Intrinsic value of Silicon Laboratories, Inc. - SLAB

Previous Close

$106.09

  Intrinsic Value

$42.97

stock screener

  Rating & Target

str. sell

-59%

Previous close

$106.09

 
Intrinsic value

$42.97

 
Up/down potential

-59%

 
Rating

str. sell

We calculate the intrinsic value of SLAB 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 4.6

 

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, %
  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
  5.19
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
Revenue, $m
  930
  995
  1,063
  1,133
  1,206
  1,282
  1,361
  1,444
  1,529
  1,619
  1,712
  1,810
  1,912
  2,018
  2,129
  2,245
  2,366
  2,493
  2,626
  2,765
  2,911
  3,064
  3,223
  3,391
  3,566
  3,750
  3,943
  4,145
  4,357
  4,580
Variable operating expenses, $m
  823
  877
  932
  990
  1,050
  1,113
  1,178
  1,246
  1,316
  1,390
  1,410
  1,490
  1,574
  1,662
  1,753
  1,849
  1,949
  2,053
  2,163
  2,277
  2,397
  2,523
  2,655
  2,793
  2,937
  3,089
  3,247
  3,414
  3,589
  3,772
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
  823
  877
  932
  990
  1,050
  1,113
  1,178
  1,246
  1,316
  1,390
  1,410
  1,490
  1,574
  1,662
  1,753
  1,849
  1,949
  2,053
  2,163
  2,277
  2,397
  2,523
  2,655
  2,793
  2,937
  3,089
  3,247
  3,414
  3,589
  3,772
Operating income, $m
  107
  119
  131
  143
  156
  169
  183
  198
  213
  229
  302
  319
  337
  356
  376
  396
  418
  440
  463
  488
  514
  541
  569
  598
  629
  662
  696
  731
  769
  808
EBITDA, $m
  177
  190
  203
  216
  230
  244
  259
  275
  291
  309
  326
  345
  364
  385
  406
  428
  451
  475
  500
  527
  555
  584
  614
  646
  680
  715
  751
  790
  830
  873
Interest expense (income), $m
  2
  20
  23
  25
  27
  30
  33
  35
  38
  41
  44
  48
  51
  55
  58
  62
  66
  71
  75
  80
  85
  90
  95
  101
  106
  113
  119
  126
  133
  140
  148
Earnings before tax, $m
  87
  96
  106
  116
  126
  137
  148
  160
  172
  184
  254
  268
  283
  298
  313
  330
  347
  365
  384
  403
  424
  446
  468
  492
  517
  543
  570
  599
  629
  660
Tax expense, $m
  24
  26
  29
  31
  34
  37
  40
  43
  46
  50
  69
  72
  76
  80
  85
  89
  94
  99
  104
  109
  114
  120
  126
  133
  140
  147
  154
  162
  170
  178
Net income, $m
  64
  70
  77
  85
  92
  100
  108
  117
  125
  135
  186
  196
  206
  217
  229
  241
  253
  266
  280
  294
  310
  325
  342
  359
  377
  396
  416
  437
  459
  482

