Intrinsic value of Rudolph Technologies - RTEC

Previous Close

$27.05

  Intrinsic Value

$28.53

stock screener

  Rating & Target

hold

+5%

Previous close

$27.05

 
Intrinsic value

$28.53

 
Up/down potential

+5%

 
Rating

hold

We calculate the intrinsic value of RTEC 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 2017), $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
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.60
  9.14
  8.73
  8.35
  8.02
  7.72
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
Revenue, $m
  279
  305
  332
  359
  388
  418
  449
  482
  515
  550
  586
  624
  664
  705
  747
  792
  838
  886
  937
  989
  1,044
  1,102
  1,162
  1,225
  1,290
  1,359
  1,431
  1,507
  1,586
  1,668
Variable operating expenses, $m
  193
  210
  228
  247
  266
  287
  308
  330
  352
  376
  398
  423
  450
  478
  506
  537
  568
  601
  635
  671
  708
  747
  788
  830
  875
  921
  970
  1,021
  1,075
  1,131
Fixed operating expenses, $m
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  27
  27
  28
  28
  29
  30
  30
  31
  32
  32
  33
  34
  34
  35
  36
  37
  38
  38
Total operating expenses, $m
  213
  231
  249
  269
  288
  310
  331
  354
  376
  401
  423
  449
  477
  505
  534
  565
  597
  631
  665
  702
  740
  779
  821
  864
  909
  956
  1,006
  1,058
  1,113
  1,169
Operating income, $m
  66
  74
  82
  91
  100
  109
  118
  128
  139
  149
  164
  175
  187
  200
  213
  227
  241
  256
  272
  288
  305
  323
  341
  361
  381
  403
  425
  449
  473
  499
EBITDA, $m
  75
  83
  92
  100
  110
  120
  130
  140
  151
  162
  174
  187
  199
  213
  227
  241
  256
  272
  289
  306
  324
  343
  362
  383
  405
  427
  451
  476
  502
  529
Interest expense (income), $m
  2
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
Earnings before tax, $m
  66
  74
  82
  90
  98
  107
  117
  126
  136
  146
  160
  171
  183
  195
  208
  221
  235
  249
  264
  280
  297
  314
  332
  351
  370
  391
  413
  435
  459
  484
Tax expense, $m
  18
  20
  22
  24
  27
  29
  31
  34
  37
  40
  43
  46
  49
  53
  56
  60
  63
  67
  71
  76
  80
  85
  90
  95
  100
  106
  111
  118
  124
  131
Net income, $m
  49
  54
  60
  66
  72
  78
  85
  92
  99
  107
  117
  125
  134
  143
  152
  161
  172
  182
  193
  205
  217
  229
  242
  256
  270
  286
  301
  318
  335
  353

