Intrinsic value of Rudolph Technologies - RTEC

Previous Close

$19.98

  Intrinsic Value

$31.58

stock screener

  Rating & Target

str. buy

+58%

Previous close

$19.98

 
Intrinsic value

$31.58

 
Up/down potential

+58%

 
Rating

str. buy

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 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 0.6

 

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, %
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.26
  7.04
  6.83
  6.65
  6.49
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
  5.47
Revenue, $m
  293
  334
  377
  423
  472
  523
  577
  633
  692
  753
  817
  883
  952
  1,023
  1,098
  1,175
  1,255
  1,339
  1,425
  1,516
  1,610
  1,708
  1,810
  1,916
  2,027
  2,143
  2,264
  2,390
  2,522
  2,659
Variable operating expenses, $m
  202
  229
  259
  290
  323
  358
  394
  432
  472
  513
  554
  598
  645
  694
  744
  796
  851
  907
  966
  1,027
  1,091
  1,157
  1,227
  1,299
  1,374
  1,452
  1,534
  1,620
  1,709
  1,803
Fixed operating expenses, $m
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  28
  29
  29
  30
  31
  31
  32
  33
  33
  34
  35
  36
  36
Total operating expenses, $m
  221
  249
  279
  311
  344
  380
  416
  455
  495
  537
  578
  623
  670
  720
  770
  823
  879
  935
  995
  1,056
  1,121
  1,188
  1,258
  1,331
  1,407
  1,485
  1,568
  1,655
  1,745
  1,839
Operating income, $m
  72
  85
  98
  113
  128
  144
  161
  178
  197
  216
  239
  260
  281
  304
  327
  352
  377
  403
  431
  459
  489
  520
  552
  585
  620
  657
  695
  735
  777
  820
EBITDA, $m
  78
  91
  105
  120
  136
  152
  170
  188
  207
  227
  247
  269
  291
  314
  339
  364
  390
  417
  445
  475
  505
  537
  570
  605
  641
  679
  718
  760
  803
  848
Interest expense (income), $m
  2
  0
  0
  1
  1
  2
  2
  3
  4
  4
  5
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
Earnings before tax, $m
  72
  84
  97
  111
  126
  141
  158
  175
  192
  211
  233
  254
  274
  296
  319
  342
  367
  392
  418
  446
  475
  504
  536
  568
  602
  637
  674
  713
  753
  795
Tax expense, $m
  19
  23
  26
  30
  34
  38
  43
  47
  52
  57
  63
  68
  74
  80
  86
  92
  99
  106
  113
  120
  128
  136
  145
  153
  162
  172
  182
  192
  203
  215
Net income, $m
  52
  61
  71
  81
  92
  103
  115
  128
  141
  154
  170
  185
  200
  216
  233
  250
  268
  286
  305
  326
  346
  368
  391
  415
  439
  465
  492
  520
  550
  580

