Intrinsic value of Rudolph Technologies - RTEC

Previous Close

$27.85

  Intrinsic Value

$11.25

stock screener

  Rating & Target

str. sell

-60%

Previous close

$27.85

 
Intrinsic value

$11.25

 
Up/down potential

-60%

 
Rating

str. sell

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

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

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, %
  4.95
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
Revenue, $m
  233
  252
  271
  292
  313
  335
  358
  382
  407
  432
  459
  487
  516
  546
  578
  611
  646
  681
  719
  758
  799
  842
  887
  935
  984
  1,035
  1,090
  1,146
  1,206
  1,268
  1,333
Variable operating expenses, $m
 
  214
  230
  248
  265
  284
  303
  323
  344
  365
  388
  409
  434
  459
  486
  513
  542
  573
  604
  637
  672
  708
  746
  785
  827
  870
  915
  963
  1,013
  1,065
  1,120
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
  180
  214
  230
  248
  265
  284
  303
  323
  344
  365
  388
  409
  434
  459
  486
  513
  542
  573
  604
  637
  672
  708
  746
  785
  827
  870
  915
  963
  1,013
  1,065
  1,120
Operating income, $m
  52
  38
  41
  44
  48
  51
  55
  59
  63
  67
  71
  78
  83
  87
  92
  98
  103
  109
  115
  121
  128
  135
  142
  149
  157
  166
  174
  183
  193
  203
  213
EBITDA, $m
  58
  44
  47
  50
  54
  58
  62
  66
  70
  75
  79
  84
  89
  94
  100
  106
  112
  118
  124
  131
  138
  146
  153
  162
  170
  179
  188
  198
  208
  219
  230
Interest expense (income), $m
  2
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
Earnings before tax, $m
  50
  38
  41
  44
  47
  50
  54
  57
  61
  65
  68
  75
  79
  84
  88
  93
  98
  103
  109
  115
  121
  127
  134
  141
  148
  156
  164
  172
  181
  190
  199
Tax expense, $m
  13
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  20
  21
  23
  24
  25
  27
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
Net income, $m
  37
  28
  30
  32
  34
  37
  39
  42
  44
  47
  50
  55
  58
  61
  64
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
  114
  119
  125
  132
  139
  146

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  126
  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
  339
  230
  248
  267
  286
  306
  327
  349
  372
  395
  420
  445
  472
  499
  528
  559
  590
  623
  657
  693
  731
  770
  811
  854
  899
  946
  996
  1,048
  1,102
  1,159
  1,218
Adjusted assets (=assets-cash), $m
  213
  230
  248
  267
  286
  306
  327
  349
  372
  395
  420
  445
  472
  499
  528
  559
  590
  623
  657
  693
  731
  770
  811
  854
  899
  946
  996
  1,048
  1,102
  1,159
  1,218
Revenue / Adjusted assets
  1.094
  1.096
  1.093
  1.094
  1.094
  1.095
  1.095
  1.095
  1.094
  1.094
  1.093
  1.094
  1.093
  1.094
  1.095
  1.093
  1.095
  1.093
  1.094
  1.094
  1.093
  1.094
  1.094
  1.095
  1.095
  1.094
  1.094
  1.094
  1.094
  1.094
  1.094
Average production assets, $m
  24
  25
  27
  29
  32
  34
  36
  39
  41
  44
  46
  49
  52
  55
  58
  62
  65
  69
  73
  77
  81
  85
  90
  94
  99
  105
  110
  116
  122
  128
  135
Working capital, $m
  227
  109
  118
  126
  136
  145
  155
  165
  176
  187
  199
  211
  223
  237
  250
  265
  280
  295
  311
  328
  346
  365
  384
  405
  426
  448
  472
  496
  522
  549
  577
Total debt, $m
  0
  4
  7
  11
  15
  20
  24
  29
  33
  38
  44
  49
  55
  60
  66
  73
  79
  86
  94
  101
  109
  117
  126
  135
  145
  155
  165
  176
  188
  200
  212
Total liabilities, $m
  45
  49
  52
  56
  60
  65
  69
  74
  78
  83
  89
  94
  100
  105
  111
  118
  124
  131
  139
  146
  154
  162
  171
  180
  190
  200
  210
  221
  233
  245
  257
Total equity, $m
  294
  182
  196
  211
  226
  242
  258
  275
  293
  312
  331
  351
  372
  394
  417
  441
  466
  491
  519
  547
  577
  608
  640
  674
  710
  747
  786
  827
  869
  914
  961
Total liabilities and equity, $m
  339
  231
  248
  267
  286
  307
  327
  349
  371
  395
  420
  445
  472
  499
  528
  559
  590
  622
  658
  693
  731
  770
  811
  854
  900
  947
  996
  1,048
  1,102
  1,159
  1,218
Debt-to-equity ratio
  0.000
  0.020
  0.040
  0.050
  0.070
  0.080
  0.090
  0.100
  0.110
  0.120
  0.130
  0.140
  0.150
  0.150
  0.160
  0.170
  0.170
  0.180
  0.180
  0.190
  0.190
  0.190
  0.200
  0.200
  0.200
  0.210
  0.210
  0.210
  0.220
  0.220
  0.220
Adjusted equity ratio
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789
  0.789

