Intrinsic value of NXP Semiconductors - NXPI

Previous Close

$104.05

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$104.05

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of NXPI 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 2016), $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 35.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  55.70
  50.63
  46.07
  41.96
  38.26
  34.94
  31.94
  29.25
  26.82
  24.64
  22.68
  20.91
  19.32
  17.89
  16.60
  15.44
  14.39
  13.46
  12.61
  11.85
  11.16
  10.55
  9.99
  9.49
  9.04
  8.64
  8.28
  7.95
  7.65
  7.39
Revenue, $m
  14,788
  22,276
  32,538
  46,190
  63,865
  86,178
  113,706
  146,965
  186,388
  232,318
  285,003
  344,598
  411,172
  484,719
  565,175
  652,431
  746,347
  846,770
  953,546
  1,066,530
  1,185,597
  1,310,648
  1,441,619
  1,578,479
  1,721,239
  1,869,950
  2,024,702
  2,185,630
  2,352,904
  2,526,737
Variable operating expenses, $m
  12,068
  17,358
  24,609
  34,256
  46,744
  62,510
  81,962
  105,462
  133,318
  165,771
  201,379
  243,488
  290,528
  342,495
  399,344
  460,998
  527,358
  598,315
  673,762
  753,594
  837,725
  926,085
  1,018,626
  1,115,330
  1,216,202
  1,321,279
  1,430,625
  1,544,333
  1,662,527
  1,785,355
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
  12,068
  17,358
  24,609
  34,256
  46,744
  62,510
  81,962
  105,462
  133,318
  165,771
  201,379
  243,488
  290,528
  342,495
  399,344
  460,998
  527,358
  598,315
  673,762
  753,594
  837,725
  926,085
  1,018,626
  1,115,330
  1,216,202
  1,321,279
  1,430,625
  1,544,333
  1,662,527
  1,785,355
Operating income, $m
  2,721
  4,917
  7,928
  11,934
  17,120
  23,667
  31,745
  41,503
  53,070
  66,547
  83,624
  101,110
  120,644
  142,224
  165,831
  191,433
  218,989
  248,455
  279,785
  312,936
  347,872
  384,564
  422,992
  463,149
  505,037
  548,671
  594,078
  641,296
  690,377
  741,382
EBITDA, $m
  7,412
  11,165
  16,308
  23,151
  32,010
  43,194
  56,991
  73,661
  93,420
  116,441
  142,848
  172,718
  206,085
  242,948
  283,274
  327,008
  374,080
  424,414
  477,932
  534,561
  594,239
  656,916
  722,561
  791,157
  862,711
  937,247
  1,014,811
  1,095,470
  1,179,310
  1,266,438
Interest expense (income), $m
  348
  496
  918
  1,513
  2,329
  3,415
  4,820
  6,594
  8,783
  11,428
  14,562
  18,214
  22,403
  27,142
  32,435
  38,283
  44,680
  51,618
  59,085
  67,070
  75,560
  84,544
  94,011
  103,954
  114,368
  125,250
  136,601
  148,425
  160,730
  173,525
  186,826
Earnings before tax, $m
  2,224
  3,999
  6,415
  9,605
  13,705
  18,847
  25,150
  32,720
  41,643
  51,985
  65,410
  78,707
  93,502
  109,789
  127,548
  146,753
  167,371
  189,369
  212,714
  237,376
  263,328
  290,553
  319,038
  348,781
  379,787
  412,070
  445,653
  480,566
  516,851
  554,556
Tax expense, $m
  601
  1,080
  1,732
  2,593
  3,700
  5,089
  6,791
  8,834
  11,244
  14,036
  17,661
  21,251
  25,246
  29,643
  34,438
  39,623
  45,190
  51,130
  57,433
  64,091
  71,099
  78,449
  86,140
  94,171
  102,543
  111,259
  120,326
  129,753
  139,550
  149,730
Net income, $m
  1,624
  2,920
  4,683
  7,012
  10,005
  13,758
  18,360
  23,886
  30,399
  37,949
  47,749
  57,456
  68,257
  80,146
  93,110
  107,129
  122,181
  138,240
  155,281
  173,284
  192,229
  212,103
  232,898
  254,610
  277,245
  300,811
  325,326
  350,813
  377,302
  404,826

