Intrinsic value of Nanometrics Incorporated - NANO

Previous Close

$30.86

  Intrinsic Value

$30.28

stock screener

  Rating & Target

hold

-2%

Previous close

$30.86

 
Intrinsic value

$30.28

 
Up/down potential

-2%

 
Rating

hold

We calculate the intrinsic value of NANO 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 0.8

 

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
  332
  339
  348
  358
  368
  380
  393
  407
  422
  439
  456
  475
  494
  515
  537
  561
  586
  612
  640
  669
  701
  733
  768
  804
  842
  883
  925
  970
  1,017
  1,066
Variable operating expenses, $m
  211
  216
  221
  227
  234
  241
  249
  258
  267
  278
  283
  294
  307
  320
  333
  348
  363
  380
  397
  415
  435
  455
  476
  499
  523
  548
  574
  602
  631
  661
Fixed operating expenses, $m
  54
  55
  57
  58
  59
  60
  62
  63
  64
  66
  67
  69
  70
  72
  73
  75
  77
  78
  80
  82
  84
  86
  87
  89
  91
  93
  95
  97
  100
  102
Total operating expenses, $m
  265
  271
  278
  285
  293
  301
  311
  321
  331
  344
  350
  363
  377
  392
  406
  423
  440
  458
  477
  497
  519
  541
  563
  588
  614
  641
  669
  699
  731
  763
Operating income, $m
  66
  68
  70
  73
  75
  79
  82
  86
  91
  95
  106
  111
  117
  124
  131
  138
  146
  154
  163
  172
  182
  193
  204
  216
  228
  242
  256
  271
  286
  303
EBITDA, $m
  77
  79
  81
  84
  87
  90
  94
  98
  103
  108
  113
  119
  126
  132
  140
  147
  155
  164
  174
  183
  194
  205
  217
  229
  243
  257
  271
  287
  303
  321
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
Earnings before tax, $m
  66
  68
  70
  72
  75
  78
  82
  85
  90
  94
  105
  110
  116
  122
  129
  136
  143
  151
  160
  169
  179
  189
  200
  211
  223
  236
  250
  264
  280
  296
Tax expense, $m
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  57
  60
  64
  67
  71
  75
  80
Net income, $m
  48
  50
  51
  53
  55
  57
  60
  62
  65
  69
  76
  80
  84
  89
  94
  99
  105
  110
  117
  123
  130
  138
  146
  154
  163
  173
  182
  193
  204
  216

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
  289
  296
  304
  312
  322
  332
  343
  355
  369
  383
  398
  414
  431
  450
  469
  489
  511
  534
  559
  584
  611
  640
  670
  702
  735
  770
  807
  846
  887
  930
Adjusted assets (=assets-cash), $m
  289
  296
  304
  312
  322
  332
  343
  355
  369
  383
  398
  414
  431
  450
  469
  489
  511
  534
  559
  584
  611
  640
  670
  702
  735
  770
  807
  846
  887
  930
Revenue / Adjusted assets
  1.149
  1.145
  1.145
  1.147
  1.143
  1.145
  1.146
  1.146
  1.144
  1.146
  1.146
  1.147
  1.146
  1.144
  1.145
  1.147
  1.147
  1.146
  1.145
  1.146
  1.147
  1.145
  1.146
  1.145
  1.146
  1.147
  1.146
  1.147
  1.147
  1.146
Average production assets, $m
  64
  66
  67
  69
  71
  74
  76
  79
  82
  85
  88
  92
  96
  100
  104
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
  207
Working capital, $m
  61
  62
  64
  65
  67
  70
  72
  75
  77
  80
  83
  87
  90
  94
  98
  103
  107
  112
  117
  123
  128
  134
  140
  147
  154
  162
  169
  177
  186
  195
Total debt, $m
  1
  3
  4
  6
  8
  11
  13
  16
  19
  22
  25
  29
  33
  37
  41
  45
  50
  55
  61
  66
  72
  79
  85
  92
  100
  107
  116
  124
  133
  143
Total liabilities, $m
  64
  65
  67
  69
  71
  73
  76
  79
  81
  85
  88
  92
  95
  99
  104
  108
  113
  118
  123
  129
  135
  141
  148
  155
  162
  170
  178
  187
  196
  206
Total equity, $m
  225
  231
  236
  243
  250
  259
  267
  277
  287
  298
  310
  323
  336
  350
  365
  381
  398
  416
  435
  455
  476
  498
  522
  547
  573
  600
  629
  659
  691
  725
Total liabilities and equity, $m
  289
  296
  303
  312
  321
  332
  343
  356
  368
  383
  398
  415
  431
  449
  469
  489
  511
  534
  558
  584
  611
  639
  670
  702
  735
  770
  807
  846
  887
  931
Debt-to-equity ratio
  0.010
  0.010
  0.020
  0.030
  0.030
  0.040
  0.050
  0.060
  0.070
  0.070
  0.080
  0.090
  0.100
  0.100
  0.110
  0.120
  0.130
  0.130
  0.140
  0.150
  0.150
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
  0.190
  0.190
  0.200
Adjusted equity ratio
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  48
  50
  51
  53
  55
  57
  60
  62
  65
  69
  76
  80
  84
  89
  94
  99
  105
  110
  117
  123
  130
  138
  146
  154
  163
  173
  182
  193
  204
  216
Depreciation, amort., depletion, $m
  11
  11
  11
  11
  12
  12
  12
  12
  12
  13
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
Funds from operations, $m
  59
  61
  62
  64
  66
  69
  72
  75
  78
  82
  84
  88
  93
  98
  103
  108
  114
  121
  127
  135
  142
  150
  159
  168
  177
  187
  198
  209
  221
  234
Change in working capital, $m
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
Cash from operations, $m
  58
  59
  61
  62
  64
  67
  69
  72
  75
  79
  81
  85
  89
  94
  99
  104
  110
  116
  122
  129
  136
  144
  152
  161
  170
  180
  190
  201
  213
  225
Maintenance CAPEX, $m
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
New CAPEX, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
Cash from investing activities, $m
  -6
  -7
  -8
  -8
  -8
  -8
  -9
  -10
  -10
  -10
  -10
  -12
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -17
  -17
  -18
  -19
  -20
  -20
  -22
  -23
  -24
  -25
  -27
Free cash flow, $m
  51
  52
  53
  55
  56
  58
  60
  63
  65
  68
  70
  74
  77
  81
  86
  91
  96
  101
  107
  113
  119
  126
  133
  141
  149
  158
  167
  177
  187
  198
Issuance/(repayment) of debt, $m
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
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  
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
Total cash flow (excl. dividends), $m
  52
  54
  55
  57
  58
  60
  63
  65
  68
  71
  73
  77
  81
  86
  90
  95
  100
  106
  112
  118
  125
  132
  140
  148
  157
  166
  175
  186
  196
  208
Retained Cash Flow (-), $m
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
Prev. year cash balance distribution, $m
  92
  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
  140
  49
  49
  50
  51
  52
  54
  56
  58
  60
  62
  65
  68
  71
  75
  79
  83
  88
  93
  98
  104
  110
  117
  123
  131
  138
  147
  155
  164
  174
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
  134
  44
  43
  41
  40
  38
  36
  35
  33
  32
  29
  28
  26
  24
  22
  20
  18
  16
  14
  13
  11
  9
  8
  6
  5
  4
  3
  2
  2
  1
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

