Intrinsic value of Qorvo, Inc. - QRVO

Previous Close

$76.68

  Intrinsic Value

$21.95

stock screener

  Rating & Target

str. sell

-71%

Previous close

$76.68

 
Intrinsic value

$21.95

 
Up/down potential

-71%

 
Rating

str. sell

We calculate the intrinsic value of QRVO 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 9.4

 

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
  3,033
  3,103
  3,183
  3,273
  3,372
  3,481
  3,599
  3,727
  3,866
  4,014
  4,173
  4,342
  4,522
  4,714
  4,917
  5,133
  5,361
  5,602
  5,857
  6,126
  6,410
  6,710
  7,025
  7,358
  7,708
  8,077
  8,465
  8,874
  9,304
  9,756
Variable operating expenses, $m
  2,130
  2,172
  2,220
  2,273
  2,333
  2,399
  2,470
  2,547
  2,630
  2,720
  2,512
  2,614
  2,722
  2,838
  2,960
  3,090
  3,227
  3,372
  3,526
  3,688
  3,859
  4,039
  4,229
  4,429
  4,640
  4,862
  5,096
  5,342
  5,601
  5,873
Fixed operating expenses, $m
  845
  864
  883
  902
  922
  942
  963
  984
  1,006
  1,028
  1,051
  1,074
  1,097
  1,122
  1,146
  1,171
  1,197
  1,224
  1,250
  1,278
  1,306
  1,335
  1,364
  1,394
  1,425
  1,456
  1,488
  1,521
  1,554
  1,589
Total operating expenses, $m
  2,975
  3,036
  3,103
  3,175
  3,255
  3,341
  3,433
  3,531
  3,636
  3,748
  3,563
  3,688
  3,819
  3,960
  4,106
  4,261
  4,424
  4,596
  4,776
  4,966
  5,165
  5,374
  5,593
  5,823
  6,065
  6,318
  6,584
  6,863
  7,155
  7,462
Operating income, $m
  59
  68
  81
  97
  117
  140
  166
  196
  229
  266
  610
  654
  703
  755
  811
  872
  937
  1,006
  1,081
  1,160
  1,245
  1,336
  1,432
  1,534
  1,643
  1,759
  1,881
  2,011
  2,148
  2,294
EBITDA, $m
  831
  851
  877
  907
  942
  981
  1,026
  1,076
  1,131
  1,191
  1,256
  1,326
  1,402
  1,484
  1,572
  1,666
  1,766
  1,873
  1,987
  2,108
  2,237
  2,374
  2,519
  2,673
  2,836
  3,008
  3,191
  3,384
  3,588
  3,803
Interest expense (income), $m
  71
  59
  61
  63
  66
  69
  72
  75
  79
  83
  88
  93
  98
  103
  109
  115
  122
  129
  136
  144
  152
  161
  170
  180
  190
  201
  212
  224
  237
  250
  264
Earnings before tax, $m
  0
  7
  18
  31
  48
  68
  91
  117
  146
  178
  518
  557
  599
  646
  696
  750
  808
  870
  937
  1,008
  1,084
  1,166
  1,252
  1,344
  1,442
  1,546
  1,657
  1,774
  1,899
  2,030
Tax expense, $m
  0
  2
  5
  8
  13
  18
  24
  32
  39
  48
  140
  150
  162
  174
  188
  202
  218
  235
  253
  272
  293
  315
  338
  363
  389
  418
  447
  479
  513
  548
Net income, $m
  0
  5
  13
  23
  35
  49
  66
  85
  107
  130
  378
  406
  438
  471
  508
  547
  590
  635
  684
  736
  792
  851
  914
  981
  1,053
  1,129
  1,210
  1,295
  1,386
  1,482