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
  38,815
  58,467
  85,400
  121,235
  167,624
  226,188
  298,442
  385,735
  489,207
  609,759
  748,040
  904,457
  1,079,190
  1,272,228
  1,483,399
  1,712,416
  1,958,916
  2,222,494
  2,502,746
  2,799,292
  3,111,803
  3,440,022
  3,783,776
  4,142,989
  4,517,688
  4,908,004
  5,314,180
  5,736,561
  6,175,601
  6,631,857
Adjusted assets (=assets-cash), $m
  38,815
  58,467
  85,400
  121,235
  167,624
  226,188
  298,442
  385,735
  489,207
  609,759
  748,040
  904,457
  1,079,190
  1,272,228
  1,483,399
  1,712,416
  1,958,916
  2,222,494
  2,502,746
  2,799,292
  3,111,803
  3,440,022
  3,783,776
  4,142,989
  4,517,688
  4,908,004
  5,314,180
  5,736,561
  6,175,601
  6,631,857
Revenue / Adjusted assets
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
Average production assets, $m
  30,730
  46,289
  67,613
  95,984
  132,711
  179,077
  236,282
  305,393
  387,314
  482,757
  592,237
  716,075
  854,414
  1,007,246
  1,174,434
  1,355,751
  1,550,909
  1,759,589
  1,981,469
  2,216,250
  2,463,671
  2,723,527
  2,995,684
  3,280,079
  3,576,735
  3,885,755
  4,207,332
  4,541,738
  4,889,335
  5,250,560
Working capital, $m
  222
  334
  488
  693
  958
  1,293
  1,706
  2,204
  2,796
  3,485
  4,275
  5,169
  6,168
  7,271
  8,478
  9,786
  11,195
  12,702
  14,303
  15,998
  17,784
  19,660
  21,624
  23,677
  25,819
  28,049
  30,371
  32,784
  35,294
  37,901
Total debt, $m
  16,999
  28,024
  43,134
  63,237
  89,261
  122,116
  162,650
  211,621
  269,669
  337,299
  414,875
  502,624
  600,650
  708,944
  827,411
  955,890
  1,094,176
  1,242,043
  1,399,265
  1,565,627
  1,740,946
  1,925,076
  2,117,922
  2,319,441
  2,529,647
  2,748,614
  2,976,479
  3,213,435
  3,459,736
  3,715,696
Total liabilities, $m
  21,775
  32,800
  47,910
  68,013
  94,037
  126,892
  167,426
  216,397
  274,445
  342,075
  419,651
  507,400
  605,426
  713,720
  832,187
  960,666
  1,098,952
  1,246,819
  1,404,041
  1,570,403
  1,745,722
  1,929,852
  2,122,698
  2,324,217
  2,534,423
  2,753,390
  2,981,255
  3,218,211
  3,464,512
  3,720,472
Total equity, $m
  17,040
  25,667
  37,491
  53,222
  73,587
  99,297
  131,016
  169,338
  214,762
  267,684
  328,390
  397,057
  473,765
  558,508
  651,212
  751,751
  859,964
  975,675
  1,098,706
  1,228,889
  1,366,082
  1,510,170
  1,661,078
  1,818,772
  1,983,265
  2,154,614
  2,332,925
  2,518,350
  2,711,089
  2,911,385
Total liabilities and equity, $m
  38,815
  58,467
  85,401
  121,235
  167,624
  226,189
  298,442
  385,735
  489,207
  609,759
  748,041
  904,457
  1,079,191
  1,272,228
  1,483,399
  1,712,417
  1,958,916
  2,222,494
  2,502,747
  2,799,292
  3,111,804
  3,440,022
  3,783,776
  4,142,989
  4,517,688
  4,908,004
  5,314,180
  5,736,561
  6,175,601