Nanometrics Incorporated is a provider of process control metrology and inspection systems used primarily in the fabrication of semiconductors and other solid-state devices, including sensors, optoelectronic devices, high-brightness (HB) light emitting diodes (LEDs), discretes and data storages components. The Company's automated and integrated metrology systems measure critical dimensions, device structures, topography and various thin film properties, including three-dimensional features and film thickness, as well as optical, electrical and material properties. The Company's process control solutions are deployed throughout the fabrication process, from front-end-of-line substrate manufacturing, to production of semiconductors and other devices, to three-dimensional wafer-level packaging applications. The Company's automated systems primarily consist of automated metrology systems that are employed in semiconductor production environments.

FINANCIAL RATIOS  of  Nanometrics Incorporated (NANO)

Valuation Ratios
P/E Ratio 17.6
Price to Sales 3.5
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 16.8
Price to Free Cash Flow 18.4
Growth Rates
Sales Growth Rate 18.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
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 16.8%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 20.4%
Ret/ On T. Cap. - 3 Yr. Avg. 2%
Return On Equity 20.4%
Return On Equity - 3 Yr. Avg. 2%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 51.6%
Gross Margin - 3 Yr. Avg. 48.5%
EBITDA Margin 16.7%
EBITDA Margin - 3 Yr. Avg. 7.9%
Operating Margin 13.1%
Oper. Margin - 3 Yr. Avg. 2.9%
Pre-Tax Margin 13.1%
Pre-Tax Margin - 3 Yr. Avg. 3%
Net Profit Margin 19.9%
Net Profit Margin - 3 Yr. Avg. 0.9%
Effective Tax Rate -51.7%
Eff/ Tax Rate - 3 Yr. Avg. -53.4%
Payout Ratio 0%

NANO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NANO stock intrinsic value calculation we used $325 million for the last fiscal year's total revenue generated by Nanometrics Incorporated. The default revenue input number comes from 0001 income statement of Nanometrics Incorporated. 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 NANO 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 NANO is calculated based on our internal credit rating of Nanometrics Incorporated, 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 Nanometrics Incorporated.
    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 NANO stock the variable cost ratio is equal to 63.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $53 million in the base year in the intrinsic value calculation for NANO 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 Nanometrics Incorporated.

Corporate tax rate of 27% is the nominal tax rate for Nanometrics Incorporated. 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 NANO 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 NANO are equal to 19.4%.

Life of production assets of 11.6 years is the average useful life of capital assets used in Nanometrics Incorporated 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 NANO is equal to 18.3%. 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 - $312.852 million for Nanometrics Incorporated - 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 24.464 million for Nanometrics Incorporated 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 Nanometrics Incorporated at the current share price and the inputted number of shares is $0.8 billion.

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