Intrinsic value of Rudolph Technologies - RTEC

Previous Close

$23.60

  Intrinsic Value

$11.67

stock screener

  Rating & Target

str. sell

-51%

Previous close

$23.60

 
Intrinsic value

$11.67

 
Up/down potential

-51%

 
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

Revenue (in 2016), $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 0.7

 

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
  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
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
Revenue, $m
  233
  248
  263
  279
  295
  313
  331
  350
  369
  390
  411
  434
  457
  482
  507
  534
  562
  592
  623
  655
  689
  725
  762
  801
  842
  885
  930
  977
  1,027
  1,079
  1,133
Variable operating expenses, $m
 
  210
  223
  237
  251
  265
  280
  296
  313
  330
  348
  364
  384
  405
  426
  449
  472
  497
  523
  550
  579
  609
  640
  673
  707
  743
  781
  821
  863
  906
  952
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
  210
  223
  237
  251
  265
  280
  296
  313
  330
  348
  364
  384
  405
  426
  449
  472
  497
  523
  550
  579
  609
  640
  673
  707
  743
  781
  821
  863
  906
  952
Operating income, $m
  52
  37
  40
  42
  45
  48
  51
  54
  57
  60
  63
  69
  73
  77
  81
  85
  90
  95
  100
  105
  110
  116
  122
  128
  135
  141
  149
  156
  164
  172
  181
EBITDA, $m
  58
  43
  45
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  88
  92
  97
  102
  108
  113
  119
  125
  132
  138
  145
  153
  161
  169
  177
  186
  196
Interest expense (income), $m
  2
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
Earnings before tax, $m
  50
  37
  40
  42
  44
  47
  50
  52
  55
  58
  61
  67
  70
  74
  78
  82
  86
  90
  95
  100
  105
  110
  115
  121
  127
  133
  140
  147
  154
  162
  170
Tax expense, $m
  13
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
Net income, $m
  37
  27
  29
  31
  32
  34
  36
  38
  40
  42
  45
  49
  51
  54
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  93
  97
  102
  107
  113
  118
  124

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
  226
  240
  255
  270
  286
  302
  320
  338
  356
  376
  396
  418
  440
  464
  488
  514
  541
  569
  599
  630
  662
  696
  732
  769
  809
  850
  893
  938
  986
  1,036
Adjusted assets (=assets-cash), $m
  213
  226
  240
  255
  270
  286
  302
  320
  338
  356
  376
  396
  418
  440
  464
  488
  514
  541
  569
  599
  630
  662
  696
  732
  769
  809
  850
  893
  938
  986
  1,036
Revenue / Adjusted assets
  1.094
  1.097
  1.096
  1.094
  1.093
  1.094
  1.096
  1.094
  1.092
  1.096
  1.093
  1.096
  1.093
  1.095
  1.093
  1.094
  1.093
  1.094
  1.095
  1.093
  1.094
  1.095
  1.095
  1.094
  1.095
  1.094
  1.094
  1.094
  1.095
  1.094
  1.094
Average production assets, $m
  24
  25
  27
  28
  30
  32
  33
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  73
  77
  81
  85
  89
  94
  99
  104
  109
  114
Working capital, $m
  227
  107
  114
  121
  128
  135
  143
  151
  160
  169
  178
  188
  198
  209
  220
  231
  244
  256
  270
  284
  298
  314
  330
  347
  364
  383
  403
  423
  445
  467
  491
Total debt, $m
  0
  3
  6
  9
  12
  15
  19
  22
  26
  30
  34
  39
  43
  48
  53
  58
  63
  69
  75
  81
  88
  95
  102
  109
  117
  126
  134
  143
  153
  163
  174
Total liabilities, $m
  45
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  84
  88
  93
  98
  103
  108
  114
  120
  126
  133
  140
  147
  154
  162
  171
  179
  188
  198
  208
  219
Total equity, $m
  294
  179
  190
  201
  213
  226
  239
  252
  266
  281
  297
  313
  330
  347
  366
  385
  406
  427
  449
  472
  497
  523
  549
  578
  607
  638
  671
  705
  740
  778
  817
Total liabilities and equity, $m
  339
  227
  241
  255
  270
  286
  303
  319
  337
  356
  376
  397
  418
  440
  464
  488
  514
  541
  569
  598
  630
  663
  696
  732
  769
  809
  850
  893
  938
  986
  1,036
Debt-to-equity ratio
  0.000
  0.020
  0.030
  0.040
  0.060
  0.070
  0.080
  0.090
  0.100
  0.110
  0.120
  0.120
  0.130
  0.140
  0.140
  0.150
  0.160
  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
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
  27
  29
  31
  32
  34
  36
  38
  40
  42
  45
  49
  51
  54
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  93
  97
  102
  107
  113
  118
  124
Depreciation, amort., depletion, $m
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
Funds from operations, $m
  36
  33
  35
  36
  38
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  67
  70
  74
  77
  81
  85
  90
  94
  99
  104
  109
  114
  120
  126
  132
  139
Change in working capital, $m
  -11
  6
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  20
  21
  23
  24
Cash from operations, $m
  47
  26
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
  47
  50
  52
  55
  58
  61
  64
  67
  71
  74
  78
  82
  86
  90
  95
  99
  104
  110
  115
Maintenance CAPEX, $m
  0
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
New CAPEX, $m
  -5
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
Cash from investing activities, $m
  24
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -20
Free cash flow, $m
  71
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  65
  68
  71
  75
  79
  83
  87
  91
  96
Issuance/(repayment) of debt, $m
  -60
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
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
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
Total cash flow (excl. dividends), $m
  -7
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  59
  62
  65
  68
  72
  76
  79
  83
  87
  92
  96
  101
  106
Retained Cash Flow (-), $m
  -23
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -39
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
 
  140
  15
  16
  17
  18
  20
  21
  22
  23
  25
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
  47
  50
  52
  55
  58
  61
  64
  67
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
 
  134
  14
  14
  14
  14
  14
  14
  14
  13
  13
  12
  11
  11
  10
  9
  8
  8
  7
  6
  5
  4
  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 19.7
Price to Sales 3.1
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 15.5
Price to Free Cash Flow 17.4
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 6.3% 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 31.54 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 $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
NANO Nanometrics 24.59 93.13  str.buy
KLAC KLA-Tencor 103.98 47.04  str.sell
NVMI Nova Measuring 26.86 1.44  str.sell
CAMT Camtek 5.55 0.52  str.sell
COHU Cohu 22.02 7.71  str.sell
AMAT Applied Materi 51.43 233.37  str.buy
CYBE CyberOptics 15.40 10.36  hold
PDFS PDF Solutions 16.30 8.54  sell

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
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.