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
  275
  300
  326
  353
  382
  411
  442
  474
  507
  541
  577
  614
  652
  693
  735
  778
  824
  871
  921
  973
  1,027
  1,083
  1,142
  1,204
  1,269
  1,337
  1,407
  1,481
  1,559
  1,640
Adjusted assets (=assets-cash), $m
  275
  300
  326
  353
  382
  411
  442
  474
  507
  541
  577
  614
  652
  693
  735
  778
  824
  871
  921
  973
  1,027
  1,083
  1,142
  1,204
  1,269
  1,337
  1,407
  1,481
  1,559
  1,640
Revenue / Adjusted assets
  1.015
  1.017
  1.018
  1.017
  1.016
  1.017
  1.016
  1.017
  1.016
  1.017
  1.016
  1.016
  1.018
  1.017
  1.016
  1.018
  1.017
  1.017
  1.017
  1.016
  1.017
  1.018
  1.018
  1.017
  1.017
  1.016
  1.017
  1.018
  1.017
  1.017
Average production assets, $m
  51
  56
  60
  65
  71
  76
  82
  88
  94
  100
  107
  114
  121
  128
  136
  144
  153
  161
  170
  180
  190
  201
  211
  223
  235
  247
  260
  274
  289
  304
Working capital, $m
  59
  65
  70
  76
  82
  89
  95
  102
  109
  117
  124
  132
  141
  149
  158
  168
  178
  188
  199
  210
  221
  234
  246
  260
  274
  288
  303
  319
  336
  354
Total debt, $m
  5
  10
  16
  21
  27
  33
  40
  47
  53
  61
  68
  76
  84
  93
  101
  111
  120
  130
  140
  151
  163
  175
  187
  200
  214
  228
  243
  258
  274
  292
Total liabilities, $m
  58
  63
  68
  74
  80
  86
  93
  99
  106
  114
  121
  129
  137
  145
  154
  163
  173
  183
  193
  204
  216
  228
  240
  253
  266
  281
  296
  311
  327
  344
Total equity, $m
  217
  237
  258
  279
  302
  325
  349
  374
  400
  427
  456
  485
  515
  547
  580
  615
  651
  688
  728
  769
  811
  856
  903
  951
  1,002
  1,056
  1,112
  1,170
  1,232
  1,296
Total liabilities and equity, $m
  275
  300
  326
  353
  382
  411
  442
  473
  506
  541
  577
  614
  652
  692
  734
  778
  824
  871
  921
  973
  1,027
  1,084
  1,143
  1,204
  1,268
  1,337
  1,408
  1,481
  1,559
  1,640
Debt-to-equity ratio
  0.020
  0.040
  0.060
  0.080
  0.090
  0.100
  0.110
  0.120
  0.130
  0.140
  0.150
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
  0.190
  0.190
  0.200
  0.200
  0.200
  0.210
  0.210
  0.210
  0.220
  0.220
  0.220
  0.220
  0.220
Adjusted equity ratio
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  49
  54
  60
  66
  72
  78
  85
  92
  99
  107
  117
  125
  134
  143
  152
  161
  172
  182
  193
  205
  217
  229
  242
  256
  270
  286
  301
  318
  335
  353
Depreciation, amort., depletion, $m
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
Funds from operations, $m
  57
  63
  69
  75
  82
  89
  96
  104
  112
  120
  128
  137
  146
  155
  165
  176
  187
  198
  210
  223
  236
  249
  263
  278
  294
  310
  327
  345
  364
  384
Change in working capital, $m
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
Cash from operations, $m
  52
  57
  63
  69
  76
  83
  90
  97
  105
  113
  120
  129
  137
  147
  156
  166
  177
  188
  199
  211
  224
  237
  251
  265
  280
  296
  312
  329
  347
  366
Maintenance CAPEX, $m
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
New CAPEX, $m
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
Cash from investing activities, $m
  -9
  -10
  -11
  -11
  -12
  -12
  -14
  -14
  -15
  -15
  -17
  -18
  -18
  -19
  -21
  -22
  -22
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -41
  -44
Free cash flow, $m
  43
  48
  53
  58
  64
  70
  76
  83
  90
  97
  103
  111
  119
  127
  136
  145
  154
  164
  174
  185
  196
  208
  220
  232
  246
  260
  274
  290
  306
  322
Issuance/(repayment) of debt, $m
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
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  
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
Total cash flow (excl. dividends), $m
  47
  53
  58
  64
  70
  76
  83
  90
  97
  104
  111
  119
  127
  136
  145
  154
  164
  174
  185
  196
  207
  219
  232
  245
  259
  274
  289
  305
  322
  339
Retained Cash Flow (-), $m
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -59
  -61
  -64
Prev. year cash balance distribution, $m
  135
  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
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
Cash available for distribution, $m
  163
  33
  38
  43
  48
  53
  59
  65
  71
  77
  83
  89
  96
  104
  111
  119
  128
  136
  145
  155
  165
  175
  185
  197
  208
  220
  233
  247
  261
  275
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
  157
  30
  33
  35
  37
  39
  40
  40
  41
  40
  39
  38
  37
  35
  33
  30
  28
  25
  22
  20
  17
  15
  12
  10
  8
  6
  5
  4
  3
  2
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

Rudolph Technologies, Inc. (Rudolph) is engaged in the design, development, manufacture and support of process control defect inspection and metrology, advanced packaging lithography, and data analysis systems and software used by microelectronics device manufacturers. The Company provides process and yield management solutions used in both wafer processing and final manufacturing through a family of standalone systems for macro-defect inspection, lithography, probe card test and analysis, and transparent and opaque thin film measurements. It offers Process Control Business, Lithography Business and Integrated Software Solutions. Rudolph markets and sells products to logic, memory, data storage, flat panel, application-specific integrated circuit (ASIC) device and packaging manufacturers. Its products include AMX 6000 Series, Explorer Inspection Platform, MetaPULSE System, Wafer Scanner Inspection System, GateWay Software, Yield Optimizer Software and Process Sentinel Software.

