Intrinsic value of Quantenna Communications, Inc. - QTNA

Previous Close

$20.01

  Intrinsic Value

$8.43

stock screener

  Rating & Target

str. sell

-58%

Previous close

$20.01

 
Intrinsic value

$8.43

 
Up/down potential

-58%

 
Rating

str. sell

We calculate the intrinsic value of QTNA 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, %
  51.60
  46.94
  42.75
  38.97
  35.57
  32.52
  29.77
  27.29
  25.06
  23.05
  21.25
  19.62
  18.16
  16.85
  15.66
  14.59
  13.64
  12.77
  11.99
  11.29
  10.67
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.19
Revenue, $m
  334
  490
  700
  972
  1,318
  1,747
  2,267
  2,885
  3,608
  4,440
  5,383
  6,440
  7,609
  8,891
  10,283
  11,784
  13,391
  15,101
  16,912
  18,822
  20,830
  22,933
  25,132
  27,427
  29,818
  32,306
  34,894
  37,585
  40,380
  43,286
Variable operating expenses, $m
  308
  452
  644
  895
  1,214
  1,608
  2,086
  2,656
  3,321
  4,086
  4,954
  5,926
  7,002
  8,182
  9,463
  10,844
  12,323
  13,897
  15,564
  17,322
  19,169
  21,105
  23,129
  25,240
  27,441
  29,731
  32,112
  34,588
  37,161
  39,835
Fixed operating expenses, $m
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
Total operating expenses, $m
  322
  467
  659
  910
  1,230
  1,624
  2,102
  2,673
  3,338
  4,103
  4,972
  5,944
  7,021
  8,201
  9,482
  10,864
  12,343
  13,918
  15,585
  17,344
  19,191
  21,128
  23,152
  25,264
  27,465
  29,756
  32,137
  34,614
  37,187
  39,862
Operating income, $m
  12
  24
  40
  62
  89
  123
  164
  213
  270
  336
  411
  495
  588
  690
  800
  920
  1,047
  1,183
  1,327
  1,479
  1,639
  1,806
  1,981
  2,163
  2,353
  2,551
  2,757
  2,971
  3,193
  3,424
EBITDA, $m
  17
  31
  51
  76
  108
  148
  197
  254
  322
  400
  488
  587
  696
  816
  946
  1,087
  1,237
  1,398
  1,567
  1,746
  1,934
  2,131
  2,338
  2,553
  2,777
  3,010
  3,252
  3,504
  3,767
  4,039
Interest expense (income), $m
  0
  0
  1
  3
  5
  7
  11
  15
  20
  26
  33
  41
  50
  60
  71
  84
  97
  111
  127
  143
  161
  179
  198
  219
  240
  262
  285
  309
  334
  360
  387
Earnings before tax, $m
  12
  23
  38
  57
  82
  112
  149
  193
  244
  303
  371
  446
  528
  619
  717
  823
  936
  1,056
  1,184
  1,318
  1,459
  1,607
  1,762
  1,923
  2,091
  2,266
  2,448
  2,637
  2,833
  3,037
Tax expense, $m
  3
  6
  10
  15
  22
  30
  40
  52
  66
  82
  100
  120
  143
  167
  194
  222
  253
  285
  320
  356
  394
  434
  476
  519
  565
  612
  661
  712
  765
  820
Net income, $m
  9
  17
  27
  42
  60
  82
  109
  141
  178
  221
  271
  325
  386
  452
  523
  601
  683
  771
  864
  962
  1,065
  1,173
  1,286
  1,404
  1,527
  1,654
  1,787
  1,925
  2,068
  2,217

