Intrinsic value of National Instruments Corporation - NATI

Previous Close

$42.81

  Intrinsic Value

$17.73

stock screener

  Rating & Target

str. sell

-59%

Previous close

$42.81

 
Intrinsic value

$17.73

 
Up/down potential

-59%

 
Rating

str. sell

We calculate the intrinsic value of NATI 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 5.7

 

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, %
  3.00
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
Revenue, $m
  1,400
  1,445
  1,493
  1,546
  1,603
  1,665
  1,730
  1,800
  1,875
  1,954
  2,038
  2,127
  2,221
  2,321
  2,426
  2,538
  2,655
  2,779
  2,910
  3,047
  3,192
  3,345
  3,506
  3,675
  3,853
  4,040
  4,236
  4,443
  4,661
  4,890
Variable operating expenses, $m
  857
  883
  912
  943
  976
  1,012
  1,050
  1,091
  1,135
  1,181
  1,193
  1,245
  1,300
  1,359
  1,420
  1,486
  1,554
  1,627
  1,703
  1,784
  1,869
  1,958
  2,052
  2,151
  2,255
  2,365
  2,480
  2,601
  2,728
  2,862
Fixed operating expenses, $m
  370
  378
  386
  395
  404
  412
  422
  431
  440
  450
  460
  470
  480
  491
  502
  513
  524
  536
  547
  559
  572
  584
  597
  610
  624
  637
  651
  666
  680
  695
Total operating expenses, $m
  1,227
  1,261
  1,298
  1,338
  1,380
  1,424
  1,472
  1,522
  1,575
  1,631
  1,653
  1,715
  1,780
  1,850
  1,922
  1,999
  2,078
  2,163
  2,250
  2,343
  2,441
  2,542
  2,649
  2,761
  2,879
  3,002
  3,131
  3,267
  3,408
  3,557
Operating income, $m
  173
  183
  195
  209
  224
  240
  258
  278
  299
  323
  385
  412
  441
  471
  504
  539
  577
  617
  659
  704
  752
  803
  856
  913
  974
  1,037
  1,105
  1,176
  1,252
  1,332
EBITDA, $m
  261
  273
  287
  302
  319
  338
  359
  381
  405
  431
  459
  489
  521
  556
  592
  631
  673
  717
  765
  815
  868
  924
  983
  1,047
  1,113
  1,184
  1,259
  1,338
  1,421
  1,509
Interest expense (income), $m
  1
  0
  1
  1
  2
  3
  4
  5
  6
  8
  9
  10
  12
  13
  15
  17
  18
  20
  22
  24
  27
  29
  31
  34
  37
  40
  43
  46
  49
  53
  57
Earnings before tax, $m
  173
  183
  194
  206
  220
  236
  253
  272
  292
  314
  375
  400
  427
  457
  488
  521
  557
  594
  635
  677
  723
  771
  822
  876
  934
  995
  1,059
  1,127
  1,199
  1,275
Tax expense, $m
  47
  49
  52
  56
  60
  64
  68
  73
  79
  85
  101
  108
  115
  123
  132
  141
  150
  160
  171
  183
  195
  208
  222
  237
  252
  269
  286
  304
  324
  344
Net income, $m
  126
  133
  141
  151
  161
  172
  185
  198
  213
  229
  274
  292
  312
  333
  356
  380
  406
  434
  463
  494
  528
  563
  600
  640
  682
  726
  773
  823
  875
  931

