Intrinsic value of Nova Measuring Instruments - NVMI

Previous Close

$28.10

  Intrinsic Value

$4.74

stock screener

  Rating & Target

str. sell

-83%

Previous close

$28.10

 
Intrinsic value

$4.74

 
Up/down potential

-83%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of NVMI 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.07
  22.70
  20.93
  19.34
  17.90
  16.61
  15.45
  14.41
  13.47
  12.62
  11.86
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
Revenue, $m
  164
  201
  243
  290
  342
  399
  461
  527
  598
  674
  754
  838
  926
  1,019
  1,116
  1,217
  1,322
  1,432
  1,545
  1,664
  1,787
  1,914
  2,047
  2,185
  2,329
  2,478
  2,634
  2,795
  2,964
  3,140
  3,323
Variable operating expenses, $m
 
  185
  223
  266
  313
  365
  421
  481
  546
  614
  687
  762
  842
  926
  1,014
  1,106
  1,202
  1,301
  1,404
  1,512
  1,624
  1,740
  1,861
  1,986
  2,116
  2,252
  2,393
  2,540
  2,694
  2,853
  3,020
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
  154
  185
  223
  266
  313
  365
  421
  481
  546
  614
  687
  762
  842
  926
  1,014
  1,106
  1,202
  1,301
  1,404
  1,512
  1,624
  1,740
  1,861
  1,986
  2,116
  2,252
  2,393
  2,540
  2,694
  2,853
  3,020
Operating income, $m
  10
  16
  20
  24
  29
  34
  40
  46
  53
  59
  67
  76
  84
  93
  102
  111
  121
  131
  141
  152
  163
  175
  187
  199
  212
  226
  240
  255
  270
  286
  303
EBITDA, $m
  17
  23
  28
  33
  39
  45
  52
  60
  68
  77
  86
  95
  105
  116
  127
  138
  150
  163
  175
  189
  203
  217
  232
  248
  264
  281
  299
  317
  336
  356
  377
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
Earnings before tax, $m
  11
  16
  20
  24
  28
  33
  38
  43
  49
  55
  62
  71
  78
  86
  94
  102
  111
  120
  129
  139
  149
  159
  170
  182
  193
  206
  218
  232
  246
  260
  275
Tax expense, $m
  1
  4
  5
  6
  8
  9
  10
  12
  13
  15
  17
  19
  21
  23
  25
  28
  30
  32
  35
  37
  40
  43
  46
  49
  52
  56
  59
  63
  66
  70
  74
Net income, $m
  10
  12
  14
  17
  20
  24
  28
  32
  36
  40
  45
  52
  57
  63
  68
  74
  81
  87
  94
  101
  109
  116
  124
  133
  141
  150
  159
  169
  179
  190
  201