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
  6,019
  6,157
  6,315
  6,493
  6,690
  6,906
  7,141
  7,396
  7,670
  7,964
  8,279
  8,615
  8,973
  9,353
  9,757
  10,184
  10,637
  11,116
  11,621
  12,155
  12,719
  13,313
  13,939
  14,599
  15,294
  16,026
  16,796
  17,607
  18,459
  19,356
Adjusted assets (=assets-cash), $m
  6,019
  6,157
  6,315
  6,493
  6,690
  6,906
  7,141
  7,396
  7,670
  7,964
  8,279
  8,615
  8,973
  9,353
  9,757
  10,184
  10,637
  11,116
  11,621
  12,155
  12,719
  13,313
  13,939
  14,599
  15,294
  16,026
  16,796
  17,607
  18,459
  19,356
Revenue / Adjusted assets
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
Average production assets, $m
  3,097
  3,168
  3,250
  3,341
  3,443
  3,554
  3,675
  3,806
  3,947
  4,098
  4,260
  4,433
  4,617
  4,813
  5,021
  5,241
  5,474
  5,720
  5,980
  6,255
  6,545
  6,851
  7,173
  7,512
  7,870
  8,247
  8,643
  9,060
  9,499
  9,960
Working capital, $m
  485
  497
  509
  524
  539
  557
  576
  596
  619
  642
  668
  695
  724
  754
  787
  821
  858
  896
  937
  980
  1,026
  1,074
  1,124
  1,177
  1,233
  1,292
  1,354
  1,420
  1,489
  1,561
Total debt, $m
  1,014
  1,052
  1,095
  1,143
  1,197
  1,256
  1,320
  1,389
  1,464
  1,544
  1,629
  1,721
  1,818
  1,921
  2,031
  2,147
  2,271
  2,401
  2,538
  2,684
  2,837
  2,998
  3,169
  3,348
  3,537
  3,736
  3,946
  4,166
  4,398
  4,642
Total liabilities, $m
  1,637
  1,675
  1,718
  1,766
  1,820
  1,878
  1,942
  2,012
  2,086
  2,166
  2,252
  2,343
  2,441
  2,544
  2,654
  2,770
  2,893
  3,023
  3,161
  3,306
  3,459
  3,621
  3,791
  3,971
  4,160
  4,359
  4,569
  4,789
  5,021
  5,265
Total equity, $m
  4,382
  4,482
  4,598
  4,727
  4,870
  5,028
  5,199
  5,384
  5,584
  5,798
  6,027
  6,272
  6,532
  6,809
  7,103
  7,414
  7,744
  8,092
  8,460
  8,849
  9,259
  9,692
  10,148
  10,628
  11,134
  11,667
  12,228
  12,818
  13,438
  14,091
Total liabilities and equity, $m
  6,019
  6,157
  6,316
  6,493
  6,690
  6,906
  7,141
  7,396
  7,670
  7,964
  8,279
  8,615
  8,973
  9,353
  9,757
  10,184
  10,637
  11,115
  11,621
  12,155
  12,718
  13,313
  13,939
  14,599
  15,294
  16,026
  16,797
  17,607
  18,459
  19,356
Debt-to-equity ratio
  0.230
  0.230
  0.240
  0.240
  0.250
  0.250
  0.250
  0.260
  0.260
  0.270
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.290
  0.300
  0.300
  0.300
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
Adjusted equity ratio
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  5
  13
  23
  35
  49
  66
  85
  107
  130
  378
  406
  438
  471
  508
  547
  590
  635
  684
  736
  792
  851
  914
  981
  1,053
  1,129
  1,210
  1,295
  1,386
  1,482
Depreciation, amort., depletion, $m
  773
  783
  796
  810
  825
  842
  860
  880
  901
  924
  646
  672
  700
  729
  761
  794
  829
  867
  906
  948
  992
  1,038
  1,087
  1,138
  1,192
  1,249
  1,310
  1,373
  1,439
  1,509
Funds from operations, $m
  772
  789
  809
  832
  860
  891
  926
  965
  1,008
  1,055
  1,023
  1,078
  1,137
  1,201
  1,269
  1,341
  1,419
  1,502
  1,590
  1,684
  1,783
  1,889
  2,001
  2,120
  2,245
  2,378
  2,519
  2,668
  2,825
  2,991
Change in working capital, $m
  10
  11
  13
  14
  16
  17
  19
  21
  22
  24
  25
  27
  29
  31
  33
  34
  36
  39
  41
  43
  45
  48
  51
  53
  56
  59
  62
  65
  69
  72
Cash from operations, $m
  763
  777
  796
  818
  844
  874
  907
  945
  986
  1,031
  998
  1,051
  1,108
  1,170
  1,236
  1,307
  1,382
  1,463
  1,549
  1,641
  1,738
  1,841
  1,950
  2,066
  2,189
  2,319
  2,457
  2,603
  2,756
  2,919
Maintenance CAPEX, $m
  -460
  -469
  -480
  -492
  -506
  -522
  -538
  -557
  -577
  -598
  -621
  -646
  -672
  -700
  -729
  -761
  -794
  -829
  -867
  -906
  -948
  -992
  -1,038
  -1,087
  -1,138
  -1,192
  -1,249
  -1,310
  -1,373
  -1,439
New CAPEX, $m
  -62
  -71
  -81
  -91
  -101
  -111
  -121
  -131
  -141
  -151
  -162
  -173
  -184
  -196
  -208
  -220
  -233
  -246
  -260
  -275
  -290
  -306
  -322
  -340
  -358
  -377
  -396
  -417
  -439
  -462
Cash from investing activities, $m
  -522
  -540
  -561
  -583
  -607
  -633
  -659
  -688
  -718
  -749
  -783
  -819
  -856
  -896
  -937
  -981
  -1,027
  -1,075
  -1,127
  -1,181
  -1,238
  -1,298
  -1,360
  -1,427
  -1,496
  -1,569
  -1,645
  -1,727
  -1,812
  -1,901
Free cash flow, $m
  241
  237
  234
  234
  237
  241
  248
  257
  268
  281
  215
  233
  252
  275
  299
  326
  356
  388
  422
  460
  500
  544
  590
  640
  693
  750
  811
  876
  945
  1,018
Issuance/(repayment) of debt, $m
  31
  38
  43
  48
  54
  59
  64
  69
  75
  80
  86
  91
  97
  103
  110
  116
  123
  130
  138
  145
  153
  162
  170
  179
  189
  199
  210
  220
  232
  244
Issuance/(repurchase) of shares, $m
  91
  96
  102
  107
  108
  108
  105
  100
  93
  84
  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  
  122
  134
  145
  155
  162
  167
  169
  169
  168
  164
  86
  91
  97
  103
  110
  116
  123
  130
  138
  145
  153
  162
  170
  179
  189
  199
  210
  220
  232
  244
Total cash flow (excl. dividends), $m
  363
  370
  380
  389
  398
  408
  417
  426
  436
  445
  301
  324
  350
  378
  409
  442
  479
  518
  560
  605
  653
  705
  760
  819
  882
  949
  1,021
  1,096
  1,177
  1,262
Retained Cash Flow (-), $m
  -91
  -101
  -115
  -129
  -143
  -157
  -171
  -185
  -200
  -214
  -229
  -245
  -260
  -277
  -294
  -311
  -329
  -348
  -368
  -389
  -410
  -433
  -456
  -480
  -506
  -533
  -561
  -590
  -621
  -653
Prev. year cash balance distribution, $m
  485
  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
  757
  269
  265
  260
  255
  250
  246
  241
  236
  231
  71
  79
  89
  101
  115
  131
  149
  169
  192
  216
  243
  273
  304
  339
  376
  417
  460
  506
  556
  609
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
  726
  247
  230
  214
  198
  182
  166
  151
  136
  121
  34
  34
  34
  34
  34
  33
  32
  31
  30
  27
  25
  23
  20
  17
  15
  12
  10
  8
  6
  5
Current shareholders' claim on cash, %
  98.9
  97.9
  96.7
  95.6
  94.5
  93.5
  92.5
  91.6
  90.8
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1
  90.1