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
  1,466
  1,513
  1,564
  1,619
  1,679
  1,743
  1,812
  1,885
  1,963
  2,046
  2,134
  2,227
  2,326
  2,430
  2,541
  2,657
  2,780
  2,910
  3,047
  3,191
  3,343
  3,503
  3,671
  3,848
  4,034
  4,230
  4,436
  4,653
  4,880
  5,120
Adjusted assets (=assets-cash), $m
  1,466
  1,513
  1,564
  1,619
  1,679
  1,743
  1,812
  1,885
  1,963
  2,046
  2,134
  2,227
  2,326
  2,430
  2,541
  2,657
  2,780
  2,910
  3,047
  3,191
  3,343
  3,503
  3,671
  3,848
  4,034
  4,230
  4,436
  4,653
  4,880
  5,120
Revenue / Adjusted assets
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
  0.955
Average production assets, $m
  452
  467
  482
  499
  518
  538
  559
  581
  605
  631
  658
  687
  717
  750
  784
  820
  858
  898
  940
  984
  1,031
  1,080
  1,132
  1,187
  1,244
  1,305
  1,368
  1,435
  1,505
  1,579
Working capital, $m
  214
  221
  228
  237
  245
  255
  265
  275
  287
  299
  312
  325
  340
  355
  371
  388
  406
  425
  445
  466
  488
  512
  536
  562
  589
  618
  648
  680
  713
  748
Total debt, $m
  13
  27
  43
  59
  77
  97
  118
  140
  164
  189
  216
  244
  274
  306
  340
  375
  412
  452
  493
  537
  583
  632
  683
  737
  793
  853
  916
  982
  1,051
  1,124
Total liabilities, $m
  446
  460
  475
  492
  510
  530
  551
  573
  597
  622
  649
  677
  707
  739
  772
  808
  845
  885
  926
  970
  1,016
  1,065
  1,116
  1,170
  1,226
  1,286
  1,349
  1,414
  1,484
  1,556
Total equity, $m
  1,020
  1,053
  1,088
  1,127
  1,168
  1,213
  1,261
  1,312
  1,366
  1,424
  1,485
  1,550
  1,619
  1,692
  1,768
  1,850
  1,935
  2,025
  2,121
  2,221
  2,327
  2,438
  2,555
  2,678
  2,808
  2,944
  3,088
  3,238
  3,397
  3,563
Total liabilities and equity, $m
  1,466
  1,513
  1,563
  1,619
  1,678
  1,743
  1,812
  1,885
  1,963
  2,046
  2,134
  2,227
  2,326
  2,431
  2,540
  2,658
  2,780
  2,910
  3,047
  3,191
  3,343
  3,503
  3,671
  3,848
  4,034
  4,230
  4,437
  4,652
  4,881
  5,119
Debt-to-equity ratio
  0.010
  0.030
  0.040
  0.050
  0.070
  0.080
  0.090
  0.110
  0.120
  0.130
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.260
  0.270
  0.280
  0.280
  0.290
  0.300
  0.300
  0.310
  0.320
Adjusted equity ratio
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  126
  133
  141
  151
  161
  172
  185
  198
  213
  229
  274
  292
  312
  333
  356
  380
  406
  434
  463
  494
  528
  563
  600
  640
  682
  726
  773
  823
  875
  931
Depreciation, amort., depletion, $m
  88
  90
  92
  94
  96
  98
  100
  103
  106
  108
  74
  77
  81
  84
  88
  92
  96
  101
  106
  111
  116
  121
  127
  133
  140
  147
  154
  161
  169
  177
Funds from operations, $m
  214
  223
  233
  244
  257
  270
  285
  301
  319
  337
  348
  369
  393
  418
  444
  472
  503
  535
  569
  605
  644
  684
  727
  773
  821
  873
  927
  984
  1,044
  1,108
Change in working capital, $m
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  33
  35
Cash from operations, $m
  208
  216
  226
  236
  248
  261
  275
  290
  307
  325
  335
  356
  378
  402
  428
  455
  485
  516
  549
  584
  621
  661
  703
  747
  794
  844
  897
  952
  1,011
  1,073
Maintenance CAPEX, $m
  -49
  -51
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -81
  -84
  -88
  -92
  -96
  -101
  -106
  -111
  -116
  -121
  -127
  -133
  -140
  -147
  -154
  -161
  -169
New CAPEX, $m
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -57
  -60
  -64
  -67
  -70
  -74
Cash from investing activities, $m
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -86
  -89
  -94
  -98
  -103
  -107
  -113
  -118
  -124
  -130
  -136
  -143
  -150
  -158
  -165
  -173
  -182
  -190
  -200
  -211
  -221
  -231
  -243
Free cash flow, $m
  146
  151
  157
  165
  173
  183
  193
  205
  218
  232
  237
  253
  270
  289
  310
  331
  355
  379
  406
  434
  464
  496
  530
  565
  603
  644
  686
  732
  780
  830
Issuance/(repayment) of debt, $m
  13
  14
  16
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
  32
  34
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  69
  73
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  
  13
  14
  16
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
  32
  34
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  69
  73
Total cash flow (excl. dividends), $m
  158
  165
  173
  182
  191
  202
  214
  227
  241
  257
  263
  281
  301
  321
  343
  367
  392
  419
  447
  478
  510
  544
  581
  619
  660
  703
  749
  798
  849
  903
Retained Cash Flow (-), $m
  -30
  -33
  -36
  -39
  -42
  -45
  -48
  -51
  -54
  -58
  -61
  -65
  -69
  -73
  -77
  -81
  -86
  -90
  -95
  -100
  -106
  -111
  -117
  -123
  -130
  -136
  -143
  -151
  -159
  -167
Prev. year cash balance distribution, $m
  248
  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
  377
  133
  137
  143
  150
  158
  166
  176
  187
  199
  202
  216
  232
  248
  266
  286
  306
  329
  352
  377
  404
  433
  464
  496
  530
  567
  606
  647
  690
  736
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
  361
  122
  120
  118
  116
  114
  112
  110
  108
  104
  96
  92
  88
  83
  78
  73
  67
  61
  54
  48
  42
  36
  30
  25
  21
  17
  13
  10
  8
  6
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