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  91
  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
  219
  157
  190
  227
  267
  312
  360
  412
  467
  526
  588
  654
  723
  796
  871
  950
  1,032
  1,118
  1,206
  1,299
  1,395
  1,495
  1,598
  1,706
  1,818
  1,935
  2,056
  2,182
  2,314
  2,451
  2,594
Adjusted assets (=assets-cash), $m
  128
  157
  190
  227
  267
  312
  360
  412
  467
  526
  588
  654
  723
  796
  871
  950
  1,032
  1,118
  1,206
  1,299
  1,395
  1,495
  1,598
  1,706
  1,818
  1,935
  2,056
  2,182
  2,314
  2,451
  2,594
Revenue / Adjusted assets
  1.281
  1.280
  1.279
  1.278
  1.281
  1.279
  1.281
  1.279
  1.281
  1.281
  1.282
  1.281
  1.281
  1.280
  1.281
  1.281
  1.281
  1.281
  1.281
  1.281
  1.281
  1.280
  1.281
  1.281
  1.281
  1.281
  1.281
  1.281
  1.281
  1.281
  1.281
Average production assets, $m
  22
  27
  33
  39
  46
  54
  62
  71
  80
  90
  101
  112
  124
  137
  150
  163
  177
  192
  207
  223
  239
  257
  274
  293
  312
  332
  353
  375
  397
  421
  445
Working capital, $m
  129
  47
  56
  67
  79
  93
  107
  122
  139
  156
  175
  194
  215
  236
  259
  282
  307
  332
  359
  386
  415
  444
  475
  507
  540
  575
  611
  649
  688
  728
  771
Total debt, $m
  0
  10
  21
  34
  48
  63
  80
  98
  117
  137
  158
  181
  205
  230
  256
  283
  311
  340
  371
  403
  436
  470
  506
  543
  581
  621
  663
  707
  752
  799
  848
Total liabilities, $m
  44
  54
  65
  78
  92
  107
  124
  142
  161
  181
  202
  225
  249
  274
  300
  327
  355
  384
  415
  447
  480
  514
  550
  587
  625
  665
  707
  751
  796
  843
  892
Total equity, $m
  175
  103
  125
  149
  175
  204
  236
  270
  306
  345
  386
  429
  474
  522
  571
  623
  677
  733
  791
  852
  915
  980
  1,048
  1,119
  1,193
  1,269
  1,349
  1,432
  1,518
  1,608
  1,702
Total liabilities and equity, $m
  219
  157
  190
  227
  267
  311
  360
  412
  467
  526
  588
  654
  723
  796
  871
  950
  1,032
  1,117
  1,206
  1,299
  1,395
  1,494
  1,598
  1,706
  1,818
  1,934
  2,056
  2,183
  2,314
  2,451
  2,594
Debt-to-equity ratio
  0.000
  0.100
  0.170
  0.230
  0.270
  0.310
  0.340
  0.360
  0.380
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.450
  0.460
  0.460
  0.470
  0.470
  0.480
  0.480
  0.480
  0.490
  0.490
  0.490
  0.490
  0.490
  0.500
  0.500
  0.500
Adjusted equity ratio
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  10
  12
  14
  17
  20
  24
  28
  32
  36
  40
  45
  52
  57
  63
  68
  74
  81
  87
  94
  101
  109
  116
  124
  133
  141
  150
  159
  169
  179
  190
  201
Depreciation, amort., depletion, $m
  7
  6
  7
  8
  10
  11
  12
  14
  15
  17
  19
  19
  21
  23
  25
  27
  30
  32
  35
  37
  40
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
Funds from operations, $m
  -28
  18
  22
  26
  30
  35
  40
  45
  51
  57
  64
  70
  78
  85
  93
  102
  110
  119
  129
  138
  149
  159
  170
  181
  193
  205
  218
  232
  245
  260
  275
Change in working capital, $m
  -24
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  42
Cash from operations, $m
  -4
  10
  12
  15
  18
  22
  26
  30
  35
  40
  46
  51
  57
  64
  71
  78
  86
  94
  102
  111
  120
  129
  139
  149
  160
  171
  182
  194
  206
  219
  233
Maintenance CAPEX, $m
  0
  -4
  -4
  -5
  -6
  -8
  -9
  -10
  -12
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -30
  -32
  -35
  -37
  -40
  -43
  -46
  -49
  -52
  -55
  -59
  -62
  -66
  -70
New CAPEX, $m
  -3
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
Cash from investing activities, $m
  -4
  -9
  -10
  -11
  -13
  -16
  -17
  -19
  -22
  -23
  -26
  -28
  -31
  -33
  -36
  -39
  -41
  -45
  -47
  -51
  -53
  -57
  -61
  -64
  -68
  -72
  -76
  -81
  -85
  -90
  -95
Free cash flow, $m
  -8
  1
  2
  3
  5
  6
  8
  11
  13
  16
  20
  23
  27
  31
  35
  40
  45
  50
  55
  61
  66
  72
  79
  85
  92
  99
  106
  114
  121
  129
  138
Issuance/(repayment) of debt, $m
  0
  10
  11
  13
  14
  15
  17
  18
  19
  20
  21
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
Issuance/(repurchase) of shares, $m
  1
  7
  7
  7
  6
  5
  4
  2
  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
  17
  18
  20
  20
  20
  21
  20
  19
  20
  21
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
Total cash flow (excl. dividends), $m
  -7
  18
  20
  23
  25
  27
  29
  31
  33
  37
  41
  45
  50
  56
  61
  67
  73
  79
  86
  92
  99
  107
  114
  122
  130
  139
  148
  157
  167
  177
  187
Retained Cash Flow (-), $m
  -14
  -19
  -22
  -24
  -27
  -29
  -32
  -34
  -36
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -65
  -68
  -71
  -74
  -76
  -80
  -83
  -86
  -90
  -94
Prev. year cash balance distribution, $m
 
  91
  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
 
  90
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -2
  0
  2
  5
  8
  12
  15
  19
  23
  27
  32
  36
  41
  46
  51
  57
  62
  68
  74
  80
  87
  93
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
 
  87
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -1
  0
  1
  2
  3
  4
  4
  5
  5
  5
  5
  5
  4
  4
  3
  3
  2
  2
  2
  1
  1
  1
Current shareholders' claim on cash, %
  100
  98.2
  96.7
  95.5
  94.7
  94.0
  93.6
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4

Nova Measuring Instruments Ltd. provides metrology solutions for the semiconductor manufacturing industry. The Company offers in-line Optical and x-ray stand-alone metrology systems, as well as integrated optical metrology systems, which are attached directly to wafer fabrication process equipment. Its metrology systems measure various film thickness and composition properties, as well as critical-dimension (CD) variables during various front-end and back-end of line steps in the semiconductor wafer fabrication process. Its product portfolio includes a set of in-situ, integrated and stand-alone metrology platforms suited for dimensional, films and material metrology measurements for process control across multiple semiconductor manufacturing process steps. Its products include NovaScan 2040, NovaScan 3090Next, Nova i500, Nova T500, Nova T600, Nova V2600 TSV metrology system, NovaMars, Nova Hybrid Metrology solution, Nova Fleet Management, VeraFlex II, VeraFlex III XF and QED.