FINANCIAL RATIOS  of  Rudolph Technologies (RTEC)

Valuation Ratios
P/E Ratio 22.6
Price to Sales 3.6
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 17.8
Price to Free Cash Flow 19.9
Growth Rates
Sales Growth Rate 5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -16.7%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 26
Management Effectiveness
Return On Assets 10.7%
Ret/ On Assets - 3 Yr. Avg. 5%
Return On Total Capital 11.9%
Ret/ On T. Cap. - 3 Yr. Avg. 5.3%
Return On Equity 13.1%
Return On Equity - 3 Yr. Avg. 6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 53.2%
Gross Margin - 3 Yr. Avg. 53.1%
EBITDA Margin 24.9%
EBITDA Margin - 3 Yr. Avg. 13.9%
Operating Margin 22.7%
Oper. Margin - 3 Yr. Avg. 12.2%
Pre-Tax Margin 21.5%
Pre-Tax Margin - 3 Yr. Avg. 9.9%
Net Profit Margin 15.9%
Net Profit Margin - 3 Yr. Avg. 7.1%
Effective Tax Rate 26%
Eff/ Tax Rate - 3 Yr. Avg. 29.3%
Payout Ratio 0%

RTEC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RTEC stock intrinsic value calculation we used $255 million for the last fiscal year's total revenue generated by Rudolph Technologies. The default revenue input number comes from 2017 income statement of Rudolph Technologies. 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 RTEC stock valuation model: a) initial revenue growth rate of 9.6% 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 RTEC is calculated based on our internal credit rating of Rudolph Technologies, 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 Rudolph Technologies.
    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 RTEC stock the variable cost ratio is equal to 69%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $20 million in the base year in the intrinsic value calculation for RTEC 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 Rudolph Technologies.

Corporate tax rate of 27% is the nominal tax rate for Rudolph Technologies. 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 RTEC stock is equal to 2.2%.

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 RTEC are equal to 18.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Rudolph Technologies 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 RTEC is equal to 21.2%. 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 - $333 million for Rudolph Technologies - 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 31 million for Rudolph Technologies 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 Rudolph Technologies at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ Rudolph Technologies: 2Q Earnings Snapshot   [05:58PM  Associated Press]
▶ Rudolph Technologies: 1Q Earnings Snapshot   [May-02-18 06:32PM  Associated Press]
▶ Top Ranked Growth Stocks to Buy for April 4th   [Apr-04-18 10:53AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for April 2nd   [Apr-02-18 06:20AM  Zacks]
▶ Villanova and Rudolph Technologies Both Make My 'Sweet 16'   [Mar-20-18 04:43PM  TheStreet.com]
▶ Top Ranked Growth Stocks to Buy for March 16th   [Mar-16-18 08:06AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for March 14th   [Mar-14-18 08:49AM  Zacks]
▶ Rudolph Technologies reports 4Q loss   [Feb-01-18 05:25PM  Associated Press]
▶ Rudolph Technologies tops Street 3Q forecasts   [Oct-30-17 05:33PM  Associated Press]
▶ Rudolph Technologies tops Street 2Q forecasts   [Aug-02-17 11:17PM  Associated Press]
▶ New Strong Buy Stocks for July 3rd   [Jul-03-17 07:57AM  Zacks]
▶ New Strong Buy Stocks for June 22nd   [Jun-22-17 10:15AM  Zacks]
▶ Rudolph Technologies tops Street 1Q forecasts   [May-01-17 04:48PM  Associated Press]
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