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
  1,239
  1,325
  1,415
  1,509
  1,606
  1,707
  1,813
  1,922
  2,037
  2,156
  2,280
  2,410
  2,545
  2,687
  2,835
  2,989
  3,151
  3,320
  3,497
  3,682
  3,876
  4,079
  4,292
  4,515
  4,749
  4,994
  5,250
  5,520
  5,802
  6,098
Adjusted assets (=assets-cash), $m
  1,239
  1,325
  1,415
  1,509
  1,606
  1,707
  1,813
  1,922
  2,037
  2,156
  2,280
  2,410
  2,545
  2,687
  2,835
  2,989
  3,151
  3,320
  3,497
  3,682
  3,876
  4,079
  4,292
  4,515
  4,749
  4,994
  5,250
  5,520
  5,802
  6,098
Revenue / Adjusted assets
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
Average production assets, $m
  395
  422
  451
  480
  511
  544
  577
  612
  648
  686
  726
  767
  810
  856
  903
  952
  1,003
  1,057
  1,114
  1,173
  1,234
  1,299
  1,367
  1,438
  1,512
  1,590
  1,672
  1,758
  1,848
  1,942
Working capital, $m
  73
  78
  83
  88
  94
  100
  106
  113
  119
  126
  134
  141
  149
  157
  166
  175
  185
  194
  205
  216
  227
  239
  251
  264
  278
  293
  308
  323
  340
  357
Total debt, $m
  395
  437
  480
  525
  572
  621
  671
  724
  779
  837
  897
  959
  1,025
  1,093
  1,164
  1,239
  1,316
  1,398
  1,483
  1,573
  1,666
  1,764
  1,867
  1,974
  2,087
  2,205
  2,328
  2,458
  2,594
  2,737
Total liabilities, $m
  597
  639
  682
  727
  774
  823
  874
  927
  982
  1,039
  1,099
  1,162
  1,227
  1,295
  1,366
  1,441
  1,519
  1,600
  1,686
  1,775
  1,868
  1,966
  2,069
  2,176
  2,289
  2,407
  2,531
  2,661
  2,797
  2,939
Total equity, $m
  642
  687
  733
  782
  832
  884
  939
  996
  1,055
  1,117
  1,181
  1,248
  1,318
  1,392
  1,468
  1,548
  1,632
  1,720
  1,811
  1,907
  2,008
  2,113
  2,223
  2,339
  2,460
  2,587
  2,720
  2,859
  3,005
  3,159
Total liabilities and equity, $m
  1,239
  1,326
  1,415
  1,509
  1,606
  1,707
  1,813
  1,923
  2,037
  2,156
  2,280
  2,410
  2,545
  2,687
  2,834
  2,989
  3,151
  3,320
  3,497
  3,682
  3,876
  4,079
  4,292
  4,515
  4,749
  4,994
  5,251
  5,520
  5,802
  6,098
Debt-to-equity ratio
  0.620
  0.640
  0.650
  0.670
  0.690
  0.700
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.790
  0.800
  0.810
  0.810
  0.820
  0.820
  0.830
  0.830
  0.840
  0.840
  0.850
  0.850
  0.860
  0.860
  0.860
  0.870
Adjusted equity ratio
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  64
  70
  77
  85
  92
  100
  108
  117
  125
  135
  186
  196
  206
  217
  229
  241
  253
  266
  280
  294
  310
  325
  342
  359
  377
  396
  416
  437
  459
  482
Depreciation, amort., depletion, $m
  70
  71
  72
  73
  74
  75
  76
  77
  78
  80
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  46
  48
  50
  53
  56
  59
  62
  65
Funds from operations, $m
  134
  141
  149
  157
  166
  175
  184
  194
  204
  214
  210
  221
  233
  246
  259
  272
  287
  302
  317
  334
  351
  369
  387
  407
  428
  449
  472
  496
  521
  547
Change in working capital, $m
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
Cash from operations, $m
  129
  136
  144
  152
  160
  169
  178
  187
  197
  207
  203
  214
  225
  237
  250
  263
  277
  292
  307
  323
  339
  357
  375
  394
  414
  435
  457
  480
  504
  529
Maintenance CAPEX, $m
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -50
  -53
  -56
  -59
  -62
New CAPEX, $m
  -26
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -94
Cash from investing activities, $m
  -38
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -56
  -60
  -63
  -65
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -96
  -101
  -106
  -111
  -117
  -122
  -128
  -135
  -142
  -149
  -156
Free cash flow, $m
  90
  95
  101
  107
  113
  120
  126
  133
  140
  148
  140
  148
  157
  165
  175
  184
  194
  204
  215
  227
  238
  251
  264
  277
  292
  306
  322
  338
  355
  373
Issuance/(repayment) of debt, $m
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  60
  63
  65
  68
  71
  75
  78
  82
  85
  89
  93
  98
  103
  107
  113
  118
  124
  130
  136
  143
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  
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  60
  63
  65
  68
  71
  75
  78
  82
  85
  89
  93
  98
  103
  107
  113
  118
  124
  130
  136
  143
Total cash flow (excl. dividends), $m
  130
  137
  144
  152
  160
  168
  177
  186
  195
  205
  200
  211
  222
  234
  246
  259
  272
  286
  301
  316
  332
  349
  366
  385
  404
  425
  446
  468
  492
  516
Retained Cash Flow (-), $m
  -43
  -45
  -47
  -48
  -50
  -52
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -116
  -121
  -127
  -133
  -139
  -146
  -153
Prev. year cash balance distribution, $m
  469
  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
  556
  92
  98
  104
  110
  116
  122
  129
  136
  143
  136
  144
  152
  160
  169
  179
  188
  198
  209
  220
  231
  244
  256
  269
  283
  298
  313
  329
  345
  363
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
  533
  85
  85
  85
  85
  84
  83
  81
  78
  75
  64
  61
  58
  54
  50
  45
  41
  37
  32
  28
  24
  20
  17
  14
  11
  9
  7
  5
  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