FINANCIAL RATIOS  of  Nova Measuring Instruments (NVMI)

Valuation Ratios
P/E Ratio 76.1
Price to Sales 4.6
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow -190.3
Price to Free Cash Flow -108.7
Growth Rates
Sales Growth Rate 10.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25%
Cap. Spend. - 3 Yr. Gr. Rate -5.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 6%
Ret/ On T. Cap. - 3 Yr. Avg. 10.1%
Return On Equity 6%
Return On Equity - 3 Yr. Avg. 10.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 45.7%
Gross Margin - 3 Yr. Avg. 50.1%
EBITDA Margin 11%
EBITDA Margin - 3 Yr. Avg. 14.4%
Operating Margin 6.1%
Oper. Margin - 3 Yr. Avg. 9.4%
Pre-Tax Margin 6.7%
Pre-Tax Margin - 3 Yr. Avg. 9.6%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 10.8%
Effective Tax Rate 9.1%
Eff/ Tax Rate - 3 Yr. Avg. -12%
Payout Ratio 0%

NVMI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NVMI stock intrinsic value calculation we used $164 million for the last fiscal year's total revenue generated by Nova Measuring Instruments. The default revenue input number comes from 2016 income statement of Nova Measuring Instruments. 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 NVMI stock valuation model: a) initial revenue growth rate of 22.7% 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 NVMI is calculated based on our internal credit rating of Nova Measuring Instruments, 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 Nova Measuring Instruments.
    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 NVMI stock the variable cost ratio is equal to 92.1%.

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 NVMI 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 3.5% for Nova Measuring Instruments.

Corporate tax rate of 27% is the nominal tax rate for Nova Measuring Instruments. 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 NVMI 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 NVMI are equal to 13.4%.

Life of production assets of 6 years is the average useful life of capital assets used in Nova Measuring Instruments 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 NVMI is equal to 23.2%. 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 - $175 million for Nova Measuring Instruments - 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 28.021 million for Nova Measuring Instruments 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 Nova Measuring Instruments at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ Nova to Present at the Needham Growth Conference   [Jan-04-18 08:20AM  PR Newswire]
▶ Nova Launches 5th Generation X-Ray Metrology Solution   [Dec-21-17 08:30AM  PR Newswire]
▶ Ronnie Kenneth Joins Nova's Board of Directors   [Dec-19-17 02:51AM  PR Newswire]
▶ 5 Best Profitable Stocks to Buy in December   [Dec-05-17 08:36AM  Zacks]
▶ New Strong Buy Stocks for November 29th   [Nov-29-17 09:29AM  Zacks]
▶ Nova Guidance Disappoints; Chip-Gear Peers Get Price-Target Hikes   [Nov-01-17 04:37PM  Investor's Business Daily]
▶ Nova Measuring Instruments posts 3Q profit   [05:09AM  Associated Press]
▶ Nova Reports Third Quarter 2017 Results   [05:00AM  PR Newswire]
▶ 3 Under-the-Radar Small Cap Gems   [11:14AM  Investopedia]
▶ Scott Black Establishes 4 New Positions in 2nd Quarter   [Aug-22-17 12:45PM  GuruFocus.com]
▶ Nova Measuring Instruments posts 2Q profit   [Aug-02-17 10:50PM  Associated Press]
▶ Nova Measuring Instruments posts 2Q profit   [05:02AM  Associated Press]
▶ Nova to Attend SEMICON West 2017   [09:30AM  PR Newswire]
▶ 5 Dependable Tech Stocks in a Volatile Industry   [Jun-15-17 03:32PM  Zacks]
▶ Shark Bites: Market Isn't a Morning Person   [May-12-17 12:10PM  TheStreet.com]
▶ Nova Measuring Instruments posts 1Q profit   [May-09-17 05:32AM  Associated Press]
▶ Top 10 Stocks Under $20   [Apr-06-17 03:55PM  Zacks]
▶ Crude Bucks Choppy Trend - Dave's Daily Dive   [Apr-04-17 07:52PM  Zacks]
Financial statements of NVMI
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