Qorvo, Inc. is a provider of technologies and radio frequency (RF) solutions for mobile, infrastructure and defense and aerospace applications. The Company designs, develops, manufactures and markets its products to the United States and international original equipment manufacturers (OEMs) and original design manufacturers (ODMs). Its segments include Mobile Products (MP) and Infrastructure and Defense Products (IDP). The MP segment is a supplier of radio frequency (RF) solutions that perform various functions in the cellular radio front end section of smartphones and other cellular devices. The IDP segment is a supplier of RF solutions that support various global applications, including ubiquitous high-speed network connectivity to the cloud, data center communications, Internet connectivity throughout the home and workplace, and upgraded military capabilities across the globe. It operates design, sales and manufacturing facilities located throughout Asia, Europe and North America.

FINANCIAL RATIOS  of  Qorvo, Inc. (QRVO)

Valuation Ratios
P/E Ratio -570.4
Price to Sales 3.2
Price to Book 2
Price to Tangible Book
Price to Cash Flow 12.5
Price to Free Cash Flow 43.3
Growth Rates
Sales Growth Rate 16.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 75%
Cap. Spend. - 3 Yr. Gr. Rate 52.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 20.2%
Total Debt to Equity 20.2%
Interest Coverage 1
Management Effectiveness
Return On Assets -0.9%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital -0.3%
Ret/ On T. Cap. - 3 Yr. Avg. 1.6%
Return On Equity -0.3%
Return On Equity - 3 Yr. Avg. 1.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 37.5%
Gross Margin - 3 Yr. Avg. 39.3%
EBITDA Margin 26.5%
EBITDA Margin - 3 Yr. Avg. 24%
Operating Margin 2.9%
Oper. Margin - 3 Yr. Avg. 3.5%
Pre-Tax Margin 0.9%
Pre-Tax Margin - 3 Yr. Avg. 2.6%
Net Profit Margin -0.6%
Net Profit Margin - 3 Yr. Avg. 3.3%
Effective Tax Rate 163%
Eff/ Tax Rate - 3 Yr. Avg. -255.2%
Payout Ratio 0%

QRVO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the QRVO stock intrinsic value calculation we used $2974 million for the last fiscal year's total revenue generated by Qorvo, Inc.. The default revenue input number comes from 0001 income statement of Qorvo, Inc.. 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 QRVO 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 QRVO is calculated based on our internal credit rating of Qorvo, Inc., 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 Qorvo, Inc..
    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 QRVO stock the variable cost ratio is equal to 70.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $827 million in the base year in the intrinsic value calculation for QRVO 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 Qorvo, Inc..

Corporate tax rate of 27% is the nominal tax rate for Qorvo, Inc.. 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 QRVO 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 QRVO are equal to 102.1%.

Life of production assets of 6.6 years is the average useful life of capital assets used in Qorvo, Inc. 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 QRVO is equal to 16%. 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 - $4775.564 million for Qorvo, Inc. - 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 122.739 million for Qorvo, Inc. 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 Qorvo, Inc. at the current share price and the inputted number of shares is $9.4 billion.

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