1.010
  1.020
  1.020
  1.030
  1.030
  1.030
  1.040
  1.040
  1.050
  1.050
  1.050
  1.060
Adjusted equity ratio
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  36
  38
  40
  42
  45
  47
  50
  53
  57
  60
  104
  109
  113
  118
  122
  128
  133
  139
  145
  152
  159
  166
  173
  182
  190
  199
  208
  218
  229
  239
Depreciation, amort., depletion, $m
  91
  92
  93
  94
  95
  97
  98
  100
  101
  103
  50
  52
  54
  56
  58
  61
  64
  67
  70
  73
  76
  80
  84
  87
  92
  96
  101
  106
  111
  116
Funds from operations, $m
  128
  130
  133
  136
  140
  144
  148
  153
  158
  163
  154
  160
  167
  174
  181
  189
  197
  206
  215
  225
  235
  246
  257
  269
  282
  295
  309
  324
  339
  355
Change in working capital, $m
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
Cash from operations, $m
  127
  129
  132
  135
  138
  142
  146
  151
  155
  161
  151
  157
  164
  170
  177
  185
  193
  201
  210
  220
  230
  240
  252
  263
  276
  289
  302
  317
  332
  348
Maintenance CAPEX, $m
  -35
  -36
  -37
  -38
  -39
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -80
  -84
  -87
  -92
  -96
  -101
  -106
  -111
New CAPEX, $m
  -4
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
Cash from investing activities, $m
  -39
  -41
  -43
  -44
  -46
  -48
  -49
  -52
  -54
  -56
  -59
  -62
  -64
  -67
  -70
  -73
  -77
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -111
  -117
  -123
  -129
  -136
  -142
Free cash flow, $m
  87
  88
  89
  91
  93
  94
  97
  99
  102
  104
  93
  96
  99
  103
  107
  112
  116
  121
  126
  132
  137
  144
  150
  157
  164
  171
  179
  188
  197
  206
Issuance/(repayment) of debt, $m
  9
  10
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  35
  38
  40
  42
  44
  46
  49
  52
  54
  57
  60
  63
  67
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  
  9
  10
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  35
  38
  40
  42
  44
  46
  49
  52
  54
  57
  60
  63
  67
Total cash flow (excl. dividends), $m
  96
  98
  101
  104
  107
  110
  114
  118
  122
  126
  116
  121
  126
  131
  137
  143
  150
  157
  164
  171
  179
  188
  196
  206
  215
  226
  236
  248
  260
  272
Retained Cash Flow (-), $m
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
Prev. year cash balance distribution, $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 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
  88
  89
  91
  92
  94
  96
  99
  101
  104
  107
  95
  99
  103
  106
  111
  115
  120
  125
  130
  136
  142
  149
  155
  162
  170
  178
  186
  195
  204
  213
Discount rate, %
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
  82
  79
  74
  70
  65
  61
  56
  52
  47
  43
  33
  29
  26
  23
  19
  17
  14
  11
  9
  7
  6
  4
  3
  2
  2
  1
  1
  1
  0
  0
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

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 (MXL)

Valuation Ratios
P/E Ratio 20.3
Price to Sales 3.2
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 10.6
Price to Free Cash Flow 177.2
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 $420.318 million for the last fiscal year's total revenue generated by MaxLinear. The default revenue input number comes from 0001 income statement of MaxLinear. 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 6.2%, whose default value for MXL is calculated based on our internal credit rating of MaxLinear, 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.
    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 83.8%.

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 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 6% for MaxLinear.

Corporate tax rate of 27% is the nominal tax rate for MaxLinear. 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 48.8%.

Life of production assets of 5.8 years is the average useful life of capital assets used in MaxLinear 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 12.3%. 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 - $387.424 million for MaxLinear - 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 68.609 million for MaxLinear 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 at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ MaxLinear (MXL) Tops Q3 Earnings Estimates   [Oct-30-18 07:10PM  Zacks]
▶ MaxLinear: 3Q Earnings Snapshot   [06:05PM  Associated Press]
▶ MaxLinear (MXL) Q2 Earnings Beat Estimates   [Aug-07-18 09:00PM  Zacks]
▶ MaxLinear: 2Q Earnings Snapshot   [07:53PM  Associated Press]
▶ 3 of the Worst Growth Stocks of 2018 (So Far)   [Jul-15-18 05:10PM  Motley Fool]
▶ Should You Buy MaxLinear Inc (NYSE:MXL)?   [Jun-26-18 10:23AM  Simply Wall St.]
▶ MaxLinear: 1Q Earnings Snapshot   [May-09-18 05:14AM  Associated Press]
▶ This Factor Can Be Your Ray Of Light When The Market Looks Dark   [May-04-18 02:49PM  Investor's Business Daily]
▶ MaxLinear and Geniatech Target Live TV on Mobile Devices   [Apr-11-18 08:45AM  Business Wire]
▶ New Strong Sell Stocks for March 2nd   [Mar-02-18 06:00AM  Zacks]
▶ MaxLinear reports 4Q loss   [Feb-13-18 05:49PM  Associated Press]
▶ MaxLinear Inc. to Host Earnings Call   [12:30PM  ACCESSWIRE]
▶ ETFs with exposure to MaxLinear, Inc. : December 29, 2017   [Dec-29-17 12:21PM  Capital Cube]
▶ Why MaxLinear (MXL) Stock Might be a Great Pick   [Dec-26-17 08:42AM  Zacks]
▶ ETFs with exposure to MaxLinear, Inc. : December 18, 2017   [Dec-18-17 03:58PM  Capital Cube]
▶ ETFs with exposure to MaxLinear, Inc. : December 8, 2017   [Dec-08-17 01:13PM  Capital Cube]
▶ IBD Rating Upgrades: Maxlinear Shows Improved Technical Strength   [Dec-01-17 03:00AM  Investor's Business Daily]
▶ Maxlinear Shows Improved Relative Strength; Still Shy Of Benchmark   [Nov-29-17 03:00AM  Investor's Business Daily]
▶ MaxLinear reports 3Q loss   [Nov-07-17 06:59PM  Associated Press]
▶ MaxLinear inc to Host Earnings Call   [12:00PM  ACCESSWIRE]

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