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
  288
  329
  371
  417
  465
  515
  568
  623
  681
  741
  804
  869
  937
  1,007
  1,080
  1,156
  1,235
  1,317
  1,403
  1,492
  1,584
  1,681
  1,781
  1,886
  1,995
  2,109
  2,228
  2,352
  2,482
  2,618
Adjusted assets (=assets-cash), $m
  288
  329
  371
  417
  465
  515
  568
  623
  681
  741
  804
  869
  937
  1,007
  1,080
  1,156
  1,235
  1,317
  1,403
  1,492
  1,584
  1,681
  1,781
  1,886
  1,995
  2,109
  2,228
  2,352
  2,482
  2,618
Revenue / Adjusted assets
  1.017
  1.015
  1.016
  1.014
  1.015
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.017
  1.016
  1.016
  1.017
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
  1.016
Average production assets, $m
  35
  40
  45
  51
  57
  63
  69
  76
  83
  90
  98
  106
  114
  123
  132
  141
  151
  161
  171
  182
  193
  205
  217
  230
  243
  257
  272
  287
  303
  319
Working capital, $m
  118
  134
  152
  170
  190
  210
  232
  255
  278
  303
  328
  355
  383
  411
  441
  472
  505
  538
  573
  609
  647
  686
  727
  770
  815
  861
  910
  961
  1,014
  1,069
Total debt, $m
  8
  16
  25
  35
  45
  55
  67
  78
  90
  103
  116
  130
  144
  159
  174
  190
  207
  224
  242
  261
  280
  300
  321
  343
  366
  390
  415
  441
  468
  497
Total liabilities, $m
  61
  69
  78
  88
  98
  108
  119
  131
  143
  156
  169
  182
  197
  211
  227
  243
  259
  277
  295
  313
  333
  353
  374
  396
  419
  443
  468
  494
  521
  550
Total equity, $m
  228
  260
  293
  329
  367
  407
  449
  492
  538
  585
  635
  686
  740
  796
  853
  913
  976
  1,041
  1,108
  1,179
  1,252
  1,328
  1,407
  1,490
  1,576
  1,666
  1,760
  1,858
  1,961
  2,068
Total liabilities and equity, $m
  289
  329
  371
  417
  465
  515
  568
  623
  681
  741
  804
  868
  937
  1,007
  1,080
  1,156
  1,235
  1,318
  1,403
  1,492
  1,585
  1,681
  1,781
  1,886
  1,995
  2,109
  2,228
  2,352
  2,482
  2,618
Debt-to-equity ratio
  0.030
  0.060
  0.090
  0.110
  0.120
  0.140
  0.150
  0.160
  0.170
  0.180
  0.180
  0.190
  0.190
  0.200
  0.200
  0.210
  0.210
  0.220
  0.220
  0.220
  0.220
  0.230
  0.230
  0.230
  0.230
  0.230
  0.240
  0.240
  0.240
  0.240
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
  52
  61
  71
  81
  92
  103
  115
  128
  141
  154
  170
  185
  200
  216
  233
  250
  268
  286
  305
  326
  346
  368
  391
  415
  439
  465
  492
  520
  550
  580
Depreciation, amort., depletion, $m
  6
  7
  7
  7
  8
  8
  9
  10
  10
  11
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
Funds from operations, $m
  59
  68
  78
  89
  100
  112
  124
  137
  151
  165
  179
  194
  210
  227
  244
  262
  280
  300
  320
  341
  363
  386
  409
  434
  460
  487
  515
  545
  575
  608
Change in working capital, $m
  15
  16
  17
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  55
Cash from operations, $m
  43
  52
  61
  70
  80
  91
  103
  115
  127
  140
  153
  168
  182
  198
  214
  231
  248
  266
  285
  305
  325
  346
  368
  392
  416
  441
  467
  494
  522
  552
Maintenance CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
New CAPEX, $m
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
Cash from investing activities, $m
  -8
  -8
  -8
  -10
  -10
  -11
  -11
  -13
  -13
  -14
  -16
  -16
  -17
  -19
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -41
  -43
Free cash flow, $m
  36
  44
  52
  61
  70
  80
  91
  102
  114
  126
  138
  151
  165
  180
  195
  210
  227
  243
  261
  279
  298
  318
  339
  360
  383
  406
  430
  456
  482
  510
Issuance/(repayment) of debt, $m
  8
  8
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
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  
  8
  8
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
Total cash flow (excl. dividends), $m
  44
  52
  61
  70
  80
  91
  102
  114
  126
  139
  151
  165
  179
  194
  210
  226
  243
  261
  279
  298
  318
  338
  360
  382
  405
  430
  455
  482
  509
  538
Retained Cash Flow (-), $m
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -49
  -51
  -54
  -56
  -58
  -60
  -62
  -65
  -68
  -70
  -73
  -76
  -79
  -83
  -86
  -90
  -94
  -98
  -103
  -107
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
  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
  149
  20
  27
  34
  42
  51
  60
  70
  80
  91
  102
  113
  126
  139
  152
  166
  181
  196
  211
  228
  245
  262
  280
  299
  319
  340
  361
  384
  407
  431
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
  143
  19
  24
  28
  33
  37
  41
  44
  46
  48
  48
  48
  48
  47
  45
  42
  39
  36
  33
  29
  25
  22
  18
  15
  12
  10
  8
  6
  4
  3
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 16.7
Price to Sales 2.7
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 13.2
Price to Free Cash Flow 14.7
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 $255.098 million for the last fiscal year's total revenue generated by Rudolph Technologies. The default revenue input number comes from 0001 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 14.9% 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 $19 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 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 12%.

Life of production assets of 11.7 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 40.2%. 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 - $333.154 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 31.901 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 $0.6 billion.

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COMPANY NEWS

▶ New Strong Sell Stocks for October 8th   [Oct-08-18 08:16AM  Zacks]
▶ 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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