National Instruments Corporation (NI) designs, manufactures and sells systems to engineers and scientists. The Company offers a line of measurement, automation and control products. It offers products, technology and services, which include system design software, programming tools, application software, modular hardware products and related driver software, production test systems, NI education platform, software products for teaching and hardware products for teaching. It also offers NI Services, including hardware services and maintenance, software maintenance services, and training and certification. Its products are used across various industries in a range of applications, including research and development, simulation and modeling, prototype and validation, production testing and industrial control and field and factory service and repair. It serves various industries and applications, such as consumer electronics, commercial aerospace, telecommunications and others.

FINANCIAL RATIOS  of  National Instruments Corporation (NATI)

Valuation Ratios
P/E Ratio 66.6
Price to Sales 4.5
Price to Book 5
Price to Tangible Book
Price to Cash Flow 28.2
Price to Free Cash Flow 47.3
Growth Rates
Sales Growth Rate 0.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.2%
Cap. Spend. - 3 Yr. Gr. Rate 3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 2.2%
Total Debt to Equity 2.2%
Interest Coverage 116
Management Effectiveness
Return On Assets 5.7%
Ret/ On Assets - 3 Yr. Avg. 7.1%
Return On Total Capital 7.4%
Ret/ On T. Cap. - 3 Yr. Avg. 9.2%
Return On Equity 7.6%
Return On Equity - 3 Yr. Avg. 9.3%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 74.5%
Gross Margin - 3 Yr. Avg. 74.4%
EBITDA Margin 15.4%
EBITDA Margin - 3 Yr. Avg. 16.4%
Operating Margin 9.9%
Oper. Margin - 3 Yr. Avg. 11%
Pre-Tax Margin 9.4%
Pre-Tax Margin - 3 Yr. Avg. 10.5%
Net Profit Margin 6.8%
Net Profit Margin - 3 Yr. Avg. 8.2%
Effective Tax Rate 27.8%
Eff/ Tax Rate - 3 Yr. Avg. 22.6%
Payout Ratio 124.1%

NATI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NATI stock intrinsic value calculation we used $1359 million for the last fiscal year's total revenue generated by National Instruments Corporation. The default revenue input number comes from 0001 income statement of National Instruments 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 NATI stock valuation model: a) initial revenue growth rate of 3% 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 NATI is calculated based on our internal credit rating of National Instruments 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 National Instruments 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 NATI stock the variable cost ratio is equal to 61.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $362 million in the base year in the intrinsic value calculation for NATI 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 National Instruments Corporation.

Corporate tax rate of 27% is the nominal tax rate for National Instruments 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 NATI 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 NATI are equal to 32.3%.

Life of production assets of 8.9 years is the average useful life of capital assets used in National Instruments 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 NATI is equal to 15.3%. 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 - $1238.358 million for National Instruments 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 132.197 million for National Instruments 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 National Instruments Corporation at the current share price and the inputted number of shares is $5.7 billion.

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