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  37
  28
  30
  32
  34
  37
  39
  42
  44
  47
  50
  55
  58
  61
  64
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
  114
  119
  125
  132
  139
  146
Depreciation, amort., depletion, $m
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
Funds from operations, $m
  36
  33
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  64
  68
  72
  76
  80
  84
  89
  94
  99
  104
  109
  115
  121
  127
  133
  140
  147
  155
  163
Change in working capital, $m
  -11
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  25
  26
  27
  28
Cash from operations, $m
  47
  25
  27
  29
  31
  34
  36
  39
  41
  44
  47
  49
  52
  55
  58
  62
  65
  69
  73
  77
  81
  85
  90
  94
  99
  105
  110
  116
  122
  128
  135
Maintenance CAPEX, $m
  0
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
New CAPEX, $m
  -5
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
Cash from investing activities, $m
  24
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -14
  -16
  -16
  -17
  -18
  -18
  -20
  -21
  -22
  -23
Free cash flow, $m
  71
  20
  22
  24
  26
  27
  29
  32
  34
  36
  38
  40
  43
  45
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  87
  91
  96
  101
  106
  112
Issuance/(repayment) of debt, $m
  -60
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  13
Issuance/(repurchase) of shares, $m
  -17
  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  
  -78
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  13
Total cash flow (excl. dividends), $m
  -7
  24
  26
  28
  30
  32
  34
  36
  39
  41
  43
  45
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  87
  92
  97
  102
  107
  112
  118
  124
Retained Cash Flow (-), $m
  -23
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
Prev. year cash balance distribution, $m
 
  126
  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
 
  136
  12
  13
  14
  16
  17
  19
  21
  22
  24
  25
  27
  29
  31
  33
  36
  38
  40
  43
  45
  48
  50
  53
  56
  59
  63
  66
  70
  73
  77
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
 
  130
  11
  11
  12
  12
  13
  13
  13
  13
  13
  12
  12
  11
  10
  10
  9
  8
  7
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  1
Current shareholders' claim on cash, %
  100
  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 23.3
Price to Sales 3.7
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 18.3
Price to Free Cash Flow 20.5
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 $233 million for the last fiscal year's total revenue generated by Rudolph Technologies. The default revenue input number comes from 2016 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 8.1% 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 85%.

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 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 6.9% 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 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 RTEC are equal to 10.1%.

Life of production assets of 7.8 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 43.3%. 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 - $294 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 31.719 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 $0.9 billion.

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COMPANY NEWS

▶ 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]
▶ Rudolph Technologies meets 4Q profit forecasts   [05:26PM  Associated Press]
▶ Is CoBiz Financial Inc (COBZ) A Good Stock To Buy?   [03:22AM  at Insider Monkey]
▶ Is Greenhill & Co., Inc. (GHL) A Good Stock To Buy?   [Dec-05-16 05:37AM  at Insider Monkey]
▶ Is Barnes & Noble Education Inc (BNED) A Good Stock To Buy?   [Dec-04-16 04:52PM  at Insider Monkey]
▶ Is Rudolph Technologies Inc (RTEC) A Good Stock To Buy?   [Dec-02-16 08:19AM  at Insider Monkey]
▶ Rudolph Redeems $60 Million in Convertible Notes   [Jul-15-16 04:30PM  Business Wire]
Financial statements of RTEC
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