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
  220
  324
  462
  642
  871
  1,154
  1,497
  1,906
  2,383
  2,932
  3,556
  4,253
  5,026
  5,872
  6,792
  7,783
  8,845
  9,974
  11,170
  12,432
  13,758
  15,147
  16,600
  18,116
  19,695
  21,338
  23,048
  24,825
  26,671
  28,590
Adjusted assets (=assets-cash), $m
  220
  324
  462
  642
  871
  1,154
  1,497
  1,906
  2,383
  2,932
  3,556
  4,253
  5,026
  5,872
  6,792
  7,783
  8,845
  9,974
  11,170
  12,432
  13,758
  15,147
  16,600
  18,116
  19,695
  21,338
  23,048
  24,825
  26,671
  28,590
Revenue / Adjusted assets
  1.518
  1.512
  1.515
  1.514
  1.513
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
  1.514
Average production assets, $m
  24
  35
  50
  69
  94
  124
  161
  205
  256
  315
  382
  457
  540
  631
  730
  837
  951
  1,072
  1,201
  1,336
  1,479
  1,628
  1,784
  1,947
  2,117
  2,294
  2,477
  2,669
  2,867
  3,073
Working capital, $m
  27
  40
  57
  80
  108
  143
  186
  237
  296
  364
  441
  528
  624
  729
  843
  966
  1,098
  1,238
  1,387
  1,543
  1,708
  1,881
  2,061
  2,249
  2,445
  2,649
  2,861
  3,082
  3,311
  3,549
Total debt, $m
  20
  48
  86
  134
  196
  272
  365
  475
  604
  753
  921
  1,109
  1,318
  1,546
  1,795
  2,062
  2,349
  2,654
  2,977
  3,318
  3,676
  4,051
  4,443
  4,852
  5,278
  5,722
  6,184
  6,663
  7,162
  7,680
Total liabilities, $m
  59
  87
  125
  173
  235
  311
  404
  514
  643
  792
  960
  1,148
  1,357
  1,586
  1,834
  2,101
  2,388
  2,693
  3,016
  3,357
  3,715
  4,090
  4,482
  4,891
  5,318
  5,761
  6,223
  6,703
  7,201
  7,719
Total equity, $m
  161
  236
  337
  469
  636
  842
  1,093
  1,391
  1,740
  2,141
  2,596
  3,105
  3,669
  4,287
  4,958
  5,682
  6,456
  7,281
  8,154
  9,075
  10,043
  11,058
  12,118
  13,224
  14,377
  15,577
  16,825
  18,122
  19,470
  20,871
Total liabilities and equity, $m
  220
  323
  462
  642
  871
  1,153
  1,497
  1,905
  2,383
  2,933
  3,556
  4,253
  5,026
  5,873
  6,792
  7,783
  8,844
  9,974
  11,170
  12,432
  13,758
  15,148
  16,600
  18,115
  19,695
  21,338
  23,048
  24,825
  26,671
  28,590
Debt-to-equity ratio
  0.130
  0.200
  0.250
  0.290
  0.310
  0.320
  0.330
  0.340
  0.350
  0.350
  0.350
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
Adjusted equity ratio
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  17
  27
  42
  60
  82
  109
  141
  178
  221
  271
  325
  386
  452
  523
  601
  683
  771
  864
  962
  1,065
  1,173
  1,286
  1,404
  1,527
  1,654
  1,787
  1,925
  2,068
  2,217
Depreciation, amort., depletion, $m
  5
  8
  11
  14
  19
  25
  33
  42
  52
  64
  76
  91
  108
  126
  146
  167
  190
  214
  240
  267
  296
  326
  357
  389
  423
  459
  495
  534
  573
  615
Funds from operations, $m
  14
  24
  38
  56
  79
  107
  142
  182
  230
  285
  347
  417
  494
  578
  669
  768
  873
  986
  1,104
  1,230
  1,361
  1,499
  1,643
  1,793
  1,950
  2,113
  2,282
  2,459
  2,642
  2,832
Change in working capital, $m
  9
  13
  17
  22
  28
  35
  43
  51
  59
  68
  77
  87
  96
  105
  114
  123
  132
  140
  149
  157
  165
  172
  180
  188
  196
  204
  212
  221
  229
  238
Cash from operations, $m
  5
  11
  21
  34
  51
  72
  99
  132
  171
  217
  270
  330
  398
  473
  555
  645
  742
  845
  956
  1,073
  1,197
  1,327
  1,463
  1,605
  1,754
  1,909
  2,070
  2,238
  2,412
  2,594
Maintenance CAPEX, $m
  -3
  -5
  -7
  -10
  -14
  -19
  -25
  -32
  -41
  -51
  -63
  -76
  -91
  -108
  -126
  -146
  -167
  -190
  -214
  -240
  -267
  -296
  -326
  -357
  -389
  -423
  -459
  -495
  -534
  -573
New CAPEX, $m
  -8
  -11
  -15
  -19
  -25
  -30
  -37
  -44
  -51
  -59
  -67
  -75
  -83
  -91
  -99
  -107
  -114
  -121
  -129
  -136
  -143
  -149
  -156
  -163
  -170
  -177
  -184
  -191
  -199
  -206
Cash from investing activities, $m
  -11
  -16
  -22
  -29
  -39
  -49
  -62
  -76
  -92
  -110
  -130
  -151
  -174
  -199
  -225
  -253
  -281
  -311
  -343
  -376
  -410
  -445
  -482
  -520
  -559
  -600
  -643
  -686
  -733
  -779
Free cash flow, $m
  -7
  -5
  -1
  4
  12
  23
  37
  56
  79
  107
  140
  179
  223
  274
  330
  392
  460
  534
  613
  697
  787
  881
  981
  1,085
  1,195
  1,309
  1,428
  1,551
  1,680
  1,814
Issuance/(repayment) of debt, $m
  20
  28
  37
  49
  62
  76
  93
  110
  129
  148
  168
  188
  209
  229
  248
  268
  287
  305
  323
  341
  358
  375
  392
  409
  426
  444
  462
  480
  499
  518
Issuance/(repurchase) of shares, $m
  46
  59
  74
  90
  107
  125
  142
  157
  170
  180
  184
  184
  178
  166
  148
  123
  91
  53
  9
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  66
  87
  111
  139
  169
  201
  235
  267
  299
  328
  352
  372
  387
  395
  396
  391
  378
  358
  332
  341
  358
  375
  392
  409
  426
  444
  462
  480
  499
  518
Total cash flow (excl. dividends), $m
  60
  82
  110
  143
  181
  224
  272
  323
  378
  435
  492
  551
  610
  669
  726
  783
  838
  892
  945
  1,038
  1,145
  1,257
  1,373
  1,495
  1,621
  1,753
  1,889
  2,031
  2,179
  2,332
Retained Cash Flow (-), $m
  -55
  -75
  -101
  -131
  -167
  -207
  -251
  -298
  -349
  -401
  -455
  -509
  -564
  -618
  -671
  -724
  -775
  -825
  -873
  -921
  -968
  -1,014
  -1,060
  -1,106
  -1,153
  -1,200
  -1,248
  -1,297
  -1,348
  -1,401
Prev. year cash balance distribution, $m
  100
  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
  106
  7
  9
  11
  14
  18
  21
  25
  29
  33
  37
  42
  46
  51
  55
  59
  64
  68
  72
  117
  177
  242
  313
  388
  468
  553
  641
  734
  831
  931
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
  101
  6
  8
  9
  11
  13
  14
  16
  17
  18
  18
  18
  18
  17
  16
  15
  14
  12
  11
  15
  18
  20
  21
  20
  18
  16
  14
  11
  9
  7
Current shareholders' claim on cash, %
  89.5
  81.5
  75.2
  70.1
  66.0
  62.7
  60.0
  57.8
  55.9
  54.4
  53.2
  52.2
  51.4
  50.7
  50.3
  49.9
  49.7
  49.6
  49.6
  49.6
  49.6
  49.6
  49.6
  49.6
  49.6
  49.6
  49.6
  49.6
  49.6
  49.6