  6,631,857
Debt-to-equity ratio
  1.000
  1.090
  1.150
  1.190
  1.210
  1.230
  1.240
  1.250
  1.260
  1.260
  1.260
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
Adjusted equity ratio
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,624
  2,920
  4,683
  7,012
  10,005
  13,758
  18,360
  23,886
  30,399
  37,949
  47,749
  57,456
  68,257
  80,146
  93,110
  107,129
  122,181
  138,240
  155,281
  173,284
  192,229
  212,103
  232,898
  254,610
  277,245
  300,811
  325,326
  350,813
  377,302
  404,826
Depreciation, amort., depletion, $m
  4,692
  6,247
  8,380
  11,217
  14,890
  19,526
  25,247
  32,158
  40,350
  49,894
  59,224
  71,607
  85,441
  100,725
  117,443
  135,575
  155,091
  175,959
  198,147
  221,625
  246,367
  272,353
  299,568
  328,008
  357,673
  388,576
  420,733
  454,174
  488,933
  525,056
Funds from operations, $m
  6,315
  9,167
  13,063
  18,229
  24,895
  33,285
  43,607
  56,044
  70,749
  87,843
  106,973
  129,064
  153,698
  180,870
  210,553
  242,705
  277,272
  314,199
  353,428
  394,909
  438,596
  484,456
  532,466
  582,618
  634,918
  689,387
  746,059
  804,987
  866,235
  929,882
Change in working capital, $m
  79
  112
  154
  205
  265
  335
  413
  499
  591
  689
  790
  894
  999
  1,103
  1,207
  1,309
  1,409
  1,506
  1,602
  1,695
  1,786
  1,876
  1,965
  2,053
  2,141
  2,231
  2,321
  2,414
  2,509
  2,608
Cash from operations, $m
  6,236
  9,055
  12,909
  18,024
  24,630
  32,950
  43,194
  55,545
  70,158
  87,154
  106,183
  128,170
  152,699
  179,767
  209,346
  241,396
  275,863
  312,692
  351,827
  393,214
  436,810
  482,580
  530,502
  580,565
  632,777
  687,156
  743,738
  802,573
  863,726
  927,275
Maintenance CAPEX, $m
  -1,974
  -3,073
  -4,629
  -6,761
  -9,598
  -13,271
  -17,908
  -23,628
  -30,539
  -38,731
  -48,276
  -59,224
  -71,607
  -85,441
  -100,725
  -117,443
  -135,575
  -155,091
  -175,959
  -198,147
  -221,625
  -246,367
  -272,353
  -299,568
  -328,008
  -357,673
  -388,576
  -420,733
  -454,174
  -488,933
New CAPEX, $m
  -10,991
  -15,559
  -21,324
  -28,371
  -36,727
  -46,366
  -57,205
  -69,112
  -81,921
  -95,443
  -109,480
  -123,838
  -138,340
  -152,831
  -167,188
  -181,317
  -195,158
  -208,680
  -221,881
  -234,781
  -247,421
  -259,857
  -272,156
  -284,396
  -296,656
  -309,021
  -321,576
  -334,407
  -347,596
  -361,226
Cash from investing activities, $m
  -12,965
  -18,632
  -25,953
  -35,132
  -46,325
  -59,637
  -75,113
  -92,740
  -112,460
  -134,174
  -157,756
  -183,062
  -209,947
  -238,272
  -267,913
  -298,760
  -330,733
  -363,771
  -397,840
  -432,928
  -469,046
  -506,224
  -544,509
  -583,964
  -624,664
  -666,694
  -710,152
  -755,140
  -801,770
  -850,159
Free cash flow, $m
  -6,729
  -9,577
  -13,044
  -17,108
  -21,696
  -26,687
  -31,919