Silicon Laboratories Inc. is a provider of silicon, software and solutions for the Internet of Things (IoT), Internet infrastructure, industrial, consumer and automotive markets. The Company operates through mixed-signal analog intensive products segment. It provides analog-intensive, mixed-signal solutions for use in a range of electronic products in various applications for the IoT market. It provides a range of timing and isolation products for infrastructure applications, including clocks and oscillators for networking equipment, data centers and wireless base stations, as well as digital isolators and current sensors for industrial power supplies and hybrid-electric vehicles. It provides broadcast products, such as television tuners and demodulators and automotive radio tuners, and access products, including subscriber line interface circuits for voice over Internet Protocol, embedded modems, and Power over Ethernet power source equipment and powered device integrated circuits.

FINANCIAL RATIOS  of  Silicon Laboratories, Inc. (SLAB)

Valuation Ratios
P/E Ratio 72.9
Price to Sales 6.4
Price to Book 5.4
Price to Tangible Book
Price to Cash Flow 34.5
Price to Free Cash Flow 37.7
Growth Rates
Sales Growth Rate 8.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 1.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 8.8%
Total Debt to Equity 8.8%
Interest Coverage 34
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 4.4%
Return On Total Capital 7%
Ret/ On T. Cap. - 3 Yr. Avg. 5%
Return On Equity 7.7%
Return On Equity - 3 Yr. Avg. 5.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 60.5%
Gross Margin - 3 Yr. Avg. 60.2%
EBITDA Margin 15.5%
EBITDA Margin - 3 Yr. Avg. 13.4%
Operating Margin 9.6%
Oper. Margin - 3 Yr. Avg. 7.6%
Pre-Tax Margin 9.3%
Pre-Tax Margin - 3 Yr. Avg. 7.3%
Net Profit Margin 8.7%
Net Profit Margin - 3 Yr. Avg. 6.5%
Effective Tax Rate 6.2%
Eff/ Tax Rate - 3 Yr. Avg. 9.5%
Payout Ratio 0%

SLAB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SLAB stock intrinsic value calculation we used $868 million for the last fiscal year's total revenue generated by Silicon Laboratories, Inc.. The default revenue input number comes from 0001 income statement of Silicon Laboratories, 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 SLAB stock valuation model: a) initial revenue growth rate of 7.2% 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 SLAB is calculated based on our internal credit rating of Silicon Laboratories, 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 Silicon Laboratories, 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 SLAB stock the variable cost ratio is equal to 88.9%.

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 SLAB 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 5.7% for Silicon Laboratories, Inc..

Corporate tax rate of 27% is the nominal tax rate for Silicon Laboratories, 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 SLAB 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 SLAB are equal to 42.4%.

Life of production assets of 37.9 years is the average useful life of capital assets used in Silicon Laboratories, 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 SLAB is equal to 7.8%. 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 - $1067.29 million for Silicon Laboratories, 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 43.341 million for Silicon Laboratories, 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 Silicon Laboratories, Inc. at the current share price and the inputted number of shares is $4.6 billion.

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