Quantenna Communications, Inc. is engaged in the design, development and marketing of wireless communication solutions enabling wireless local area networking. The Company's solutions are designed to deliver wireless fidelity (Wi-Fi) performance to support various connected devices accessing a pool of digital content. The Company combines its wireless systems and software expertise with radio frequency, mixed-signal and digital semiconductor design skills to provide solutions to its customers. Its products include QSR10G, QSR2000, QSR1000, QHS710 and MAUI. The Company offers its products for home networking applications, including home gateways, repeaters, and set-top boxes. Its solutions portfolio consists of various generations of its radio frequency chip and its digital baseband chip, which together support the Institute of Electrical and Electronics Engineers (IEEE) Wi-Fi standards, including 802.11n and 802.11ac.

FINANCIAL RATIOS  of  Quantenna Communications, Inc. (QTNA)

Valuation Ratios
P/E Ratio -331
Price to Sales 5.1
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 331
Price to Free Cash Flow -661.9
Growth Rates
Sales Growth Rate 53.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 59
Current Ratio 0
LT Debt to Equity 3.1%
Total Debt to Equity 4.7%
Interest Coverage 0
Management Effectiveness
Return On Assets -2%
Ret/ On Assets - 3 Yr. Avg. -27%
Return On Total Capital -2.4%
Ret/ On T. Cap. - 3 Yr. Avg. -44.3%
Return On Equity -2.5%
Return On Equity - 3 Yr. Avg. -57%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 49.6%
Gross Margin - 3 Yr. Avg. 47.2%
EBITDA Margin -0.8%
EBITDA Margin - 3 Yr. Avg. -8.6%
Operating Margin -0.8%
Oper. Margin - 3 Yr. Avg. -9.1%
Pre-Tax Margin -1.6%
Pre-Tax Margin - 3 Yr. Avg. -9.8%
Net Profit Margin -1.6%
Net Profit Margin - 3 Yr. Avg. -10.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -2.6%
Payout Ratio 0%

QTNA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the QTNA stock intrinsic value calculation we used $220 million for the last fiscal year's total revenue generated by Quantenna Communications, Inc.. The default revenue input number comes from 0001 income statement of Quantenna Communications, 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 QTNA stock valuation model: a) initial revenue growth rate of 51.6% 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 QTNA is calculated based on our internal credit rating of Quantenna Communications, 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 Quantenna Communications, 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 QTNA stock the variable cost ratio is equal to 92.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $14 million in the base year in the intrinsic value calculation for QTNA 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 Quantenna Communications, Inc..

Corporate tax rate of 27% is the nominal tax rate for Quantenna Communications, 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 QTNA 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 QTNA are equal to 7.1%.

Life of production assets of 3.8 years is the average useful life of capital assets used in Quantenna Communications, 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 QTNA is equal to 8.2%. 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 - $206.487 million for Quantenna Communications, 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 38.261 million for Quantenna Communications, 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 Quantenna Communications, Inc. at the current share price and the inputted number of shares is $0.8 billion.

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