  -37,195
  -42,302
  -47,020
  -51,573
  -54,892
  -57,248
  -58,506
  -58,566
  -57,365
  -54,870
  -51,079
  -46,013
  -39,713
  -32,235
  -23,643
  -14,007
  -3,399
  8,113
  20,462
  33,587
  47,433
  61,956
  77,116
Issuance/(repayment) of debt, $m
  7,812
  11,025
  15,110
  20,103
  26,025
  32,855
  40,534
  48,972
  58,048
  67,629
  77,576
  87,750
  98,026
  108,294
  118,467
  128,479
  138,286
  147,868
  157,221
  166,362
  175,319
  184,131
  192,846
  201,519
  210,206
  218,968
  227,864
  236,956
  246,302
  255,959
Issuance/(repurchase) of shares, $m
  4,481
  5,708
  7,141
  8,719
  10,360
  11,951
  13,360
  14,436
  15,025
  14,973
  12,956
  11,211
  8,452
  4,598
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  12,293
  16,733
  22,251
  28,822
  36,385
  44,806
  53,894
  63,408
  73,073
  82,602
  90,532
  98,961
  106,478
  112,892
  118,467
  128,479
  138,286
  147,868
  157,221
  166,362
  175,319
  184,131
  192,846
  201,519
  210,206
  218,968
  227,864
  236,956
  246,302
  255,959
Total cash flow (excl. dividends), $m
  5,564
  7,155
  9,207
  11,714
  14,688
  18,118
  21,975
  26,212
  30,771
  35,583
  38,959
  44,069
  49,229
  54,386
  59,901
  71,114
  83,416
  96,789
  111,209
  126,649
  143,083
  160,487
  178,839
  198,120
  218,319
  239,429
  261,451
  284,389
  308,258
  333,075
Retained Cash Flow (-), $m
  -6,105
  -8,627
  -11,824
  -15,731
  -20,365
  -25,710
  -31,719
  -38,322
  -45,424
  -52,922
  -60,705
  -68,667
  -76,708
  -84,744
  -92,704
  -100,539
  -108,213
  -115,711
  -123,031
  -130,184
  -137,192
  -144,088
  -150,908
  -157,695
  -164,493
  -171,349
  -178,311
  -185,425
  -192,739
  -200,296
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
  332
  518
  780
  1,139
  1,617
  2,235
  3,016
  3,980
  5,144
  6,524
  8,131
  9,975
  12,061
  14,391
  16,965
  19,781
  22,835
  26,122
  29,637
  33,374
  37,329
  41,496
  45,873
  50,457
  55,247
  60,243
  65,448
  70,865
  76,497
  82,352
Cash available for distribution, $m
  -541
  -1,472
  -2,617
  -4,017
  -5,677
  -7,591
  -9,744
  -12,109
  -14,654
  -17,339
  -21,746
  -24,598
  -27,479
  -30,357
  -32,803
  -29,425
  -24,797
  -18,922
  -11,822
  -3,535
  5,891
  16,399
  27,931
  40,425
  53,826
  68,080
  83,140
  98,964
  115,519
  132,779
Discount rate, %
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
  -514
  -1,321
  -2,207
  -3,165
  -4,155
  -5,126
  -6,028
  -6,811
  -7,435
  -7,868
  -8,746
  -8,683
  -8,427
  -8,000
  -7,343
  -5,526
  -3,856
  -2,403
  -1,208
  -286
  372
  792
  1,015
  1,083
  1,042
  931
  786
  631
  484
  356
Current shareholders' claim on cash, %
  88.7
  80.3
  73.9
  69.0
  65.0
  61.9
  59.4
  57.4
  55.9
  54.7
  53.9
  53.3
  53.0
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8
  52.8

NXP Semiconductors N.V. (NXP) is a holding company. The Company operates as a semiconductor company. The Company provides high performance mixed signal and standard product solutions. The Company's segments are High Performance Mixed Signal (HPMS), Standard Products (SP), and Corporate and Other. Its product solutions are used in a range of end-market applications, including automotive, personal security and identification, wireless and wireline infrastructure, mobile communications, multi-market industrial, consumer and computing. It engages with global original equipment manufacturers (OEMs) and sells products in all geographic regions. NXP's HPMS segment includes business lines, such as Automotive, Secure Identification Solutions (SIS), Secure Connected Devices (SCD), and Secure Interfaces and Infrastructure (SI&I). The Company's SP segment supplies a range of standard semiconductor components, such as small signal discretes and power discretes.

FINANCIAL RATIOS  of  NXP Semiconductors (NXPI)

Valuation Ratios
P/E Ratio 174.5
Price to Sales 3.7
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 15.2
Price to Free Cash Flow 18.8
Growth Rates
Sales Growth Rate 55.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 26.9%
Cap. Spend. - 3 Yr. Gr. Rate 12.4%
Financial Strength
Quick Ratio 4
Current Ratio 0.6
LT Debt to Equity 80.2%
Total Debt to Equity 84%
Interest Coverage -1
Management Effectiveness
Return On Assets 0.2%
Ret/ On Assets - 3 Yr. Avg. 6.9%
Return On Total Capital 1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.3%
Return On Equity 1.8%
Return On Equity - 3 Yr. Avg. 28.6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 43%
Gross Margin - 3 Yr. Avg. 45.3%
EBITDA Margin 20.5%
EBITDA Margin - 3 Yr. Avg. 25.7%
Operating Margin -1.9%
Oper. Margin - 3 Yr. Avg. 16.5%
Pre-Tax Margin -6.3%
Pre-Tax Margin - 3 Yr. Avg. 9.8%
Net Profit Margin 2.1%
Net Profit Margin - 3 Yr. Avg. 12.2%
Effective Tax Rate 141.1%
Eff/ Tax Rate - 3 Yr. Avg. 46.8%
Payout Ratio 0%

NXPI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NXPI stock intrinsic value calculation we used $9498 million for the last fiscal year's total revenue generated by NXP Semiconductors. The default revenue input number comes from 2016 income statement of NXP Semiconductors. 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 NXPI stock valuation model: a) initial revenue growth rate of 55.7% 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 5.3%, whose default value for NXPI is calculated based on our internal credit rating of NXP Semiconductors, 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 NXP Semiconductors.
    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 NXPI stock the variable cost ratio is equal to 87.7%.

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 NXPI 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 NXP Semiconductors.

Corporate tax rate of 27% is the nominal tax rate for NXP Semiconductors. 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 NXPI stock is equal to 3.5%.

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 NXPI are equal to 207.8%.

Life of production assets of 10 years is the average useful life of capital assets used in NXP Semiconductors 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 NXPI is equal to 1.5%. 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 - $10935 million for NXP Semiconductors - 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 338 million for NXP Semiconductors 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 NXP Semiconductors at the current share price and the inputted number of shares is $35.2 billion.

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COMPANY NEWS

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▶ Qualcomm extends NXP tender offer yet again   [Jun-29-18 11:21AM  Reuters]
▶ China's ZTE still in limbo over U.S. Commerce ban   [Jun-28-18 08:07PM  Reuters]
▶ Investor Makes Massive Bet That China Could Scuttle Qualcomm-NXP Deal   [Jun-26-18 04:34PM  The Wall Street Journal]
▶ NXP Unlocks Access to RF Energy   [09:00AM  GlobeNewswire]
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▶ [$$] Elliott Management Raises NXP Stake to 5.5%   [Jun-13-18 12:40PM  Barrons.com]
▶ ZTE to Resume Trading After Settlement Agreement With U.S.   [Jun-12-18 10:32PM  Bloomberg Video]
▶ Cover Story: How CEO Gregg Lowe wants to reshape Cree   [06:00AM  American City Business Journals]
▶ NXP Semiconductors and Allergan rise; Smucker slips   [Jun-07-18 04:39PM  Associated Press]
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